Credit Mathematics

Credits determine your share of points. Points are distributed weekly, not as a single lump sum at epoch end. This page explains exactly how credits accumulate and how weekly distribution rewards early holders. Prerequisites: Protocol Overview, Expected Points Token

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Why Credits Exist

Without credits, points distribution would be trivially gameable. A naive design that distributes points proportional to EPT balance at epoch end lets anyone deposit one second before maturity and claim the same share as a day-one holder. Credits prevent this by tracking how much EPT you held and for how long during the epoch. Your share of points is proportional to your cumulative credit balance, not a single end-of-epoch snapshot. A last-second depositor accumulates nearly zero credits and receives a negligible share of points, making the attack economically worthless.

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How Credits Accumulate

ArcX periodically publishes a credit update on-chain. Each update specifies a number: credits per EPT since the last update. $$\text{credits per update} = \text{EPT balance} \times \text{credits per EPT for that update}$$ Every EPT holder’s credit balance increases by this amount on each update. Over an epoch with $n$ updates, a holder’s total credits are: $$\text{totalCredits}_i = \sum_{k=1}^{n} \text{balance}_i(k) \times c_k$$ where $c_k$ is the credits-per-EPT published at update $k$, and $\text{balance}_i(k)$ is user $i$‘s EPT balance at that update.

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What drives the credit amount per update?

The credits per update reflect the strategy’s actual activity on the underlying perp DEX during that interval. More open interest means the strategy is generating more exchange points, so a higher credit amount is published. If the strategy is idle (market crash, technical issue, no open orders), credits continue to accrue for all holders. The reduced points from the idle period are socialized across everyone rather than penalizing holders who happened to hold during that window.

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Fresh Credits on Transfer

When EPT changes hands, whether through a secondary trade on the EPT/USDC orderbook or through minting via deposit, the new holder’s credit counter starts from zero at the moment of acquisition.

• Secondary purchase: You buy 50 EPT on the orderbook. You start with zero credits. The seller retains all credits they accrued up to the moment of the sale.
• Minting: You deposit USDC and receive freshly minted EPT. The new EPT starts at zero credits.
• No credit inheritance: Credits are non-transferable. The buyer never receives the seller’s accumulated credits.

This is essential for fairness. Without the fresh-start rule, an attacker could buy EPT right before maturity and inherit the seller’s entire credit history, defeating the purpose of the credit system.

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Weekly Points Distribution

Points are not distributed as a single lump sum at epoch end. Instead, each week’s points are distributed separately among that week’s credit holders: $$\text{yourPoints} = \sum_{w=1}^{W} \frac{\text{yourCredits}_w}{\text{totalCredits}_w} \times \text{points}_w$$ where $W$ is the number of weeks in the epoch, $\text{yourCredits}_w$ is your credits accrued during week $w$, $\text{totalCredits}_w$ is the sum of all holders’ credits for that week, and $\text{points}_w$ is the points earned by the strategy during that week.

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Why Weekly Matters

Weekly distribution rewards early holders. When the platform is new and few people hold EPT, the denominator ($\text{totalCredits}_w$) is small. Early holders get a larger share of those early weeks’ points. As more holders join in later weeks, the denominator grows and each holder’s share of that week’s points shrinks — but the early weeks are already locked in. This is the core early-mover advantage. If you wait until the platform is “hyped” and everyone holds EPT, you only participate in weeks with a large denominator. The early weeks — when points were split among fewer holders — are gone.

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Worked Examples