> For the complete documentation index, see [llms.txt](https://docs.pots.money/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.pots.money/pots.money/slashing-stake.md).

# Slashing Stake

### Why IBS Staking is Different

Many algorithmic token projects compete for users with a simple playbook: promise high APRs, offer 0-day bonds, and let users feel safe enough to invest more. It works — at first. But it creates a structural trap.

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⚠️ The Olympus DAO Problem

When staking has no slashing, early users accumulate inflated yield. As the protocol grows, they exit — draining the liquidity pool and leaving later participants holding devalued tokens. The project can reopen bonds to restart liquidity, but without slashing principal, the inflated interest becomes the primary tool for arbitrage, not growth.
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IBS is designed differently. We are not building a yield product. We are building the monetary infrastructure for Pots Market — and long-term protocol stability takes priority over short-term user acquisition.

### Every Staker is a Co-Builder

When you stake IBS — whether for 0 days or 360 days — you are not simply depositing for yield. You are automatically enrolled in the PBM (POTS Bid Module), the mechanism through which $POTS governance tokens are distributed to the ecosystem.

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💡 What this means

Your staked IBS is not just earning rewards. It is actively participating in the governance token auction that determines the long-term ownership structure of POTS. Staking is an act of co-building, not passive investment.
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This is why unstaking carries a cost. It is not a penalty. It is a Co-Building Fund Tax — a contribution to the very auction pool you have been participating in.

### The Slashing Mechanism

When you choose to unstake your IBS and claim your rewards, a percentage of the unlocked value must be paid in USDT as the Co-Building Fund Tax.This tax serves one purpose: funding the POTS bid pool.

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📐 The Design Logic：Without slashing, the system behaves like a pure yield farm

* Early stakers accumulate inflated rewards
* They exit, draining the pool
* Later participants absorb the loss

With slashing, every exit contributes to the protocol's governance treasury:

* Unstaking becomes a deliberate, committed act
* The bid pool grows with every exit
* $POTS distribution becomes more sustainable and equitable
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### A Two-Sided Choice

Slashing creates a genuine decision point for every participant:

<table data-header-hidden><thead><tr><th width="151"></th><th></th><th></th></tr></thead><tbody><tr><td>Option</td><td>Action</td><td>Outcome</td></tr><tr><td>Stay Staked</td><td>Continue earning IBS rewards and accumulating PBM bid weight</td><td>Higher long-term upside; deeper protocol alignment</td></tr><tr><td>Unstake</td><td>Pay the Co-Building Fund Tax in USDT to unlock</td><td>Immediate liquidity; contribution to POTS governance pool</td></tr></tbody></table>

Neither choice is wrong. Both serve the protocol. The tax simply ensures that exiting the system contributes to it, rather than extracting from it.

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🏗️ The Core Philosophy

High APR with no exit cost is a promise that the protocol cannot keep forever. Slashing Stake is our answer to that broken model — a mechanism that aligns the incentives of every participant, at every stage, with the long-term health of the ecosystem.
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### Unlock Options

The Co-Building Fund Tax is not mandatory at full rate. You choose how you exit — and your choice determines how much you contribute.

| Unlock Method    | Co-Building Tax | Compounding                      |
| ---------------- | --------------- | -------------------------------- |
| Immediate Unlock | Higher rate     | Stops upon entering unlock cycle |
| Linear Unlock    | Lower rate      | Stops upon entering unlock cycle |

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💡 Linear Unlock = Lower Tax

By choosing to unlock over a set period rather than immediately, you reduce the Co-Building Fund Tax you pay. The protocol rewards patience — not just in yield, but in exit costs too.
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⏸️ Important: Compounding Stops at Unlock

IBS that remains staked continues to compound — earning rewards on rewards. However, once you initiate an unlock, the tokens entering the unlock cycle stop compounding immediately. Only staked tokens continue to earn.
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### Restake

If your staking package expires and you still hold remaining capital, you can Restake to continue compounding.

* Each restake locks your remaining capital according to the selected package duration.
* A new staking record is created for each restake.

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🔁 Restake keeps your capital working.Tokens in the unlock cycle earn nothing. Tokens that are restaked continue to compound. The choice is always yours.
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### All Actions Are On-Chain

All staking, restaking, and unlock operations are executed on-chain. Gas fees apply. The conversion rate for USDT unlock charges is recorded at the time of each transaction.

For specific parameters — including tax rates, unlock durations, and thresholds — please refer to the Parameter Reference Table.