Add liquid staking reward redistribution via incentive (#1308)

* wip Add claim

* Add distr keeper and claiming

* Add claim test

* Update claim test with failures

* wip Add staking rewards

* -S

Fix savings to earn incentive methods

* Use a single accural time for all earn incentives

* Add additional required liquid methods

* Update genesis to only include 1 accrual time for earn

* Revert "Update genesis to only include 1 accrual time for earn"

This reverts commit cc7e35347298681c0c8a4a0b9bf9b9b296c25531.

* Revert "Use a single accural time for all earn incentives"

This reverts commit aeb49c4622d4e3d99dc6421c8830932b1b546be9.

* Update tests with incentive distribution

* Add earn to incentive rewards query

* add earn cli tx

* Update claim example to use ukava large

* Use underlying ukava to determine proportional reward amount

* Rename liquid methods to reflect derivative value

* Add tests for derivative values

* Return error to panic in BeginBlocker

Co-authored-by: karzak <kjydavis3@gmail.com>

app/app.go

@@ -594,6 +594,7 @@ func NewApp(
 		app.accountKeeper,
 		app.bankKeeper,
 		&app.stakingKeeper,
+		&app.distrKeeper,
 	)
 	savingsKeeper := savingskeeper.NewKeeper(
 		appCodec,
@@ -625,8 +626,7 @@ func NewApp(
 		app.stakingKeeper,
 		&swapKeeper,
 		&savingsKeeper,
-		// TODO: Liquid keeper
+		&app.liquidKeeper,
-		nil,
 		&earnKeeper,
 	)
 	app.routerKeeper = routerkeeper.NewKeeper(

x/incentive/abci.go

@@ -1,6 +1,8 @@
 package incentive
 
 import (
+	"fmt"
+
 	sdk "github.com/cosmos/cosmos-sdk/types"
 
 	"github.com/kava-labs/kava/x/incentive/keeper"
@@ -29,6 +31,8 @@ func BeginBlocker(ctx sdk.Context, k keeper.Keeper) {
 		k.AccumulateSavingsRewards(ctx, rp)
 	}
 	for _, rp := range params.EarnRewardPeriods {
-		k.AccumulateEarnRewards(ctx, rp)
+		if err := k.AccumulateEarnRewards(ctx, rp); err != nil {
+			panic(fmt.Sprintf("failed to accumulate earn rewards: %s", err))
+		}
 	}
 }

x/incentive/client/cli/query.go

@@ -159,6 +159,11 @@ func queryRewardsCmd() *cobra.Command {
 				if err != nil {
 					return err
 				}
+				earnClaims, err := executeEarnRewardsQuery(cliCtx, params)
+				if err != nil {
+					return err
+				}
+
 				if len(hardClaims) > 0 {
 					if err := cliCtx.PrintObjectLegacy(hardClaims); err != nil {
 						return err
@@ -184,6 +189,11 @@ func queryRewardsCmd() *cobra.Command {
 						return err
 					}
 				}
+				if len(earnClaims) > 0 {
+					if err := cliCtx.PrintObjectLegacy(earnClaims); err != nil {
+						return err
+					}
+				}
 			}
 			return nil
 		},

x/incentive/client/cli/tx.go

@@ -32,6 +32,7 @@ func GetTxCmd() *cobra.Command {
 		getCmdClaimDelegator(),
 		getCmdClaimSwap(),
 		getCmdClaimSavings(),
+		getCmdClaimEarn(),
 	}
 
 	for _, cmd := range cmds {
@@ -209,3 +210,35 @@ func getCmdClaimSavings() *cobra.Command {
 	}
 	return cmd
 }
+
+func getCmdClaimEarn() *cobra.Command {
+	var denomsToClaim map[string]string
+
+	cmd := &cobra.Command{
+		Use:     "claim-earn",
+		Short:   "claim sender's earn rewards using given multipliers",
+		Long:    `Claim sender's outstanding earn rewards using given multipliers`,
+		Example: fmt.Sprintf(`  $ %s tx %s claim-earn --%s ukava=large`, version.AppName, types.ModuleName, multiplierFlag),
+		Args:    cobra.NoArgs,
+		RunE: func(cmd *cobra.Command, args []string) error {
+			cliCtx, err := client.GetClientTxContext(cmd)
+			if err != nil {
+				return err
+			}
+
+			sender := cliCtx.GetFromAddress()
+			selections := types.NewSelectionsFromMap(denomsToClaim)
+
+			msg := types.NewMsgClaimEarnReward(sender.String(), selections)
+			if err := msg.ValidateBasic(); err != nil {
+				return err
+			}
+			return tx.GenerateOrBroadcastTxCLI(cliCtx, cmd.Flags(), &msg)
+		},
+	}
+	cmd.Flags().StringToStringVarP(&denomsToClaim, multiplierFlag, multiplierFlagShort, nil, "specify the denoms to claim, each with a multiplier lockup")
+	if err := cmd.MarkFlagRequired(multiplierFlag); err != nil {
+		panic(err)
+	}
+	return cmd
+}

x/incentive/keeper/rewards_earn.go

@@ -1,23 +1,24 @@
 package keeper
 
 import (
+	"errors"
 	"fmt"
 	"sort"
-	"strings"
 	"time"
 
 	sdk "github.com/cosmos/cosmos-sdk/types"
 
 	earntypes "github.com/kava-labs/kava/x/earn/types"
 	"github.com/kava-labs/kava/x/incentive/types"
+
+	distrtypes "github.com/cosmos/cosmos-sdk/x/distribution/types"
 )
 
 // AccumulateEarnRewards calculates new rewards to distribute this block and updates the global indexes to reflect this.
 // The provided rewardPeriod must be valid to avoid panics in calculating time durations.
-func (k Keeper) AccumulateEarnRewards(ctx sdk.Context, rewardPeriod types.MultiRewardPeriod) {
+func (k Keeper) AccumulateEarnRewards(ctx sdk.Context, rewardPeriod types.MultiRewardPeriod) error {
 	if rewardPeriod.CollateralType == "bkava" {
-		k.accumulateEarnBkavaRewards(ctx, rewardPeriod)
+		return k.accumulateEarnBkavaRewards(ctx, rewardPeriod)
-		return
 	}
 
 	k.accumulateEarnRewards(
@@ -27,6 +28,8 @@ func (k Keeper) AccumulateEarnRewards(ctx sdk.Context, rewardPeriod types.MultiR
 		rewardPeriod.End,
 		sdk.NewDecCoinsFromCoins(rewardPeriod.RewardsPerSecond...),
 	)
+
+	return nil
 }
 
 func GetProportionalRewardsPerSecond(
@@ -59,16 +62,13 @@ func GetProportionalRewardsPerSecond(
 
 // accumulateEarnBkavaRewards does the same as AccumulateEarnRewards but for
 // *all* bkava vaults.
-func (k Keeper) accumulateEarnBkavaRewards(ctx sdk.Context, rewardPeriod types.MultiRewardPeriod) {
+func (k Keeper) accumulateEarnBkavaRewards(ctx sdk.Context, rewardPeriod types.MultiRewardPeriod) error {
-	// TODO: Get staking rewards and distribute
-
 	// All bkava vault denoms
 	bkavaVaultsDenoms := make(map[string]bool)
 
 	// bkava vault denoms from earn records (non-empty vaults)
 	k.earnKeeper.IterateVaultRecords(ctx, func(record earntypes.VaultRecord) (stop bool) {
-		// TODO: Replace with single bkava denom check method from liquid
+		if k.liquidKeeper.IsDerivativeDenom(ctx, record.TotalShares.Denom) {
-		if strings.HasPrefix(record.TotalShares.Denom, "bkava-") {
 			bkavaVaultsDenoms[record.TotalShares.Denom] = true
 		}
 
@@ -78,14 +78,17 @@ func (k Keeper) accumulateEarnBkavaRewards(ctx sdk.Context, rewardPeriod types.M
 	// bkava vault denoms from past incentive indexes, may include vaults
 	// that were fully withdrawn.
 	k.IterateEarnRewardIndexes(ctx, func(vaultDenom string, indexes types.RewardIndexes) (stop bool) {
-		if strings.HasPrefix(vaultDenom, "bkava-") {
+		if k.liquidKeeper.IsDerivativeDenom(ctx, vaultDenom) {
 			bkavaVaultsDenoms[vaultDenom] = true
 		}
 
 		return false
 	})
 
-	totalBkavaSupply := k.liquidKeeper.GetTotalDerivativeSupply(ctx)
+	totalBkavaValue, err := k.liquidKeeper.GetTotalDerivativeValue(ctx)
+	if err != nil {
+		return err
+	}
 
 	i := 0
 	sortedBkavaVaultsDenoms := make([]string, len(bkavaVaultsDenoms))
@@ -99,18 +102,110 @@ func (k Keeper) accumulateEarnBkavaRewards(ctx sdk.Context, rewardPeriod types.M
 
 	// Accumulate rewards for each bkava vault.
 	for _, bkavaDenom := range sortedBkavaVaultsDenoms {
-		k.accumulateEarnRewards(
+		derivativeValue, err := k.liquidKeeper.GetDerivativeValue(ctx, bkavaDenom)
+		if err != nil {
+			return err
+		}
+
+		k.accumulateBkavaEarnRewards(
 			ctx,
 			bkavaDenom,
 			rewardPeriod.Start,
 			rewardPeriod.End,
 			GetProportionalRewardsPerSecond(
 				rewardPeriod,
-				totalBkavaSupply,
+				totalBkavaValue.Amount,
-				k.liquidKeeper.GetDerivativeSupply(ctx, bkavaDenom),
+				derivativeValue.Amount,
 			),
 		)
 	}
+
+	return nil
+}
+
+func (k Keeper) accumulateBkavaEarnRewards(
+	ctx sdk.Context,
+	collateralType string,
+	periodStart time.Time,
+	periodEnd time.Time,
+	periodRewardsPerSecond sdk.DecCoins,
+) {
+	// Collect staking rewards for this validator, does not have any start/end
+	// period time restrictions.
+	stakingRewards := k.collectDerivativeStakingRewards(ctx, collateralType)
+
+	// Collect incentive rewards
+	// **Total rewards** for vault per second, NOT per share
+	perSecondRewards := k.collectPerSecondRewards(
+		ctx,
+		collateralType,
+		periodStart,
+		periodEnd,
+		periodRewardsPerSecond,
+	)
+
+	// **Total rewards** for vault per second, NOT per share
+	rewards := stakingRewards.Add(perSecondRewards...)
+
+	// Distribute rewards by incrementing indexes
+	indexes, found := k.GetEarnRewardIndexes(ctx, collateralType)
+	if !found {
+		indexes = types.RewardIndexes{}
+	}
+
+	totalSourceShares := k.getEarnTotalSourceShares(ctx, collateralType)
+	var increment types.RewardIndexes
+	if totalSourceShares.GT(sdk.ZeroDec()) {
+		// Divide total rewards by total shares to get the reward **per share**
+		// Leave as nil if no source shares
+		increment = types.NewRewardIndexesFromCoins(rewards).Quo(totalSourceShares)
+	}
+	updatedIndexes := indexes.Add(increment)
+
+	if len(updatedIndexes) > 0 {
+		// the store panics when setting empty or nil indexes
+		k.SetEarnRewardIndexes(ctx, collateralType, updatedIndexes)
+	}
+}
+
+func (k Keeper) collectDerivativeStakingRewards(ctx sdk.Context, collateralType string) sdk.DecCoins {
+	rewards, err := k.liquidKeeper.CollectStakingRewardsByDenom(ctx, collateralType, types.IncentiveMacc)
+	if err != nil {
+		if !errors.Is(err, distrtypes.ErrNoValidatorDistInfo) &&
+			!errors.Is(err, distrtypes.ErrEmptyDelegationDistInfo) {
+			panic(fmt.Sprintf("failed to collect staking rewards for %s: %s", collateralType, err))
+		}
+
+		// otherwise there's no validator or delegation yet
+		rewards = nil
+	}
+	return sdk.NewDecCoinsFromCoins(rewards...)
+}
+
+func (k Keeper) collectPerSecondRewards(
+	ctx sdk.Context,
+	collateralType string,
+	periodStart time.Time,
+	periodEnd time.Time,
+	periodRewardsPerSecond sdk.DecCoins,
+) sdk.DecCoins {
+	previousAccrualTime, found := k.GetEarnRewardAccrualTime(ctx, collateralType)
+	if !found {
+		previousAccrualTime = ctx.BlockTime()
+	}
+
+	rewards, accumulatedTo := types.CalculatePerSecondRewards(
+		periodStart,
+		periodEnd,
+		periodRewardsPerSecond,
+		previousAccrualTime,
+		ctx.BlockTime(),
+	)
+
+	k.SetEarnRewardAccrualTime(ctx, collateralType, accumulatedTo)
+
+	// Don't need to move funds as they're assumed to be in the IncentiveMacc module account already.
+	return rewards
 }
 
 func (k Keeper) accumulateEarnRewards(

x/incentive/keeper/rewards_earn_accum_test.go

@@ -94,13 +94,16 @@ func (suite *AccumulateEarnRewardsTests) TestStateUpdatedWhenBlockTimeHasIncreas
 	vaultDenom1 := "bkava-meow"
 	vaultDenom2 := "bkava-woof"
 
+	previousAccrualTime := time.Date(1998, 1, 1, 0, 0, 0, 0, time.UTC)
+	suite.ctx = suite.ctx.WithBlockTime(previousAccrualTime)
+
 	earnKeeper := newFakeEarnKeeper().
 		addVault(vaultDenom1, earntypes.NewVaultShare(vaultDenom1, d("800000"))).
 		addVault(vaultDenom2, earntypes.NewVaultShare(vaultDenom2, d("200000")))
 
 	liquidKeeper := newFakeLiquidKeeper().
-		addDerivative(vaultDenom1, i(800000)).
+		addDerivative(suite.ctx, vaultDenom1, i(800000)).
-		addDerivative(vaultDenom2, i(200000))
+		addDerivative(suite.ctx, vaultDenom2, i(200000))
 
 	suite.keeper = suite.NewKeeper(&fakeParamSubspace{}, nil, nil, nil, nil, nil, nil, nil, liquidKeeper, earnKeeper)
 
@@ -134,7 +137,6 @@ func (suite *AccumulateEarnRewardsTests) TestStateUpdatedWhenBlockTimeHasIncreas
 	}
 
 	suite.storeGlobalEarnIndexes(globalIndexes)
-	previousAccrualTime := time.Date(1998, 1, 1, 0, 0, 0, 0, time.UTC)
 	suite.keeper.SetEarnRewardAccrualTime(suite.ctx, vaultDenom1, previousAccrualTime)
 	suite.keeper.SetEarnRewardAccrualTime(suite.ctx, vaultDenom2, previousAccrualTime)
 
@@ -164,7 +166,8 @@ func (suite *AccumulateEarnRewardsTests) TestStateUpdatedWhenBlockTimeHasIncreas
 		},
 		{
 			CollateralType: "ukava",
-			RewardFactor:   d("3.64"),
+			RewardFactor: d("3.64"). // base incentive
+							Add(d("360")), // staking rewards, 10% of total bkava per second
 		},
 	}
 
@@ -179,16 +182,20 @@ func (suite *AccumulateEarnRewardsTests) TestStateUpdatedWhenBlockTimeHasIncreas
 	vaultDenom1Supply := i(800000)
 	vaultDenom2Supply := i(200000)
 
-	liquidKeeper := newFakeLiquidKeeper().
+	previousAccrualTime := time.Date(1998, 1, 1, 0, 0, 0, 0, time.UTC)
-		addDerivative(vaultDenom1, vaultDenom1Supply).
+	suite.ctx = suite.ctx.WithBlockTime(previousAccrualTime)
-		addDerivative(vaultDenom2, vaultDenom2Supply)
 
+	liquidKeeper := newFakeLiquidKeeper().
+		addDerivative(suite.ctx, vaultDenom1, vaultDenom1Supply).
+		addDerivative(suite.ctx, vaultDenom2, vaultDenom2Supply)
+
+	vault1Shares := d("700000")
 	vault2Shares := d("100000")
 
 	// More bkava minted than deposited into earn
 	// Rewards are higher per-share as a result
 	earnKeeper := newFakeEarnKeeper().
-		addVault(vaultDenom1, earntypes.NewVaultShare(vaultDenom1, d("700000"))).
+		addVault(vaultDenom1, earntypes.NewVaultShare(vaultDenom1, vault1Shares)).
 		addVault(vaultDenom2, earntypes.NewVaultShare(vaultDenom2, vault2Shares))
 
 	suite.keeper = suite.NewKeeper(&fakeParamSubspace{}, nil, nil, nil, nil, nil, nil, nil, liquidKeeper, earnKeeper)
@@ -223,7 +230,7 @@ func (suite *AccumulateEarnRewardsTests) TestStateUpdatedWhenBlockTimeHasIncreas
 	}
 
 	suite.storeGlobalEarnIndexes(globalIndexes)
-	previousAccrualTime := time.Date(1998, 1, 1, 0, 0, 0, 0, time.UTC)
+
 	suite.keeper.SetEarnRewardAccrualTime(suite.ctx, vaultDenom1, previousAccrualTime)
 	suite.keeper.SetEarnRewardAccrualTime(suite.ctx, vaultDenom2, previousAccrualTime)
 
@@ -252,7 +259,12 @@ func (suite *AccumulateEarnRewardsTests) TestStateUpdatedWhenBlockTimeHasIncreas
 		},
 		{
 			CollateralType: "ukava",
-			RewardFactor:   d("4.154285714285714286"),
+			RewardFactor: d("4.154285714285714286"). // base incentive
+									Add(vaultDenom1Supply.ToDec(). // staking rewards
+													QuoInt64(10).
+													MulInt64(3600).
+													Quo(vault1Shares),
+				),
 		},
 	})
 
@@ -278,27 +290,15 @@ func (suite *AccumulateEarnRewardsTests) TestStateUpdatedWhenBlockTimeHasIncreas
 		},
 		{
 			CollateralType: "ukava",
-			RewardFactor:   d("7.24"),
+			RewardFactor: d("7.24").
+				Add(vaultDenom2Supply.ToDec().
+					QuoInt64(10).
+					MulInt64(3600).
+					Quo(vault2Shares),
+				),
 		},
 	}
 	suite.storedIndexesEqual(vaultDenom2, vault2expectedIndexes)
-
-	// Verify math described above
-	totalVault2DistributedUkava := i(int64(time.Hour.Seconds())).
-		ToDec().
-		Mul(rewardPeriod.RewardsPerSecond.AmountOf("ukava").ToDec()).
-		// 20% of total rewards
-		// vault 2 supply / (vault 1 supply + vault 2 supply)
-		Mul(
-			vaultDenom2Supply.ToDec().
-				Quo(vaultDenom1Supply.Add(vaultDenom2Supply).ToDec()),
-		)
-
-	totalVault2ClaimableRewards := vault2expectedIndexes[1].
-		RewardFactor.Sub(d("0.04")). // Rewards per share for 1 hr, excluding the starting value
-		Mul(vault2Shares)            // * Shares in vault to get total rewards for entire vault
-
-	suite.Equal(totalVault2DistributedUkava, totalVault2ClaimableRewards)
 }
 
 func (suite *AccumulateEarnRewardsTests) TestStateUnchangedWhenBlockTimeHasNotIncreased() {
@@ -350,13 +350,16 @@ func (suite *AccumulateEarnRewardsTests) TestStateUnchangedWhenBlockTimeHasNotIn
 	vaultDenom1 := "bkava-meow"
 	vaultDenom2 := "bkava-woof"
 
+	previousAccrualTime := time.Date(1998, 1, 1, 0, 0, 0, 0, time.UTC)
+	suite.ctx = suite.ctx.WithBlockTime(previousAccrualTime)
+
 	earnKeeper := newFakeEarnKeeper().
 		addVault(vaultDenom1, earntypes.NewVaultShare(vaultDenom1, d("1000000"))).
 		addVault(vaultDenom2, earntypes.NewVaultShare(vaultDenom2, d("1000000")))
 
 	liquidKeeper := newFakeLiquidKeeper().
-		addDerivative(vaultDenom1, i(1000000)).
+		addDerivative(suite.ctx, vaultDenom1, i(1000000)).
-		addDerivative(vaultDenom2, i(1000000))
+		addDerivative(suite.ctx, vaultDenom2, i(1000000))
 
 	suite.keeper = suite.NewKeeper(&fakeParamSubspace{}, nil, nil, nil, nil, nil, nil, nil, liquidKeeper, earnKeeper)
 
@@ -389,12 +392,10 @@ func (suite *AccumulateEarnRewardsTests) TestStateUnchangedWhenBlockTimeHasNotIn
 		},
 	}
 	suite.storeGlobalEarnIndexes(previousIndexes)
-	previousAccrualTime := time.Date(1998, 1, 1, 0, 0, 0, 0, time.UTC)
+
 	suite.keeper.SetEarnRewardAccrualTime(suite.ctx, vaultDenom1, previousAccrualTime)
 	suite.keeper.SetEarnRewardAccrualTime(suite.ctx, vaultDenom2, previousAccrualTime)
 
-	suite.ctx = suite.ctx.WithBlockTime(previousAccrualTime)
-
 	period := types.NewMultiRewardPeriod(
 		true,
 		"bkava",
@@ -585,13 +586,16 @@ func (suite *AccumulateEarnRewardsTests) TestStateAddedWhenStateDoesNotExist_bka
 	vaultDenom1 := "bkava-meow"
 	vaultDenom2 := "bkava-woof"
 
+	firstAccrualTime := time.Date(1998, 1, 1, 0, 0, 0, 0, time.UTC)
+	suite.ctx = suite.ctx.WithBlockTime(firstAccrualTime)
+
 	earnKeeper := newFakeEarnKeeper().
 		addVault(vaultDenom1, earntypes.NewVaultShare(vaultDenom1, d("1000000"))).
 		addVault(vaultDenom2, earntypes.NewVaultShare(vaultDenom2, d("1000000")))
 
 	liquidKeeper := newFakeLiquidKeeper().
-		addDerivative(vaultDenom1, i(1000000)).
+		addDerivative(suite.ctx, vaultDenom1, i(1000000)).
-		addDerivative(vaultDenom2, i(1000000))
+		addDerivative(suite.ctx, vaultDenom2, i(1000000))
 
 	suite.keeper = suite.NewKeeper(&fakeParamSubspace{}, nil, nil, nil, nil, nil, nil, nil, liquidKeeper, earnKeeper)
 
@@ -603,9 +607,6 @@ func (suite *AccumulateEarnRewardsTests) TestStateAddedWhenStateDoesNotExist_bka
 		cs(c("earn", 2000), c("ukava", 1000)),
 	)
 
-	firstAccrualTime := time.Date(1998, 1, 1, 0, 0, 0, 0, time.UTC)
-	suite.ctx = suite.ctx.WithBlockTime(firstAccrualTime)
-
 	suite.keeper.AccumulateEarnRewards(suite.ctx, period)
 
 	// After the first accumulation only the current block time should be stored.
@@ -632,7 +633,9 @@ func (suite *AccumulateEarnRewardsTests) TestStateAddedWhenStateDoesNotExist_bka
 		},
 		{
 			CollateralType: "ukava",
-			RewardFactor:   d("0.005"),
+			// 10% of total bkava for rewards per second for 10 seconds
+			// 1ukava per share per second + regular 0.005ukava incentive rewards
+			RewardFactor: d("1.005"),
 		},
 	}
 

x/incentive/keeper/rewards_earn_staking_test.go

@@ -0,0 +1,103 @@
+package keeper_test
+
+import (
+	"time"
+
+	earntypes "github.com/kava-labs/kava/x/earn/types"
+	"github.com/kava-labs/kava/x/incentive/types"
+)
+
+func (suite *AccumulateEarnRewardsTests) TestStakingRewardsDistributed() {
+	vaultDenom1 := "bkava-meow"
+	vaultDenom2 := "bkava-woof"
+
+	previousAccrualTime := time.Date(1998, 1, 1, 0, 0, 0, 0, time.UTC)
+	suite.ctx = suite.ctx.WithBlockTime(previousAccrualTime)
+
+	vaultDenom1Supply := i(800000)
+	vaultDenom2Supply := i(200000)
+
+	liquidKeeper := newFakeLiquidKeeper().
+		addDerivative(suite.ctx, vaultDenom1, vaultDenom1Supply).
+		addDerivative(suite.ctx, vaultDenom2, vaultDenom2Supply)
+
+	vault1Shares := d("700000")
+	vault2Shares := d("100000")
+
+	// More bkava minted than deposited into earn
+	// Rewards are higher per-share as a result
+	earnKeeper := newFakeEarnKeeper().
+		addVault(vaultDenom1, earntypes.NewVaultShare(vaultDenom1, vault1Shares)).
+		addVault(vaultDenom2, earntypes.NewVaultShare(vaultDenom2, vault2Shares))
+
+	suite.keeper = suite.NewKeeper(&fakeParamSubspace{}, nil, nil, nil, nil, nil, nil, nil, liquidKeeper, earnKeeper)
+
+	initialVault1RewardFactor := d("0.04")
+	initialVault2RewardFactor := d("0.04")
+
+	globalIndexes := types.MultiRewardIndexes{
+		{
+			CollateralType: vaultDenom1,
+			RewardIndexes: types.RewardIndexes{
+				{
+					CollateralType: "ukava",
+					RewardFactor:   initialVault1RewardFactor,
+				},
+			},
+		},
+		{
+			CollateralType: vaultDenom2,
+			RewardIndexes: types.RewardIndexes{
+				{
+					CollateralType: "ukava",
+					RewardFactor:   initialVault2RewardFactor,
+				},
+			},
+		},
+	}
+
+	suite.storeGlobalEarnIndexes(globalIndexes)
+
+	suite.keeper.SetEarnRewardAccrualTime(suite.ctx, vaultDenom1, previousAccrualTime)
+	suite.keeper.SetEarnRewardAccrualTime(suite.ctx, vaultDenom2, previousAccrualTime)
+
+	newAccrualTime := previousAccrualTime.Add(1 * time.Hour)
+	suite.ctx = suite.ctx.WithBlockTime(newAccrualTime)
+
+	rewardPeriod := types.NewMultiRewardPeriod(
+		true,
+		"bkava",         // reward period is set for "bkava" to apply to all vaults
+		time.Unix(0, 0), // ensure the test is within start and end times
+		distantFuture,
+		cs(), // no incentives, so only the staking rewards are distributed
+	)
+	suite.keeper.AccumulateEarnRewards(suite.ctx, rewardPeriod)
+
+	// check time and factors
+
+	suite.storedTimeEquals(vaultDenom1, newAccrualTime)
+	suite.storedTimeEquals(vaultDenom2, newAccrualTime)
+
+	// Only contains staking rewards
+	suite.storedIndexesEqual(vaultDenom1, types.RewardIndexes{
+		{
+			CollateralType: "ukava",
+			RewardFactor: initialVault1RewardFactor.
+				Add(vaultDenom1Supply.ToDec().
+					QuoInt64(10).
+					MulInt64(3600).
+					Quo(vault1Shares)),
+		},
+	})
+
+	suite.storedIndexesEqual(vaultDenom2, types.RewardIndexes{
+		{
+			CollateralType: "ukava",
+			RewardFactor: initialVault2RewardFactor.
+				Add(vaultDenom2Supply.ToDec().
+					QuoInt64(10).
+					MulInt64(3600).
+					Quo(vault2Shares)),
+		},
+	})
+}

x/incentive/keeper/unit_test.go

@@ -433,6 +433,7 @@ func (k *fakeEarnKeeper) IterateVaultRecords(
 // It can be used to return values to the incentive keeper without having to initialize a full liquid keeper.
 type fakeLiquidKeeper struct {
 	derivatives     map[string]sdk.Int
+	lastRewardClaim map[string]time.Time
 }
 
 var _ types.LiquidKeeper = newFakeLiquidKeeper()
@@ -440,11 +441,17 @@ var _ types.LiquidKeeper = newFakeLiquidKeeper()
 func newFakeLiquidKeeper() *fakeLiquidKeeper {
 	return &fakeLiquidKeeper{
 		derivatives:     map[string]sdk.Int{},
+		lastRewardClaim: map[string]time.Time{},
 	}
 }
 
-func (k *fakeLiquidKeeper) addDerivative(denom string, supply sdk.Int) *fakeLiquidKeeper {
+func (k *fakeLiquidKeeper) addDerivative(
+	ctx sdk.Context,
+	denom string,
+	supply sdk.Int,
+) *fakeLiquidKeeper {
 	k.derivatives[denom] = supply
+	k.lastRewardClaim[denom] = ctx.BlockTime()
 	return k
 }
 
@@ -460,22 +467,56 @@ func (k *fakeLiquidKeeper) GetAllDerivativeDenoms(ctx sdk.Context) (denoms []str
 	return denoms
 }
 
-func (k *fakeLiquidKeeper) GetTotalDerivativeSupply(ctx sdk.Context) sdk.Int {
+func (k *fakeLiquidKeeper) GetTotalDerivativeValue(ctx sdk.Context) (sdk.Coin, error) {
 	totalSupply := sdk.ZeroInt()
 	for _, supply := range k.derivatives {
 		totalSupply = totalSupply.Add(supply)
 	}
 
-	return totalSupply
+	return sdk.NewCoin("ukava", totalSupply), nil
 }
 
-func (k *fakeLiquidKeeper) GetDerivativeSupply(ctx sdk.Context, denom string) sdk.Int {
+func (k *fakeLiquidKeeper) GetDerivativeValue(ctx sdk.Context, denom string) (sdk.Coin, error) {
 	supply, found := k.derivatives[denom]
 	if !found {
+		return sdk.NewCoin("ukava", sdk.ZeroInt()), nil
+	}
+
+	return sdk.NewCoin("ukava", supply), nil
+}
+
+func (k *fakeLiquidKeeper) CollectStakingRewardsByDenom(
+	ctx sdk.Context,
+	derivativeDenom string,
+	destinationModAccount string,
+) (sdk.Coins, error) {
+	amt := k.getRewardAmount(ctx, derivativeDenom)
+
+	return sdk.NewCoins(sdk.NewCoin("ukava", amt)), nil
+}
+
+func (k *fakeLiquidKeeper) getRewardAmount(
+	ctx sdk.Context,
+	derivativeDenom string,
+) sdk.Int {
+	amt, found := k.derivatives[derivativeDenom]
+	if !found {
+		// No error
 		return sdk.ZeroInt()
 	}
 
-	return supply
+	lastRewardClaim, found := k.lastRewardClaim[derivativeDenom]
+	if !found {
+		panic("last reward claim not found")
+	}
+
+	duration := int64(ctx.BlockTime().Sub(lastRewardClaim).Seconds())
+	if duration <= 0 {
+		return sdk.ZeroInt()
+	}
+
+	// Reward amount just set to 10% of the derivative supply per second
+	return amt.QuoRaw(10).MulRaw(duration)
 }
 
 // Assorted Testing Data

x/incentive/types/accumulator.go

@@ -88,7 +88,7 @@ func (*Accumulator) calculateNewRewards(rewardsPerSecond sdk.DecCoins, totalSour
 		// So return an empty increment instead of one full of zeros.
 		return nil
 	}
-	increment := newRewardIndexesFromCoins(rewardsPerSecond)
+	increment := NewRewardIndexesFromCoins(rewardsPerSecond)
 	increment = increment.Mul(sdk.NewDec(durationSeconds)).Quo(totalSourceShares)
 	return increment
 }
@@ -109,11 +109,36 @@ func maxTime(t1, t2 time.Time) time.Time {
 	return t1
 }
 
-// newRewardIndexesFromCoins is a helper function to initialize a RewardIndexes slice with the values from a Coins slice.
+// NewRewardIndexesFromCoins is a helper function to initialize a RewardIndexes slice with the values from a Coins slice.
-func newRewardIndexesFromCoins(coins sdk.DecCoins) RewardIndexes {
+func NewRewardIndexesFromCoins(coins sdk.DecCoins) RewardIndexes {
 	var indexes RewardIndexes
 	for _, coin := range coins {
 		indexes = append(indexes, NewRewardIndex(coin.Denom, coin.Amount))
 	}
 	return indexes
 }
+
+func CalculatePerSecondRewards(
+	periodStart time.Time,
+	periodEnd time.Time,
+	periodRewardsPerSecond sdk.DecCoins,
+	previousTime, currentTime time.Time,
+) (sdk.DecCoins, time.Time) {
+	duration := (&Accumulator{}).getTimeElapsedWithinLimits(
+		previousTime,
+		currentTime,
+		periodStart,
+		periodEnd,
+	)
+
+	upTo := minTime(periodEnd, currentTime)
+
+	durationSeconds := int64(math.RoundToEven(duration.Seconds()))
+	if durationSeconds <= 0 {
+		// If the duration is zero, there will be no increment.
+		// So return an empty increment instead of one full of zeros.
+		return nil, upTo // TODO
+	}
+
+	return periodRewardsPerSecond.MulDec(sdk.NewDec(durationSeconds)), upTo
+}

x/incentive/types/expected_keepers.go

@@ -74,8 +74,13 @@ type EarnKeeper interface {
 // LiquidKeeper defines the required methods needed by this modules keeper
 type LiquidKeeper interface {
 	IsDerivativeDenom(ctx sdk.Context, denom string) bool
-	GetTotalDerivativeSupply(ctx sdk.Context) sdk.Int
+	GetTotalDerivativeValue(ctx sdk.Context) (sdk.Coin, error)
-	GetDerivativeSupply(ctx sdk.Context, denom string) sdk.Int
+	GetDerivativeValue(ctx sdk.Context, denom string) (sdk.Coin, error)
+	CollectStakingRewardsByDenom(
+		ctx sdk.Context,
+		derivativeDenom string,
+		destinationModAccount string,
+	) (sdk.Coins, error)
 }
 
 // AccountKeeper expected interface for the account keeper (noalias)

x/liquid/keeper/claim.go

@@ -0,0 +1,51 @@
+package keeper
+
+import (
+	"fmt"
+
+	sdk "github.com/cosmos/cosmos-sdk/types"
+
+	"github.com/kava-labs/kava/x/liquid/types"
+)
+
+func (k Keeper) CollectStakingRewards(
+	ctx sdk.Context,
+	validator sdk.ValAddress,
+	destinationModAccount string,
+) (sdk.Coins, error) {
+	macc := k.accountKeeper.GetModuleAccount(ctx, types.ModuleAccountName)
+
+	// Ensure withdraw address is as expected
+	withdrawAddr := k.distributionKeeper.GetDelegatorWithdrawAddr(ctx, macc.GetAddress())
+	if !withdrawAddr.Equals(macc.GetAddress()) {
+		panic(fmt.Sprintf(
+			"unexpected withdraw address for liquid staking module account, expected %s, got %s",
+			macc.GetAddress(), withdrawAddr,
+		))
+	}
+
+	rewards, err := k.distributionKeeper.WithdrawDelegationRewards(ctx, macc.GetAddress(), validator)
+	if err != nil {
+		return nil, err
+	}
+
+	err = k.bankKeeper.SendCoinsFromModuleToModule(ctx, types.ModuleAccountName, destinationModAccount, rewards)
+	if err != nil {
+		return nil, err
+	}
+
+	return rewards, nil
+}
+
+func (k Keeper) CollectStakingRewardsByDenom(
+	ctx sdk.Context,
+	derivativeDenom string,
+	destinationModAccount string,
+) (sdk.Coins, error) {
+	valAddr, err := types.ParseLiquidStakingTokenDenom(derivativeDenom)
+	if err != nil {
+		return nil, err
+	}
+
+	return k.CollectStakingRewards(ctx, valAddr, destinationModAccount)
+}

x/liquid/keeper/claim_test.go

@@ -0,0 +1,88 @@
+package keeper_test
+
+import (
+	sdk "github.com/cosmos/cosmos-sdk/types"
+	"github.com/cosmos/cosmos-sdk/x/staking"
+	"github.com/kava-labs/kava/app"
+	"github.com/kava-labs/kava/x/liquid/types"
+
+	distrtypes "github.com/cosmos/cosmos-sdk/x/distribution/types"
+)
+
+func (suite *KeeperTestSuite) TestCollectStakingRewards() {
+	_, addrs := app.GeneratePrivKeyAddressPairs(5)
+	valAccAddr1, delegator := addrs[0], addrs[1]
+	valAddr1 := sdk.ValAddress(valAccAddr1)
+
+	initialBalance := i(1e9)
+	delegateAmount := i(100e6)
+
+	suite.NoError(suite.App.FundModuleAccount(
+		suite.Ctx,
+		distrtypes.ModuleName,
+		sdk.NewCoins(
+			sdk.NewCoin("ukava", initialBalance),
+		),
+	))
+
+	suite.CreateAccountWithAddress(valAccAddr1, suite.NewBondCoins(initialBalance))
+	suite.CreateAccountWithAddress(delegator, suite.NewBondCoins(initialBalance))
+
+	suite.CreateNewUnbondedValidator(valAddr1, initialBalance)
+	suite.CreateDelegation(valAddr1, delegator, delegateAmount)
+	staking.EndBlocker(suite.Ctx, suite.StakingKeeper)
+
+	// Transfers delegation to module account
+	_, err := suite.Keeper.MintDerivative(suite.Ctx, delegator, valAddr1, suite.NewBondCoin(delegateAmount))
+	suite.Require().NoError(err)
+
+	validator, found := suite.StakingKeeper.GetValidator(suite.Ctx, valAddr1)
+	suite.Require().True(found)
+
+	suite.Ctx = suite.Ctx.WithBlockHeight(2)
+
+	distrKeeper := suite.App.GetDistrKeeper()
+	stakingKeeper := suite.App.GetStakingKeeper()
+	accKeeper := suite.App.GetAccountKeeper()
+	liquidMacc := accKeeper.GetModuleAccount(suite.Ctx, types.ModuleAccountName)
+
+	// Add rewards
+	rewardCoins := sdk.NewDecCoins(sdk.NewDecCoin("ukava", sdk.NewInt(500e6)))
+	distrKeeper.AllocateTokensToValidator(suite.Ctx, validator, rewardCoins)
+
+	delegation, found := stakingKeeper.GetDelegation(suite.Ctx, liquidMacc.GetAddress(), valAddr1)
+	suite.Require().True(found)
+
+	// Get amount of rewards
+	endingPeriod := distrKeeper.IncrementValidatorPeriod(suite.Ctx, validator)
+	delegationRewards := distrKeeper.CalculateDelegationRewards(suite.Ctx, validator, delegation, endingPeriod)
+	truncatedRewards, _ := delegationRewards.TruncateDecimal()
+
+	suite.Run("collect staking rewards", func() {
+		// Collect rewards
+		derivativeDenom := suite.Keeper.GetLiquidStakingTokenDenom(valAddr1)
+		rewards, err := suite.Keeper.CollectStakingRewardsByDenom(suite.Ctx, derivativeDenom, types.ModuleName)
+		suite.Require().NoError(err)
+		suite.Require().Equal(truncatedRewards, rewards)
+
+		suite.True(rewards.AmountOf("ukava").IsPositive())
+
+		// Check balances
+		suite.AccountBalanceEqual(liquidMacc.GetAddress(), rewards)
+	})
+
+	suite.Run("collect staking rewards with non-validator", func() {
+		// acc2 not a validator
+		derivativeDenom := suite.Keeper.GetLiquidStakingTokenDenom(sdk.ValAddress(addrs[2]))
+		_, err := suite.Keeper.CollectStakingRewardsByDenom(suite.Ctx, derivativeDenom, types.ModuleName)
+		suite.Require().Error(err)
+		suite.Require().Equal("no validator distribution info", err.Error())
+	})
+
+	suite.Run("collect staking rewards with invalid denom", func() {
+		derivativeDenom := "bkava"
+		_, err := suite.Keeper.CollectStakingRewardsByDenom(suite.Ctx, derivativeDenom, types.ModuleName)
+		suite.Require().Error(err)
+		suite.Require().Equal("cannot parse denom bkava", err.Error())
+	})
+}

x/liquid/keeper/derivative.go

@@ -136,6 +136,28 @@ func (k Keeper) GetStakedTokensForDerivatives(ctx sdk.Context, coins sdk.Coins)
 	return totalCoin, nil
 }
 
+// GetTotalDerivativeValue returns the total sum value of all derivative coins
+// for all validators denominated by the bond token (ukava).
+func (k Keeper) GetTotalDerivativeValue(ctx sdk.Context) (sdk.Coin, error) {
+	bkavaCoins := sdk.NewCoins()
+
+	k.bankKeeper.IterateTotalSupply(ctx, func(c sdk.Coin) bool {
+		if k.IsDerivativeDenom(ctx, c.Denom) {
+			bkavaCoins = bkavaCoins.Add(c)
+		}
+
+		return false
+	})
+
+	return k.GetStakedTokensForDerivatives(ctx, bkavaCoins)
+}
+
+// GetDerivativeValue returns the total underlying value of the provided
+// derivative denominated by the bond token (ukava).
+func (k Keeper) GetDerivativeValue(ctx sdk.Context, denom string) (sdk.Coin, error) {
+	return k.GetStakedTokensForDerivatives(ctx, sdk.NewCoins(k.bankKeeper.GetSupply(ctx, denom)))
+}
+
 func (k Keeper) mintCoins(ctx sdk.Context, receiver sdk.AccAddress, amount sdk.Coins) error {
 	if err := k.bankKeeper.MintCoins(ctx, types.ModuleAccountName, amount); err != nil {
 		return err

x/liquid/keeper/derivative_test.go

@@ -470,6 +470,61 @@ func (suite *KeeperTestSuite) TestGetStakedTokensForDerivatives() {
 	}
 }
 
+func (suite *KeeperTestSuite) TestGetDerivativeValue() {
+	_, addrs := app.GeneratePrivKeyAddressPairs(5)
+	valAccAddr1, delegator, valAccAddr2 := addrs[0], addrs[1], addrs[2]
+	valAddr1 := sdk.ValAddress(valAccAddr1)
+
+	valAddr2 := sdk.ValAddress(valAccAddr2)
+
+	initialBalance := i(1e9)
+	vestedBalance := i(500e6)
+	delegateAmount := i(100e6)
+
+	suite.CreateAccountWithAddress(valAccAddr1, suite.NewBondCoins(initialBalance))
+	suite.CreateVestingAccountWithAddress(delegator, suite.NewBondCoins(initialBalance), suite.NewBondCoins(vestedBalance))
+
+	suite.CreateNewUnbondedValidator(valAddr1, initialBalance)
+	suite.CreateDelegation(valAddr1, delegator, delegateAmount)
+
+	suite.CreateAccountWithAddress(valAccAddr2, suite.NewBondCoins(initialBalance))
+
+	suite.CreateNewUnbondedValidator(valAddr2, initialBalance)
+	suite.CreateDelegation(valAddr2, delegator, delegateAmount)
+	staking.EndBlocker(suite.Ctx, suite.StakingKeeper)
+
+	_, err := suite.Keeper.MintDerivative(suite.Ctx, delegator, valAddr1, suite.NewBondCoin(delegateAmount))
+	suite.Require().NoError(err)
+
+	_, err = suite.Keeper.MintDerivative(suite.Ctx, delegator, valAddr2, suite.NewBondCoin(delegateAmount))
+	suite.Require().NoError(err)
+
+	suite.SlashValidator(valAddr2, d("0.05"))
+
+	suite.Run("total value", func() {
+		totalValue, err := suite.Keeper.GetTotalDerivativeValue(suite.Ctx)
+		suite.Require().NoError(err)
+		suite.Require().Equal(
+			// delegateAmount + (delegateAmount * 95%)
+			delegateAmount.Add(delegateAmount.MulRaw(95).QuoRaw(100)),
+			totalValue.Amount,
+		)
+	})
+
+	suite.Run("1:1 derivative value", func() {
+		derivativeValue, err := suite.Keeper.GetDerivativeValue(suite.Ctx, suite.Keeper.GetLiquidStakingTokenDenom(valAddr1))
+		suite.Require().NoError(err)
+		suite.Require().Equal(suite.NewBondCoin(delegateAmount), derivativeValue)
+	})
+
+	suite.Run("slashed derivative value", func() {
+		derivativeValue, err := suite.Keeper.GetDerivativeValue(suite.Ctx, suite.Keeper.GetLiquidStakingTokenDenom(valAddr2))
+		suite.Require().NoError(err)
+		// delegateAmount * 95%
+		suite.Require().Equal(delegateAmount.MulRaw(95).QuoRaw(100), derivativeValue.Amount)
+	})
+}
+
 func (suite *KeeperTestSuite) TestDerivativeFromTokens() {
 	_, addrs := app.GeneratePrivKeyAddressPairs(1)
 	valAccAddr := addrs[0]

x/liquid/keeper/keeper.go

@@ -17,6 +17,7 @@ type Keeper struct {
 	accountKeeper      types.AccountKeeper
 	bankKeeper         types.BankKeeper
 	stakingKeeper      types.StakingKeeper
+	distributionKeeper types.DistributionKeeper
 
 	derivativeDenom string
 }
@@ -24,7 +25,7 @@ type Keeper struct {
 // NewKeeper returns a new keeper for the liquid module.
 func NewKeeper(
 	cdc codec.Codec,
-	ak types.AccountKeeper, bk types.BankKeeper, sk types.StakingKeeper,
+	ak types.AccountKeeper, bk types.BankKeeper, sk types.StakingKeeper, dk types.DistributionKeeper,
 	derivativeDenom string,
 ) Keeper {
 
@@ -33,6 +34,7 @@ func NewKeeper(
 		accountKeeper:      ak,
 		bankKeeper:         bk,
 		stakingKeeper:      sk,
+		distributionKeeper: dk,
 		derivativeDenom:    derivativeDenom,
 	}
 }
@@ -40,10 +42,10 @@ func NewKeeper(
 // NewDefaultKeeper returns a new keeper for the liquid module with default values.
 func NewDefaultKeeper(
 	cdc codec.Codec,
-	ak types.AccountKeeper, bk types.BankKeeper, sk types.StakingKeeper,
+	ak types.AccountKeeper, bk types.BankKeeper, sk types.StakingKeeper, dk types.DistributionKeeper,
 ) Keeper {
 
-	return NewKeeper(cdc, ak, bk, sk, types.DefaultDerivativeDenom)
+	return NewKeeper(cdc, ak, bk, sk, dk, types.DefaultDerivativeDenom)
 }
 
 // Logger returns a module-specific logger.

x/liquid/keeper/keeper_test.go

@@ -94,7 +94,7 @@ func (suite *KeeperTestSuite) AddCoinsToModule(module string, amount sdk.Coins)
 // AccountBalanceEqual checks if an account has the specified coins.
 func (suite *KeeperTestSuite) AccountBalanceEqual(addr sdk.AccAddress, coins sdk.Coins) {
 	balance := suite.BankKeeper.GetAllBalances(suite.Ctx, addr)
-	suite.Equalf(coins, balance, "expected account balance to equal coins %s, but got %s", coins, balance)
+	suite.Truef(coins.IsEqual(balance), "expected account balance to equal coins %s, but got %s", coins, balance)
 }
 
 func (suite *KeeperTestSuite) deliverMsgCreateValidator(ctx sdk.Context, address sdk.ValAddress, selfDelegation sdk.Coin) error {

x/liquid/types/expected_keepers.go

@@ -17,6 +17,9 @@ type BankKeeper interface {
 	MintCoins(ctx sdk.Context, moduleName string, amt sdk.Coins) error
 	BurnCoins(ctx sdk.Context, moduleName string, amt sdk.Coins) error
 	UndelegateCoinsFromModuleToAccount(ctx sdk.Context, senderModule string, recipientAddr sdk.AccAddress, amt sdk.Coins) error
+
+	IterateTotalSupply(ctx sdk.Context, cb func(sdk.Coin) bool)
+	GetSupply(ctx sdk.Context, denom string) sdk.Coin
 }
 
 // AccountKeeper defines the expected keeper interface for interacting with account
@@ -45,3 +48,8 @@ type StakingKeeper interface {
 		ctx sdk.Context, delAddr sdk.AccAddress, valAddr sdk.ValAddress, shares sdk.Dec,
 	) (amount sdk.Int, err error)
 }
+
+type DistributionKeeper interface {
+	GetDelegatorWithdrawAddr(ctx sdk.Context, delAddr sdk.AccAddress) sdk.AccAddress
+	WithdrawDelegationRewards(ctx sdk.Context, delAddr sdk.AccAddress, valAddr sdk.ValAddress) (sdk.Coins, error)
+}