PUNCH DOCS: OUTCOME-WEIGHTED REWARDS

A CAPPED INCENTIVE. NOT LOSS INSURANCE.

Punch can weight bounded PUNCH incentives by terminal trade outcome. Every reward remains subordinate to class, epoch, account, and global limits—and to a strict non-profitable-manufacture condition.

OUTCOME CLASSES

WIN

TERMINAL · PROFIT

A profitable full close may receive its class-configured outcome weight.

LOSS

TERMINAL · LOSS

A realized losing close may receive a larger weight because it adds counterparty cash.

LIQ

TERMINAL · LIQUIDATION

A liquidation may use a distinct class weight while the trader's economic loss remains real.

WEIGHTS ARE CLASS-LOCAL

Core Pool, dKLP, and KLP reward schedules are isolated. A larger loss weight recognizes a different capital effect; it does not reimburse the loss or make manufactured loss profitable.

THE PUNCH REWARD OBJECT

A Punch reward is attached to one terminal position outcome in one counterparty class. Partial decreases realize ordinary PnL and fees but cannot repeatedly reuse the same position as a reward basis. A full close or liquidation may record:

a class-configured eligible basis;
a win, realized-loss, or liquidation outcome weight;
an optional class-and-market multiplier;
a lock boost snapshotted when exposure is opened; and
the current rate from that class's monotonic emission curve.

The resulting amount is clamped by the trader's remaining class-epoch cap, the class epoch budget, the class lifetime budget, and the immutable Punch global ceiling. Exhaustion reduces the reward to what remains; it cannot revert trade settlement.

THE ANTI-FARMING CONSTRAINT

Every class configuration and market multiplier must pass the same worst-case test (design paper Equation 23): maximum curve rate × largest outcome weight × largest market multiplier × (1 + maximum allowed boost) × conservative PUNCH price must remain strictly below the guaranteed cost of producing one reward-basis dollar.

A REWARDED LOSS MUST STILL BE A LOSS

Even the richest eligible outcome must cost more to manufacture than its maximum reward value before gas, price movement, spread uncertainty, and opportunity cost. Raising a rate, boost, or market multiplier must re-run Equation 23.

Per-address caps add friction but are not claimed as Sybil resistance. The class-wide epoch budget is the aggregate issuance backstop when activity is distributed across addresses.

PUNCH / sPUNCH FEEDBACK IS DELAYED

Punch's reward and staking rails can reinforce each other across position cohorts, but they are not part of trade settlement. A trader may claim PUNCH plainly or optionally claim-and-lock through sPUNCH. Locked value affects only the boost snapshotted when a later position opens.

PUNCH20 is especially important for traders seeking the maximum permitted reward multiplier: its fixed 20:1 redemption can supply PUNCH for sPUNCH deposit and duration locking before a later position is admitted. Pre-position inventory can therefore contribute to the boost requirement and hold a pro-rata vault share before later donations. It guarantees neither outcome.

PUNCH earned when a position closes cannot retroactively boost that same position.
Fee-funded buybacks and donations cannot execute while the Core Pool's senior FIFO debt remains.
Donated PUNCH can increase sPUNCH share value without minting new shares, affecting only later open-time boost snapshots.
Reward exhaustion, a disabled claim path, or an unavailable buyback cannot block margin return or profit accounting.

ACCOUNTING CLOSURE IS NOT A RETURN

A mechanically higher assets-per-share index proves only that PUNCH backing increased without new shares. Swap cost, operating cost, risk, opportunity cost, market demand, token value, and return remain separate economic variables.

REWARDS DO NOT SHARE SOLVENCY

PUNCH rewards are not trader margin, counterparty cash, KLP reserves, or Core Pool FIFO collateral.
Every counterparty class has an isolated sub-budget and accrual ledger under the global issuance ceiling.
An LP class can use a zero trading-reward budget. Rewards are optional and cannot be a hidden solvency dependency.
Economic changes publish for the next epoch; they do not reprice already completed activity mid-epoch.
Plain claims, once enabled and fully inventoried, remain available without requiring a staking lock.

WHAT OUTCOME WEIGHTING IS NOT

A larger loss weight recognizes that different realized outcomes can affect counterparty capital differently. It is not a promise that PUNCH will retain value, a reimbursement of trading losses, an expected return, or a reason to manufacture liquidations.

Read the formal reward, budget, and stock-flow equations in the design paper, and the risk limits in Risk & Disclosures.