# Utility / Mechanics

**xKDK Staking:** xKDK can be staked to earn Protocol Rewards and participate in governance. 

**Protocol Rewards:**

* xKDK holders can stake for protocol rewards through a recurring epoch-based system.

  Each epoch lasts 3 days. Users may stake xKDK at any point during an active epoch. Rewards accrue continuously proportional to the xKDK staked.
* Forfeited KDK (from redemptions shorter than max vesting) and xKDK penalties from deallocation/unstaking from the Staking Rewards Utility Module go into a Rewards Pool.
* Rewards Pool is distributed to xKDK stakers (in the form of xKDK) proportionally to their stake.
* This Utility Module will be initially seeded with rewards to incentivize and reward early stakers.
* Protocol Rewards can be distributed in multiple tokens.

**Governance:**

* Staked xKDK can participate in governing the Kodiak Protocol (upon sufficient decentralization).

**VIP Tiers:**

* Perps users staking xKDK are additionally eligible for fee discounts.  See [VIP](/protocol/perps/vip.md).


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