Reset Penalty Systems
progress-wipe deterrent architecture
Reset Penalty Systems are protocol-level frameworks that erase accrued benefitsÔÇösuch as reward multipliers, tiered access, or loyalty streaksÔÇöwhen a user breaks a specific behavioral commitment. Unlike slashing (which removes funds), reset penalties wipe non-financial progress, requiring users to start over if they exit early, go inactive, or fail to meet ongoing conditions. These systems encourage consistency by tying rewards to uninterrupted engagement.
Use Case: A staking protocol tracks user loyalty with a time-based multiplier that grows weekly. If the user unstakes or skips governance votes, the reset penalty system activates, zeroing out their progress. This deters opportunistic exits and ensures that yield favors those aligned with long-term protocol goals.
Key Concepts:
- Reset Penalty ÔÇö The core mechanism that wipes multipliers or access streaks on early exit.
- Behavioral Lock-In ÔÇö Users remain committed to avoid triggering resets.
- Reward Multipliers ÔÇö Compounded benefits that disappear upon reset events.
- Retention Pressure ÔÇö Incentive pacing systems that discourage exit through time-based buildup.
Summary: Reset Penalty Systems protect protocol health by rewarding consistency and punishing disruptionÔÇönot through token slashing, but through progress loss. They quietly strengthen loyalty, reduce churn, and ensure that deeper participation yields deeper rewards.
| Reset Trigger | What Resets | Recovery Path | Purpose |
|---|---|---|---|
| Early Unstaking | Time-Based Multipliers | Start New Cycle | Discourage Yield-Hopping |
| Governance Inactivity | Voting Streaks / Roles | Requalify Over Time | Promote Active Participation |
| Unmet Holding Duration | Tiered Access Levels | Rebuild Commitment | Ensure Loyalty-Based Utility |