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Staking and Target Allocation

Status: Planned

CAV staking is designed as capital allocation, not passive token farming.

Stake distribution becomes the target portfolio​

The share of CAV stake allocated to an asset determines that asset’s target weight in the pool.

target weight of asset i
= CAV staked to asset i / total allocated CAV stake

If 20% of allocated CAV stake points to ETH, ETH receives a 20% target weight.

Stakers therefore shape the market through an economically consequential state variable rather than an advisory poll.

How the target affects execution​

The target portfolio changes quote curvature:

  • trades toward target receive linear execution with zero price impact before fees;
  • trades away from target face increasing protection;
  • trades that cross target are protected beyond the target-restoring portion.

The target acts as a persistent market-making instruction. It encourages flow toward the selected portfolio without forcing the pool to execute an immediate rebalance.

Staker revenue​

The intended design pays stakers in the asset to which they allocate CAV:

stake CAV to ETH  → earn ETH-denominated protocol revenue
stake CAV to USDC → earn USDC-denominated protocol revenue

There are no planned CAV emissions used to manufacture the yield.

Risk allocation​

Target weights affect inventory and execution. Stakers must therefore evaluate more than expected fees:

  • asset and issuer risk,
  • pool exposure,
  • adverse flow,
  • oracle configuration,
  • concentration,
  • changing market conditions.

The production staking contracts and exact revenue accounting will be documented before activation.