# Horizon Staking

<h2 align="center"><strong>USDx Payouts to Horizon Stakers</strong></h2>

Users create positions by depositing ETH and locking HORIZON tokens. These positions generate shares that determine how rewards are distributed.

A position can be created in two ways:

* **ETH + HORIZON deposit:** users supply both ETH and HORIZON when creating the position.
* **ETH-only deposit:** users deposit ETH and the protocol automatically purchases the required amount of HORIZON from the market and locks it within the position.

Incoming ETH is routed into three destinations:

* liquidity vault deployment
* USDx reward pools
* token burn mechanisms

Liquidity vaults deploy capital into ecosystem trading pairs and generate yield. This yield is periodically harvested and added to reward pools.

Rewards are distributed in USDx across multiple payout cycles that reward both short-term activity and long-term commitment.

The system also includes token burn mechanisms that reduce the circulating supply of ecosystem tokens.

All operations are executed through smart contracts on Ethereum.

***

<h2 align="center">System Overview</h2>

Users create a position by depositing:

```
ETH + HORIZON
```

ETH funds the system while HORIZON is locked within the position.

The ETH deposit is routed as follows:

| Allocation | Destination                    |
| ---------- | ------------------------------ |
| 20%        | Liquidity vault deployment     |
| 70%        | Buy USDx and fund reward pools |
| 10%        | Buy and burn HORIZON and NOVAE |

This structure allows the system to:

* fund reward pools immediately
* deploy productive liquidity
* create continuous token burns.

Each position generates shares that determine the user’s portion of rewards.

Two types of shares exist:

* permanent shares
* daily shares

***

<h2 align="center">Position Creation</h2>

A position is created when a user deposits ETH and locks HORIZON.

The HORIZON portion becomes locked collateral for the position.

Properties of locked HORIZON:

* remains locked while the position is active
* is returned if the user exits the position.

Locking HORIZON ensures that each new position creates demand for the token.

***

<h3 align="center">Position Maturity</h3>

Each position is created with a defined duration.

When a position reaches maturity, the user may close the position without penalty. Upon closure:

• the position’s shares are removed from the system\
• locked HORIZON is returned to the user

***

<h2 align="center">Share System</h2>

Each position generates two types of shares.

<h3 align="center">Permanent Shares</h3>

Permanent shares represent long-term positions in the system.

Permanent shares:

* accumulate when positions are created
* remain active as long as the position remains open
* determine rewards from long-cycle payout pools.

Permanent shares participate in the following reward cycles:

* 8-day pool
* 28-day pool
* 88-day pool
* 888-day pool

Permanent shares increase proportionally with the ETH deposited when creating the position.

***

<h3 align="center">Daily Shares</h3>

Daily shares reward active position creation.

Daily shares are generated **only when a new position is created**.

Daily shares:

* exist only during the current day
* reset after the daily payout
* determine reward distribution from the daily pool.

Daily shares use a concave weighting function so larger deposits receive more shares but with diminishing returns.

Example:

```
dailyShares = k × √(ETH deposited)
```

This structure prevents large deposits from dominating the daily reward pool while still rewarding larger contributions.

***

<h3 align="center">Share Rate and Difficulty</h3>

The protocol maintains a global share rate that determines how many permanent shares a new position receives.

When a position is created, the share rate increases slightly based on the amount of capital entering the system. As the share rate rises, new positions receive fewer shares for the same deposit.

This mechanism ensures that shares become progressively more difficult to obtain as the system grows.

Increasing share difficulty prevents early participants from permanently dominating the reward system and ensures that new capital continues to compete fairly for rewards.

***

<h3 align="center">Share Lifecycle</h3>

Shares remain active for as long as the associated position remains open.

If a position is closed, the shares associated with that position are removed from the system. As total shares decrease, the remaining participants receive a larger proportion of future rewards.

This dynamic ensures that reward distribution continuously adjusts based on active participation in the system.

***

<h2 align="center">Time Structure</h2>

The protocol measures time using fixed daily epochs.

```
1 day = 86400 seconds
```

The epoch start begins at the contract deployment timestamp.

If the contract launches at approximately **14:00 UTC**, each new day begins at the same time.

***

<h2 align="center">Capital Routing</h2>

ETH deposited through position creation is routed into three destinations.

<h3 align="center">Liquidity Vault Deployment (20%)</h3>

Twenty percent of incoming ETH is deployed into Horizon liquidity vaults as **protocol-owned liquidity (POL)**.

This liquidity is managed by the protocol and is **not withdrawable by users**.

Vault pairs include:

* HORIZON / ETH
* USDx / USDC
* NOVAE / ETH

These vaults generate yield through:

* trading fees
* liquidity incentives

Vault yield is periodically harvested and converted to USDx before being sent into the reward pools.

Because this liquidity is protocol-owned and permanent, it strengthens ecosystem markets while creating a recurring yield source for reward distributions.

***

<h3 align="center">USDx Reward Pools (70%)</h3>

Seventy percent of incoming ETH is swapped into USDx and funds the reward pools.

ETH may first be stored temporarily before conversion.

The protocol periodically swaps ETH into USDx using a **dollar-cost averaging (DCA)** approach. This reduces market impact and improves execution quality.

Rewards are distributed across multiple payout cycles rather than released immediately.

<h4 align="center">Swap Protection and Price Safety</h4>

When the protocol performs swaps to purchase HORIZON or USDx, price protection mechanisms are used.

A **time-weighted average price (TWAP) oracle** provides the reference price for swap execution.

All swaps must execute within a defined **maximum slippage parameter** relative to the TWAP price.

If the swap price exceeds the allowed slippage threshold, the transaction will revert.

To reduce front-running and sandwich attacks, swaps may use **MEV-protection.**

These safeguards help protect from price manipulation and ensure reasonable execution conditions.

***

<h3 align="center">Token Burn Mechanism (10%)</h3>

Ten percent of incoming ETH is used to purchase ecosystem tokens from the market.

These tokens are permanently removed from circulation.

Example allocation:

| Allocation | Action               |
| ---------- | -------------------- |
| 5%         | Buy HORIZON and burn |
| 5%         | Buy NOVAE and burn   |

***

<h2 align="center">Reward Pools</h2>

USDx rewards are distributed across five payout cycles.

| Pool         | Allocation |
| ------------ | ---------- |
| Daily pool   | 28%        |
| 8-day pool   | 28%        |
| 28-day pool  | 18%        |
| 88-day pool  | 18%        |
| 888-day pool | 8%         |

Each pool accumulates rewards until its payout cycle triggers.

***

<h2 align="center">Payout Schedule</h2>

| Pool    | Trigger        |
| ------- | -------------- |
| Daily   | every day      |
| 8-day   | every 8 days   |
| 28-day  | every 28 days  |
| 88-day  | every 88 days  |
| 888-day | every 888 days |

Multiple payout cycles may occur on the same day.

***

<h2 align="center">Reward Distribution</h2>

When a payout cycle triggers, the entire pool balance is distributed to stakers.

The **daily pool** uses daily shares.

All other pools use permanent shares.

Reward distribution follows a proportional model.

```
userReward = poolBalance × (userShares / totalShares)
```

***

<h3 align="center">Reward Cycle Settlement</h3>

Reward pools accumulate USDx until their payout cycle triggers.

When a payout cycle is reached, the pool balance becomes eligible for distribution. Settlement occurs through a smart contract that distributes rewards proportionally to all eligible shares.

Settlement transactions can be triggered by any user interacting with the protocol. No centralized operator is required.

This mechanism ensures reward distribution remains fully decentralized.

***

<h2 align="center">Position Creation Fee</h2>

A small protocol fee is applied when a position is created. This fee is routed to the burn mechanism.

```
User claim = 1000 USDx
Creation fee = 2%
```

| Allocation    | Amount   |
| ------------- | -------- |
| User receives | 980 USDx |
| Buy & Burn    | 20 USDx  |

Burn allocation:

| Allocation | Action               |
| ---------- | -------------------- |
| 50%        | Buy HORIZON and burn |
| 50%        | Buy NOVAE and burn   |

This creates continuous market demand for ecosystem tokens.

***

<h2 align="center">Activity Requirement</h2>

Users must claim rewards at least once every **90 days** to remain active.

If a user does not claim within this window:

* their shares remain recorded
* their shares stop receiving rewards.

These become **inactive shares**.

Inactive shares are excluded from reward calculations.

A user can restore activity by claiming rewards.

***

<h2 align="center">Early Exit</h2>

Positions may be closed before their defined duration has elapsed.

If a position exits early, a penalty is applied to both the deposited ETH and the locked HORIZON. The penalty begins at 50% at the time the position is created and decreases linearly as the position approaches its maturity, reaching 0% at the end of the position duration.

Penalty proceeds are routed back into the system:

• Penalized ETH is distributed between reward pools and token buy-and-burn mechanisms.\
• Penalized HORIZON is permanently removed from circulation.

This structure discourages short-term participation while ensuring that early exits increase rewards for remaining users and reduce token supply.

***

<h2 align="center">Liquidity and Yield</h2>

Liquidity vaults generate yield from deployed capital.

This yield is harvested and converted into USDx.

The USDx is routed back into reward pools, increasing future payouts.

As more ETH enters the system, vault liquidity grows and the potential for yield generation increases.

***

<h2 align="center">Economic Framework</h2>

Horizon Staking operates through several reinforcing mechanisms.

1. Users buy and lock HORIZON
2. ETH deposits fund reward pools and liquidity vaults
3. Vault liquidity generates yield
4. Yield increases reward pool balances
5. Stakers receive USDx rewards
6. Entry routing and claim fees burn ecosystem tokens.

These mechanisms connect system growth, reward funding, and token supply reduction.

***

<h2 align="center">System Growth Dynamics</h2>

Horizon Staking connects capital inflow, liquidity deployment, and token supply reduction into a single economic system.

ETH entering the system funds reward pools and protocol-owned liquidity. Liquidity vaults generate yield that increases future rewards. As new positions are created, the share rate increases, making shares progressively more difficult to obtain.

Early exits redirect capital back into reward pools while removing HORIZON from circulation.

***

<h2 align="center">Smart Contract Restrictions</h2>

Horizon Staking is designed for direct user participation.

To prevent large automated aggregated deposits, smart contracts are not allowed to create positions.

This prevents other protocols from combining large amounts of capital into single whale positions that could dominate reward distribution.

***

<h2 align="center">Security Model</h2>

Horizon Staking operates entirely through Ethereum smart contracts.

Reward calculations, capital routing, and settlement functions are executed deterministically.

Reward cycle settlement can be triggered by any user interacting with the contracts.

No centralized operator is required.

***

<h2 align="center">Conclusion</h2>

Horizon Staking allows users to put ETH to work while earning USDx rewards over time.

By creating a position, users gain shares that determine their portion of rewards distributed across multiple payout cycles.

Rewards come from several sources:

* ETH entering the system
* yield generated by protocol-owned liquidity
* system fees and token burns.

This structure gives users exposure to both short-term payouts and larger long-term reward cycles.

At the same time, the system strengthens the Horizon ecosystem by:

* deepening liquidity
* funding reward pools
* reducing token supply through buy and burn mechanisms.

The result is a system where users earn rewards while contributing to the growth and long-term health of the Horizon ecosystem.
