Reset Penalty
progress loss on early exit
Reset Penalty is a staking or yield mechanism that reverts a user’s progress, tier, or reward multiplier back to baseline if they exit before completing a minimum commitment period. It discourages inconsistent behavior by enforcing consequences for early withdrawals, preventing users from gaming time-based systems. The reset acts as a soft lock—encouraging loyalty and long-term engagement without permanently locking tokens.
Use Case: A staking protocol offers time-based reward multipliers that increase every 30 days. If a user unstakes on day 29, the reset penalty kicks in and their multiplier returns to 1×. When they stake again, they must start from scratch—creating behavioral pressure to stay staked through each cycle.
Key Concepts:
- Reward Multipliers — Benefits increase over time and reset if interrupted.
- Retention Pressure — Structural incentive to stay engaged and avoid early exit.
- Staking Disincentives — Penalties or delays that reduce short-term exploitation.
- Time-Based Scaling — Duration-linked reward or access progression that resets on exit.
Summary: Reset Penalties create friction that protects protocol economics and filters out short-term opportunists. By tying progress to continuous behavior and resetting on exit, they align staking systems with longevity, user alignment, and emission sustainability.