Token References
Tokenomics describes a series of tools and incentive mechanisms used to express a project’s preferences and goals in the highest resolution possible. These preferences and goals can be expressed on a temporal vector and be set to change over time at a project’s genesis, or be allowed to changed at any time via governance. New tokenomics mechanisms are being discovered all the time, and integrating them allows projects to express their preferences in an even higher resolution.
Distribution mechanisms
The rate or size of any of the following distribution methods relative to other distribution methods in the same project occurring at the same time will determine which users are being diluted or concentrated. For example, if a project has 10% APY staking emissions and 15% APY LP rewards, the stakers are being diluted relative to the LPs (ignoring impermanent loss). But a passive holder or a future-holder is being diluted relative to stakers and LPs.
- Staking
- Allow holders to maintain some portion of their relative share during ongoing emissions
- LP rewards
- Incentivize liquidity to move where is useful for the project
- Bonding
- Bonding curve offering
- Airdrop
- Curate token holders to a subset that are most likely to be aligned with the project’s goals
- Burning/minting
Governance mechanisms
- Delegated voting
- Increase voting participation by allowing lazy voters to delegate their votes
- Voting escrow (veTokens)
- Give more voting weight to longer time horizon token holders
- Nontransferable tokens
- Disincentivize speculation and accumulation
On-chain Token Utility
- Fee sharing
- Governance
Types of Token
Governance tokens
Platform Tokens
Social tokens
Distribution of tokens
tokens are distributed in different methods to the public.
Why is the distribution of tokens important
Types of distribution
Distribution amount community
Case studies
The Idols NFT
Uniswap
- Infinite years of emissions (Sep 2020 -> End of time)
- 4 years of vesting (Sep 2020 -> Sep 2024)
Notes:
- Sushiswap vampire attack forced Uniswap to issue a governance token. Sushiswap cloned Uniswap with LP rewards in the form of Sushi governance tokens and liquidity drained to Sushiswap
- No fee sharing yet, but can be voted in
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Allocation
Amount
Vesting/Emission
Looksrare
- 2 years of emissions, exponential decay (Jan 2022 -> Dec 2023)
- 2 years of vesting (Jan 2022 -> Dec 2023)
Notes:
- Opensea competitor with web3-aligned values
- All platform trading fees get distributed to stakers in WETH
- Controversial trading rewards incentivize wash trading. Wash traders’ fees get distributed to stakers, but wash traders must dump token rewards on the market to realize the arbitrage gain
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Allocation
Amount
Vesting/Emission
Curve
- 300 years of emissions (Aug 2020 -> ~2320)
- 4 years of vesting (Aug 2020 -> Aug 2024)
Notes:
- Can lock CRV for veCRV, a non transferable time-boosted voting token
- cvxCRV is a tokenized version of veCRV that you receive for providing CRV to Convex that can be traded on the secondary market to making CRV voting power liquid
- CRV wars [to be expanded]
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Allocation
Amount
Vesting/Emission
56.99999999999999%
24.46% total supply first year, diminishing by a rate of 2.25 every following year
ENS
- No emissions (Nov 2021)
- 4 years of vesting (Nov 2021 -> Nov 2025)
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Allocation
Amount
Vesting/Emission
TokeMak
- ~2+ years emissions (July 2021 -> ~July 2023)
- 2 years of vesting (July 2021 -> July 2023)
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Allocation
Vesting/Emission
Amount