Staking & Slashing

Overview

The staking system is the core of Circles of Trust security. Participants deposit collateral that can be "slashed" (cut) in case of misconduct.

Types of Stake

Circle Admin Stake

Parameter	Value
Minimum	$250 (in P2P tokens)
Maximum	No limit
Lock period	While Circle is active
Withdrawal cooldown	15 days

Benefits of higher stake:

• Better ranking in the system
• Attracts more delegations
• Higher merchant capacity

Merchant Stake

Parameter	Value
Minimum	$250 USDC
Maximum	$1,000 USDC
Lock period	While merchant is active
Withdrawal cooldown	15 days

Stake → capacity relationship:

Order capacity is defined by currency (local currency), not by a fixed stake multiplier.

Currency	Limit per order
BRL, ARS, IDR	Based on RP ($2 USDC per RP)
INR	Based on RP ($1 USDC per RP)

Check your country's specific parameters for exact values.

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Slashing (Penalties)

When it occurs

Event	Penalty	Who pays
Merchant abandons transaction	1% of stake	Merchant
Merchant loses dispute	Dispute value	Merchant
Admin decides incorrectly (2x)	Protocol-defined value	Admin
Admin ignores dispute (>7 days)	0.5% of stake	Admin
Proven fraud	100% of stake + ban	Offender

Slashing Process

Slashing event detected
            │
            ▼
    ┌───────────────┐
    │ Calculate     │
    │ slash amount  │
    └───────┬───────┘
            │
            ▼
    ┌───────────────┐
    │ On-chain      │
    │ execution     │
    └───────┬───────┘
            │
    ┌───────┴───────┐
    │               │
    ▼               ▼
Stake > 0      Stake = 0
    │               │
    ▼               ▼
Continue       Automatic
operating        ban

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Circle Protection Fund

Each Circle maintains a protection fund fed by:

Source	Contribution
Transaction fee	0.1%
Merchant slashings	100%
Admin initial deposit	Portion

Fund usage

• User refunds in disputes
• Transaction abandonment coverage
• Exceptional cases approved by protocol

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Capital Delegation

How it works

1. Investor deposits USDC in the Circle
2. Admin allocates capital to specific merchants
3. Merchant operates with increased capacity
4. Rewards are distributed proportionally

Reward distribution (delegated capital)

Participant	% of reward
Merchant	60%
Delegator	20%
Circle Fund	10%
Circle Admin	10%

Risks for delegators

• Capital can be slashed if merchant commits fraud
• Protection: Diversification across multiple merchants
• Mitigation: Merchant score and history

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Cooldown Periods

Why they exist?

• Prevent "hit and run" (fraud and escape)
• Time for pending disputes to be resolved
• System stability

Duration

Action	Cooldown
Exit as merchant	15 days
Exit as admin	30 days
Withdraw delegation	15 days
After slashing	Immediate (forced)

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Technical Implementation

Relevant contracts

// Merchant stake
function stake(uint256 amount) external;
function requestUnstake() external;
function completeUnstake() external; // after cooldown

// Slashing
function slash(address merchant, uint256 amount) external onlyResolver;

Emitted events

event Staked(address indexed user, uint256 amount);
event UnstakeRequested(address indexed user, uint256 unlockTime);
event Slashed(address indexed user, uint256 amount, string reason);