Proof of Return Mechanism

To ensure transparency and fair distribution of rewards within the Dexponent protocol, we introduce the concept of Proof of Return(PoR). This mechanism provides a systematic approach for Verifiers to verify, benchmark yield based on miners performance of the investment returns strategies. Each validator within the network is responsible for creating and implementing their own benchmarking models. These models can be simple or complex, depending on the complexity and requirements of the investment returns strategy. The core purpose of the PoR system is to ensure that yields are accurately benchmarked and distributed fairly, with transparent verification mechanisms.

Verifiers will include the following parameters in their Proof of Return models to measure and confirm yield:

Historical Yield Analysis:Calibrating benchmarks using historical performance data to prioritize consistent APRs.

Risk Free Rate Integration: Incorporating risk-free rates to maintain realistic yield expectations. Volatility Adjustment:: A modifier applied based on the standard deviation of historical yields.

Market Condition Factor: An adjustment factor based on the current macroeconomic or crypto market trends. Token Performance Adjustment: A multiplicative or additive factor based on the performance of specific tokens within the strategy.

n: Benchmark Yield based on Historical performance of a strategy over period n. The benchmark yield is calculated by combining these parameters into a comprehensive model and is an indicative conceptual benchmarking. Verifiers will backtest their models using historical data and continuously adjust them as more data becomes available. This ongoing refinement ensures that the benchmark remains accurate, transparent and reflective of real time market and performance conditions.