Reward Cliff Models
delayed yield activation structures
Reward Cliff Models are yield systems where rewards do not begin immediately upon staking or participation, but instead activate only after a predefined time thresholdÔÇöknown as the ÔÇ£cliff.ÔÇØ This structure encourages long-term engagement, filters out opportunistic capital, and strengthens protocol resilience by making short-term farming less attractive. Once the cliff duration is met, rewards often begin either linearly or in stepped tiers.
Use Case: A protocol introduces a 30-day reward cliff: users must remain staked for 30 days before any APR is activated. Early exits receive no rewards, while users who stay beyond the cliff begin earning at full rate. This rewards true commitment and prevents reward farming by bots or fast capital rotation.
Key Concepts:
- Cliff Vesting ÔÇö No unlocks or payouts occur until a minimum time has passed.
- Staking Disincentives ÔÇö Penalty or zero-reward policies for early exits.
- Retention Pressure ÔÇö Structural incentives that favor long-term participation.
- Progressive Unlocks ÔÇö Benefits that activate gradually after meeting cliff requirements.
Summary: Reward Cliff Models delay the gratification of yield to enforce stronger user alignment. They reward patience, discourage rapid liquidity cycling, and are essential for protocols that prioritize sustainability over short-term extraction.
| Model Type | Activation Timing | Short-Term Behavior | Long-Term Incentive |
|---|---|---|---|
| Reward Cliff | After Minimum Time | No Reward Earned | Full Yield Access |
| Linear Yield | Starts Immediately | Partial Gains Possible | No Delayed Bonus |
| Progressive Unlock | Post-Cliff Tiered | Scaled Down | Tiered Boosts |