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Tokenomics
The tokenomics of a protocol charts a course toward the decentralization and autonomy of that protocol. Given a common thread of its governance token to bind them, how does an amorphous community weave itself towards a tapestry? Tokenomics is not a series of binary “do or don’t” gates, but of incentives and self-governance as steering mechanisms to guide a community toward maximizing its utility.
Here, we lay out our tokenomics framework, which builds on many good ideas that we saw over the last few years, including veCurve of Curve protocol and esGMX of GMX protocol.
Our community is at the centre of our tokenomics and so we focus on (1) growth of value accrued to our community, (2) fair distribution of the accrued value, and (3) inclusive governance to deliver on the first two focuses.
By value, we largely mean the monetary value accrued to our community, i.e. the revenue generated on our platform. So before we talk about its growth, let’s quickly go over what revenues we expect to generate at Uniwhale.
Uniwhale is an oracle-based decentralized on-chain perpetual trading exchange where you can trade, with up to 200x leverage, BTC, ETH, and many mainstream crypto assets, directly from your wallet. So, much of its revenue comes from trading fees, which are:
- Opening fee, that a trader pays when opening a position;
- Closing fee, that a trader pays when closing an open position; and
- Rollover fee, that a trader pays on the margin posted
Opening and closing fees are 10bps at the time of writing. They are directly linked to the trading volume. For example, if the trading volume over a month was $100mn, then the platform revenue due to opening/closing fee for that month would be $100,000.
Rollover fee is a fixed fee charged per block-height on the margin posted. The amount of the rollover fee a trader pays is proportional to the duration of the open position he or she maintains. The fee rate is different for each crypto asset and is updated periodically.
So the value creation for our community hinges on our increasing the trading volume and trading revenue, and the supply distribution of our tokenomics is designed to achieve that goal. For example, 10% of our token supply is allocated to the token airdrops to early contributors of Uniwhale, Uniwhale Genesis Pass holders and targeted DeFi users. 40% of the token supply is allocated to community emission, specifically to reward those loyal traders and liquidity providers as well as our community.
Focusing on the growth of value accrued to our community is part of the story. What is equally important is a fair distribution of the value accrued. To that end, our tokenomics calls for a distribution of the value accrued to not only the long-term stakeholders but also to the liquidity providers, as well as reserving some to help the long-term stability of the platform.
Uniwhale is a community-driven project, owned by our community. Tokenomics therefore must ensure that our value creation is directed by the wishes of our community and evolve based on that. Through community governance, our community can decide all matters relating to Uniwhale, including, but not limited to, opening/closing fee, distribution of value accrued, emission schedule, token supply and reserve fund.
Black swan events can happen and do happen. So it is important that we as a community are well prepared for these. Reserve fund acts as a line of defence against such events and helps ensure our community grows in a sustainable manner. Reserve fund may also be used to strengthen the security of our community, for example, paying for the security audit or bug bounties. Initially, the reserve fund liquidity is bootstrapped by the 20 million allocation from the token supply. A portion of the value accrued will also be distributed to the reserve fund. Any and all creator fees from our NFTs including Uniwhale Genesis Pass will also contribute to the reserve fund.
Last modified 2d ago