HDG tokens are primarily used for revenue sharing. Anyone who stakes the HDG token is able to claim a proportion of all protocol fees. As the Hedge protocol evolves (with new functionality such as accepting different types of collateral), HDG tokens will be used to vote on governance and use of treasury funds.
The protocol, and in turn HDG token holders, earns fees when:
Depositing USH in the stability pool. The more USH you deposit and the longer the USH is deposited, the more HDG you are rewarded with. The formula for HDG rewards is the following:
f(x) = k * 0.5^(x/365) / (365/log(2)), where x is the time in days. Effectively, HDG token incentives are large at the initiation of the protocol but will gradually decrease over time. For more detail, please see section A.3.1 in the whitepaper.
Staking the HDG tokens on our platform to collect a percentage of the platform fees.