Vested Rewards

Rewards allocated to the following protocols incentive programs are subject to a vesting mechanism:

• Staking SHERP via the mSHERP framework,

• Holding an active Position

• Providing liquidity SHERP/WMONAD or SHERP/USDT

• Using a strategy which mSHERP voters have channeled incentives into

NFT staking and Referral rewards are not subject to rewards vesting and are paid out in SHERP tokens directly as opposed to mSHERP.

Vesting Mechanism

The rewards vesting mechanisms works as follows:

• Rewards are initially paid out in the form of mSHERP, these rewards can be converted into SHERP anytime at a ratio determined by the time-lock penalty.

• The time-lock penalty decays until a full 12 month period elapses. At this point mSHERP becomes SHERP at a 1:1 ratio.

• Time-locked mSHERP is considered staked and will continue to accrue additional rewards until the user claims into SHERP or after the 12 month time-lock period has elapsed.

• For SHERP stakers, their mSHERP rewards will be compounded directly into their mSHERP staking positions. Note that mSHERP earned as rewards will be converted back to SHERP in a manner that is separate than the principal mSHERP that was minted through SHERP staking directly. See Unlocking mSHERP for additional details.

• Time-locked mSHERP rewards are equivalent to mSHERP minted via the SHERP staking mechanism in the context of VIP tiers qualification.

• Users can claim their mSHERP into SHERP at any time, however they will incur conversion penalties of up to a 97% loss (if within 1st month) versus holding for the entire period. The penalty decays using a quadratic formula, therefore the user's rewards become exponentially larger the longer they wait. Full time-lock penalty schedule is below:

mSHERP Rewards Time-lock (Months)	% Recieved in form of SHERP
0	3
1	4
2	5.5
3	7.5
4	10
5	13.5
6	18
7	24
8	32
9	42
10	56.5
11	75
12	100