bbBNC Reward Mechanism Upgrade

Background

Under the current design, when users claim BNC rewards, the system automatically mints them as vBNC via VtokenMinting::mint(). These rewards never flow back into the bbBNC locking system, not ideal for a compounding flywheel.

This proposal replaces the existing reward distribution with a dual-path mechanism: users may either lock rewards directly as a new bbBNC position, or claim BNC outright with a penalty applied. The change is designed to close the reward loop and incentivise long-term locking behaviour.

Reward Claim Options

	Lock as bbBNC	Claim BNC Directly
Requirement	Choose a lock duration (3 months – 4 years)	No lock required
Reward received	100% — no penalty	80% / 75% / 70% (subject to vote)
Penalty handling	None	Remaining 20% / 25% / 30% sent to BNC buyback address
Lock duration range	Same as standard position creation	—

Governance Decision Required

This proposal requires a community vote to determine the penalty rate applied to direct BNC claims. Three options are on the table:

Option A — 20% penalty; user receives 80% BNC
Option B — 25% penalty; user receives 75% BNC
Option C — 30% penalty; user receives 70% BNC
Option D — Nothing change, don't do this upgrade

💡 Only one option will be enacted. The vote outcome determines the final penalty parameter applied on-chain.

Success Criteria

Lock path — Any lock duration (3 months to 4 years) yields 100% of rewards with no penalty differentiation.
Direct claim path — The payout ratio is determined by governance vote; all penalty amounts are routed to the BNC buyback address.
Flywheel closed — Rewards flow back into the bbBNC locking system, establishing a self-reinforcing lock → earn → re-lock cycle.