Early withdrawal function allows you to withdraw locked ALPACA in the Governance Vault with penalty.
- The penalty for early withdrawal will be 0.75% of the withdrawn amount per week of remaining locked time. ( There needs to be a sufficient penalty so that those who would consider early withdrawal could not game the mechanism by choosing a long lockup duration for higher APR, and then withdrawing early. )
Example:Alice wants to perform an early withdrawal of 100 locked ALPACA from the Governance Vault, but her position still has 65 days locked time remaining. Alice will have to pay:Penalty = 0.75% * roundup(65 / 7) = 7.5% of the withdrawn amountAnd she will receive: 100 ALPACA * (100% — 7.5%) = 92.5 ALPACA
According to the community vote in AIP-3, the allocation of the penalty from early withdrawal will be distributed as follow:
- 50% of the penalty will go towards weekly burn
- 50% will be distributed as rewards to the Governance Vault’s stakers in the following week.
A user who withdraws early would still be entitled to earn their final epoch’s rewards distribution.
Although we hope none of you will ever have to use this feature, it’s always good to have extra options, and now that we’ve presented the appetizer, it’s time to get to the main course.