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+# System Overview
+
+This document provides an overview of the system architecture and design of the staking system. We'll learn about the
+system components, their interactions, and the data flow between them.
+
+## Components
+
+![System Overview](assets/overview.png)
+
+1. **Account**: EOAs and smart accounts that participate in the staking system.
+2. **Stake vault**: A smart contract that maintains the account's stake. Accounts interface with the staking system
+   through their stake vaults.
+3. **Stake manager proxy**: A smart contract proxy that delegates to the logic/implementation contract of the staking
+   system. It maintains its own onchain storage. Stake vaults interact with the staking system through the proxy.
+4. **Stake manager implementation**: A smart contract in which the logic of the staking system resides. The stake
+   manager proxy uses this contract to execute the staking system's logic. This contract is ugpradeable.
+5. **XP balance providers**: Systems that provide XP token balances to the XP token contract. The staking system is one
+   such XP balance provider.
+6. **XP token**: An ERC20 token contract that issues XP tokens to accounts based on their stake. In addition to its own
+   balance accounting, it relies on XP balance providers to aggregate total balances of individual accounts. XP tokens
+   are not transferable.
+7. **XP NFT**: An ERC721 token contract that maintains non-transferable NFTs of accounts that participate in the XP
+   program, either via the staking system or other activities. The XP NFTs rely on the XP token contract to render an
+   accounts XP balance.
+8. **Accounts, DApps, Wallets**: External entities that consume the XP tokens and NFTs.
+9. **DAO/Admin**: Entity that controls the contract and sets XP rewards in the system which will be distributed
+   according to every participant's stake.
+
+## How the system works
+
+- Accounts (EOAs or smart accounts) create one or multiple stake vaults to stake their SNT and participate in the XP
+  Programme. In most cases, accounts will have only one stake vault, but nothing prevents them from creating more vaults
+  with different configurations.
+- The stake vaults interact with the stake manager through the proxy by forwarding calls to the implementation contract.
+  When an account stakes funds, their funds are moved into the stake vault and they will stay there until the account
+  decides to unstake them.
+- While the account is staking, it will accrue experience points (XP) based on the amount of SNT staked and the duration
+  of the stake. The longer accounts stake, the more XP they will earn.
+- By locking up their stake, accounts receive multiplier points that increase their initial XP earnings upon staking.
+- At any point in time, accounts can view their XP token balance in their wallets and how it updates in realtime.
+- In addition, every account receives an NFT that represents their participation in the XP Programme. It will evolve as
+  the account gains XP.
+- Eventually, an account will either reach the maximum amount of XP they can accrue based on their stake amount, at
+  which point they will no longer earn XP, or they will decide to unstake their funds, at which point they will not only
+  stop earning XP, but even lose the XP they've received through staking.
+- The XP in the account's wallet can be used to access exclusive features or services within the Status app or other
+  DApps that support the XP token, like voting in governance proposals or participating in exclusive events.