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