When a stake is opened, its SWAPP principal is burned and converted into shares. These shares represent the stake size and length as well as, indirectly, how early the stake was opened. The amount of shares a newly opened stake gets is determined by a global “INTR$T price” tracked in the SWAPP contract, as well as a percentage bonus based on the length of the stake. This share price only increases, hence staking earlier is better than later.
Stakes earn interest daily through the SWAPP supply inflation, as well as from other stakes’ penalties paid. Depending on the length of the stake, a bonus amount of shares will be generated on top of the amount determined by the staked amount of SWAPP and current share price. This bonus scales linearly from slightly above 0% for a one day stake, to 25% for a 5 year stake. For instance, a stake with a length of 1.5 years will generate1.5 * 5% = 7.5% bonus shares.
The share price starts at some predetermined value denominated in SWAPP per share. Whenever any stake is closed, the contract calculates a ratio of that stake’s total return (principal + interest – penalty) to its shares. If this ratio is greater than the current share price, then the share price is immediately set to this new, increased value.