Overview of the reinvest process on Cycle
The reinvest button is what allows pending vaults rewards to be compounded. Once pressed, the rewards are swapped to the farm assets, LP tokens are created from it, and are then added back into the farm.
Pressing the button involves a fee, so anyone pressing it will receive a reward (kickback) paid in WAVAX. The reward received will depend on the amount of reward tokens reinvested, since the kickback is 3.5% of the total pending rewards. This is done to incentivize users to press the button, allowing for perpetual compounding, in a decentralized manner. Anyone can press the button at any time, which includes some risks detailed bellow.
You can find bellow how the collected rewards are distributed when the reinvest button is pressed.
- Kickback: 2%, reward sent to the user that pressed the “Reinvest” button, to compensate for the transaction
- Single staking: 4%, part of the reinvest is sent to the $CYCLE single staking farm, where you can earn AVAX. The $CYCLE is collecting part of the revenue generated by the protocol, which is redistributed to stakers.
- Fund/Treasury: 4%, sent to the team address to build a treasury for future expenses (e.g. an audit)
- Reinvested: 90%, rewards are swapped to the tokens making the pair, LP’s are then created and added back to the farm
Since everyone can press the button at anytime, it is possible for 2 users to press it almost at the same time, leaving one of them with dust instead of the actual reward.
You can see current rewards for pressing the button, by clicking on the "?" button, which will show you the current WAVAX value of the kickback. You can then compare that with the transaction fee shown on MetaMask and evaluate whether or not it is interesting to press the button.
It is also important to note that YOU DON'T HAVE TO press the button. You can simply chose to ignore it if you're not willing to take the risk or unsure on what it actually does. It will not impact your returns in any way.