Hey all, in this article I want to quickly answer the question that many people ask when introduced to DRIP and the Faucet: where does my deposit go?
For those unfamiliar with DRIP, the Faucet is a protocol where you deposit a desired amount of DRIP tokens and in return the Faucet guarantees you a 1% daily reward (DRIP tokens). Once you are staked in the Faucet, you have 2 actions: you can hydrate (think compound!) your daily reward, which increases your deposit, thereby giving you a greater daily reward; or you can claim those daily rewards (DRIP tokens) out of the Faucet and back into your DRIP wallet. 2 limitations of the Faucet:
- You can only claim up to a maximum of 365%
- A max payout of 100k on your deposits
Okay, sounds pretty cool, eh?
Let’s return back to the original question: where does my deposit go?
If you’re scratching your head trying to make sense of the question, I will endeavour to explain…
One of the rules of the Faucet is this: all deposits are unretrievable. In other words, there is no mechanism to take it back. Whatever I deposit in, I cannot take out. Ever. If I accidentally deposited into the Faucet one Saturday night whilst drinking with the boys, not realising in my drunken stupor, too bad.
So, where does my deposit go? I’m not sure about you, but I’ve heard different ideas from the DRIP community about the fate of our deposits. Some of the ideas are:
- Faucet taxes 10% from the deposit and sends the tax into the “tax-vault” and the remainder of the 90% is sent to a “burn” address
- Faucet taxes 10% from the deposit, but sends the remainder of the 90% into the “tax-vault”; the 10% tax is simply a math calculation (no more)
- Faucet sends the entire deposit amount into the “tax-vault”
The correct answer is 3.
The Faucet smart contract deposits the entire amount into the “tax-vault”. The 10% tax is merely a calculation performed on your deposit and the net amount (which is just a number) is stored against your wallet address in a “users” array. The number is then used for display purposes on the website.
So, now we know that no deposits are “burned” into some artificial burn address, causing a deflationary mechanism. Nope. All deposits are sent to the “tax-vault” and that is how the “tax-vault” is funded. That is how all Faucet rewards are paid out.
Is this a good thing or bad thing? I don’t have much of an opinion on it. I mean, the more deposits that go into the Faucet, the more the “tax-vault” grows, the more DRIP tokens there are to pay out rewards. That’s a good thing, I guess.
Hope I’ve helped to shed some light on this. I hope I didn’t bore you with some details.
If you want to chat further on “all-things” DRIP, consider visiting my Telegram channel.
DRIP Reservoir — https://t.me/dripreservoir
If you want a DRIP buddy, consider using my address.
DRIP buddy — 0x91098AE2A2Edb12803c8Ec81805d86e32BfB39a7
Talk soon!
