Sherlock V2
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Overview

A staker deposits USDC into Sherlock's staking pool for a fixed term (6 months, 12 months etc.) and receives a market-leading APY in exchange for the risk of funds being used (up to 50%) to pay out a bug bounty submission or exploit at a covered protocol.
The APY for a staker is made up of 2 streams:
  1. 1.
    Premiums from protocol customers
  2. 2.
    Incentive rewards paid in SHER (Sherlock’s governance token)
In return for these streams, a staker’s funds are at risk of being partially liquidated (up to 50%) if a covered bug bounty payout or exploit payout occurs at a protocol covered by Sherlock (or possibly a protocol that the covered protocol depends on). Despite the risk, stakers are incentivized to stake because:
  1. 1.
    They are paid a substantial APY for the risk
  2. 2.
    They see the quality and incentive alignment of the audit process