Conversion Factors

SHERP to mSHERP conversion ratios and mechanics

The SHERP:mSHERP conversion ratio changes depending on two criteria:

1. Length of time-lock

Ranging from a minimum of one day (99% conversion loss) up to a maximum lockup of two years (0% conversion loss)

E.g., Users locking for the full two years receive at least a 1:1 (1x) conversion on their SHERP to mSHERP. Users locking for the lock minimum of one day receive a conversion ratio of 1:0.01 (0.01x)

2. Value of SHERP stake at time of lockup

Ranging from $10 minimum stake (1x ratio multiple) to a $10M maximum stake (2x ratio multiple)

Users can stake more than 10M$ however no additional value / volume benefits will be granted. This is currently scaled based on USD; however, it may be switched to being scaled by SHERP amount (a governance vote will be conducted prior to mainnet launch to determine whether the community prefers USD or SHERP weighted volume multipliers)

E.g., As delineated in Chart 1 below, users locking SHERP worth at least $10,000 at current market value (not factoring in price impact or slippage) receive a 1:1.41 conversion if locked for the full two years. If their SHERP is worth less than $100 then they receive a 1:1 conversion, even for locking the full two years.

Key Points

• The time-lock factor is of primary importance for determining the SHERP to mSHERP conversion. The stake value serves a secondary role and acts as a modifier of the base ratio predetermined by the time-lock length. I.e. a user that meets the maximum threshold for time-locking (two years) but only the minimum threshold for stake value ($10) receives a better conversion ratio than a user who meets minimum time-lock and maximum stake value. E.g. 10$ locked for two years yields 1:1 ratio while $10,000,000 locked for one day yields 1:0.02 ratio

• Both the time weighted and volume weighted variables shift based on a quadratic formula.

• Upon expiration users receive back the exact amount of SHERP originally locked.

• The more mSHERP a user holds, the greater the SHERP staking rewards received.

• The full range of benefits received by holding certain amounts of mSHERP are fully laid out in the VIP Tier Schedule.

Chart 1 - mHEDGE Multipler Received

Chart 2 - mHEDGE Quantity Received