🖍️Minting Mechanism

The minting mechanism is designed to release tokens progressively, proportionate to the protocol's usage. This approach ensures that token supply grows in tandem with demand, maintaining a balanced and sustainable ecosystem.

Reference Point: Total Locked Tokens

Revenue and Demand Correlation:

The total number of tokens locked serves as the primary reference point. As the protocol generates revenue, these revenues are used to buy back tokens, which are then locked.

The greater the number of locked tokens, the higher the generated revenue, reflecting increased demand for the protocol. This correlation makes the number of locked tokens a reliable indicator of the protocol’s demand.

Reserve Ratio:

To prevent scenarios where high demand quickly depletes the minting pool, a reserve ratio is utilized. The reserve ratio is calculated as the number of tokens in the minting pool divided by the pool's maximum supply. This ratio helps ensure that the minting pool maintains sufficient reserves to handle varying levels of demand.

Proportional Inflation:

The release of new tokens (inflation) is directly proportional to the protocol’s demand, as indicated by the number of locked tokens. Tokens are bought back from the secondary market, which means that inflation is effectively priced. This approach stabilizes the token’s value by ensuring that new supply aligns with market conditions.

Redistribution:

Newly minted tokens are redistributed to different pools to support various ecosystem functions:

• Community Pool: A portion of the minted tokens is directed here to refill the pool, ensuring continuous community engagement and support for projects.

• Staking Pool: Another portion is allocated to the staking pool, providing rewards for stakers and incentivizing long-term investment.

• Treasury: Some tokens are directed to the treasury to fund the ecosystem’s development, marketing, and other operational needs.

Staggered Release

The release of inflation is staggered over time to create retention and loyalty among stakers.

This mechanism ensures that stakers remain committed to the ecosystem even during periods of declining revenue or external events that might affect the token's price.

Tokens are released over a period ranging from 12 to 36 months, depending on the type of revenue. This gradual release creates a friction in exit, compelling stakers to stay longer to capture all the potential revenues.

By staggering the release of tokens over an extended period, the system creates a natural retention mechanism. Stakers are incentivized to remain invested for longer periods to fully benefit from the released revenues.

This approach mitigates the risk of sudden mass exits from the staking pool, which could destabilize the token’s value and the ecosystem.

Sustainable Growth

The gradual release of tokens ensures that inflation is managed carefully, preventing sudden spikes in supply that could negatively impact the token’s price. By aligning the minting process with the protocol’s demand, the ecosystem fosters a stable and predictable growth environment.

This stability enhances the long-term commitment of users and investors, contributing to the overall sustainability and health of the tokenomics model.