Cracking the Code: How Velora Epochs Distribute Rewards and Refunds

From PSP 2.0 to Today’s Distribution Model

PSP 2.0 was a fundamental redesign of Velora’s tokenomics:

• 80% of protocol fees go to stakers; 20% to the DAO treasury.

• Rewards are paid in native gas tokens of the network where you stake.

• A Social Escrow system (sePSP1 & sePSP2) through ParaBoost incentives put more weight on users who lock in PSP long-term and provide liquidity.

This means Epoch calculations aren’t just about “how much you staked”, they factor in how you staked, for how long, and what value you brought back to Velora.

Step 1 — Calculating Your ParaBoost Score

Your ParaBoost Score is the foundation:

• sePSP1 is your staked PSP balance across Ethereum & Optimism.

• sePSP2 reflects your end-of-epoch share of the pool, determined by your balance, the pool’s total supply, and the pool’s PSP holdings. Totals from Mainnet and Optimism are added together.

Step 2 — Boosting Your Stake with ParaBoost

ParaBoost is an additional multiplier applied to your ParaBoost Score that increases your share of rewards. It’s designed to reward value-adding actions, activities that directly support Velora’s growth and stability, on top of your base stake.

Currently, one of the main actions that earns ParaBoost is pooling through sePSP2:

• You provide liquidity to the pool and keep it there without requesting a withdrawal.

• A minimum of 60,000 PSP staked is required to qualify.

• The boost is calculated using the stake over time.

By maintaining these contributions across multiple Epochs, your Boosted Score, the ParaBoost Score multiplied by your ParaBoost factor, increases, giving you a proportionally larger share of the protocol fees when rewards are distributed.

Boosted Score Calculation

The Boosted Score is obtained by taking the user’s ParaBoost Score and applying the ParaBoost percentage as a multiplier:

Boosted Score = ParaBoost Score × (1 + Boost Percentage)

• ParaBoost Score is the user’s PSP Score after considering sePSP1 and sePSP2 balances.

• Boost Percentage is the incentive boost earned from value-adding actions, such as providing liquidity through sePSP2 or maintaining a stake across multiple Epochs.

Source: https://help.velora.xyz/en/articles/6921900-what-is-psp-2-0#h_fd3d72fb2c 

Step 3 — Rewards Distribution

At the end of each Epoch, Velora’s total protocol fees are split:

UserRewards = (userBoostScore / totalBoostScoreInEpoch) × totalCollectedFees

Where:

• totalBoostScoreInEpoch = The sum of all Boosted Scores from active stakers in that Epoch.

• totalCollectedFees = The 80% portion of Velora’s total protocol fees for the Epoch (after allocating 20% to the DAO treasury).

This means your share depends not only on your own Boosted Score, but also on how it compares to all other active stakers during that period.

Then, the allocation is split by network, based on where you have staked.

Users can stake on Ethereum Mainnet, Optimism, or both, and the rewards are distributed proportionally to your ParaBoost Score on each network:

UserRewards_chainX = (PSPscore_chainX / totalPSPscore) × UserRewards

Step 4 — Gas Refunds

Refunds are individual and transaction-based (Ethereum only).
They use your Boosted Score and a logarithmic function to determine your refund percentage:

TotalRefund_tx = gasFee_tx × (RefundPercentage / 100)
RefundPercentage = 0% if score < 10k
RefundPercentage = 95% if score > 1M
Otherwise: RefundPercentage = 0.152003 × log(0.000517947 × BoostedScore)

Chain-level allocation follows the same proportional formula as rewards.

Step 5 — Verification & Governance

Here’s where transparency kicks in:

• Off-chain scripts crunch all blockchain data into Merkle trees.

• The root hash is stored on-chain.

• The full dataset is uploaded to IPFS so anyone can verify their share.

• Proposals are automatically posted to Snapshot; once the DAO votes “yes,” execution happens trustlessly via UMA + oSnap.

Inside the Epoch Process

Behind the formulas and governance votes, there’s a streamlined but meticulous workflow that turns raw blockchain data into accurate, verifiable payouts.

• Kick-off: Each Epoch starts automatically every four weeks. Refunds can be calculated immediately from on-chain activity, while rewards wait for a single input, the total profit figure from Velora.

• Data handling: All calculations run off-chain through TypeScript scripts and a PostgreSQL database. The only manual step that remains is uploading multiple transactions to Snapshot due to current UI limitations.

• Safety checks: Before anything hits the blockchain, transactions are simulated to ensure they won’t fail. Errors at this stage won’t break the system but could misassign amounts, which is why human review is always part of the process.

• Developer mindset: The focus is on optimizing the code and catching discrepancies down to the last decimal, with the long-term goal of reducing execution time to just a few minutes.

This end-to-end automation, from pulling on-chain data to preparing governance proposals, is built and maintained by WakeUp Labs for the Velora DAO.

The Result

What once took a week now takes hours and every number is verifiable by the community.

Velora’s reward engine is now:

• Efficient — no manual steps.

• Transparent — open data, verifiable results.

• Decentralized — DAO-driven approval and execution.

With PSP 2.0’s Social Escrow and ParaBoost in play, every Epoch isn’t just a payout cycle, it’s a reflection of how each participant contributes to Velora’s growth.

Stay Connected

The Epoch process is just one example of how automation, transparency, and community governance come together in Velora.
WakeUp Labs continues to build the infrastructure that keeps this engine running, and we’re not stopping here.

Follow our work and join the conversation:

• X (Twitter): @wakeuplabs

• LinkedIn: WakeUp Labs

• Website:wakeuplabs.io