ABAX - The DAO Token - Tokenomics

Governance
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(Note: The proposed tokenomics are subject to approval by DAO on-chain voting except for the initial distribution and 1st public sale.)

Summary

In this article, we will discuss the proposed tokenomics for our DAO’s native token, ABAX. We aim to create an inflationary token, with a small number of tokens minted as rewards for governance participants as described in the governance thread. Anyone can participate in governance!

ABAX Token Distribution

The initial amount of ABAX tokens will be 1,000,000,000 (one billion). The distribution is as follows:

1. Founders & Initial Team (4%)
40,000,000 ABAX (4% of the total supply) will be allocated to the ABAX protocol creators and initiators of this DAO.

2. First Public Contribution (4%)
40,000,000 ABAX (4% of the total supply) will be distributed during a one-week public contribution event, where everyone can specify the amount of AZERO they want to contribute to the DAO. The tokens will be distributed proportionally to the contribution, but not more than 1 ABAX per 0.05 AZERO. If not all tokens are distributed, the remaining part will be used in subsequent distributions.

3. Development Team (16%)
160,000,000 ABAX (16% of the total supply) will be vested linearly over four years to the development team. Initially, the creators’ team will be chosen as the development team, but this can be changed at any time through on-chain voting.

4. Subsequent Contributions (6%)
60,000,000 ABAX (6% of the total supply) will be used for subsequent contributions. We propose six contributions, each worth 1%. The contributions will remain open until all tokens are distributed. The amount of AZERO required to receive 1 ABAX will be 0.1, 0.125, 0.15, 0.175, 0.2, and 0.25, respectively.

5. Marketing, Partnerships, etc. (4%)
40,000,000 ABAX (4% of the total supply) will be allocated for marketing efforts, partnerships, and other promotional activities.

6. Bug Bounty (4%)
40,000,000 ABAX (4% of the total supply) will be reserved for bug bounties, incentivizing the community to help identify and fix vulnerabilities within the platform.

7. Valuable Community Members (2%)
20,000,000 ABAX (2% of the total supply) will be allocated to valuable community members and DAO participants who contribute great ideas to the project.

8. Liquidity Mining (60%)
600,000,000 ABAX (60% of the total supply) will be used for liquidity mining, with 10% released per year.

Conclusion

The proposed tokenomics for the ABAX token aims to create a fair and sustainable ecosystem for our DAO. By incentivizing participation in governance and rewarding valuable contributions, we hope to foster a strong and vibrant community around our project. Remember, these tokenomics are subject to approval through on-chain voting, so make your voice heard!

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The tokenomics look well thought out. Fine by me

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The team should be vested by some years.
Contribution should be more % maybe 6% or 8% with a fair price like 0.03 for example.
Tokens to the most valuable!? Who decide that? Not agree.

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I’m assuming you’re talking about adding a vesting mechanism to the point 1)?
A linear vesting over how many years would seem fair to you?
Are you afraid of the “team” having too big of an impact initially?
If so - would you believe the “team” would want to do any harm to the protocol?

Fair point about the proposal lacking the selection mechanism of the so called valuable community members. We’ve had some vague criteria in mind though I agree that they, as well as the actual mechanism should be disclosed in the final version of the proposal.

Thank you for your input and I’m happy to discuss the topic further!

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Yes, point 1.
I just talked about vesting to give some “security” to contributors.

And if I contribute, I would prefer choose price and vesting. for example, choose linear vesting of 6 months with 0.03 of token price or 1 year of linear vesting at 0.01 instead of paying 0.05 (50M full valuation). Just an idea.

Tks

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How do I contribute to the project?

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  1. Would need a vesting period, like tokens slowly being unlock / day ( not a big chunk unlock on a single day )

  2. 0.05 azero would already put the fdv at 75m$, which is kinda high for the first contribution imo. Aleph zero itself launched at just 30m$ fdv for their final public sale btw

  3. Personally the amount is too high imo considering all the abax for public sale is just 100m abax ( 40m + 60m ).
    Either lower it, or vest it for way longer.

  4. Same concern with no 2. 0.25 azero / abax would put the fdv at 375m$ ( assuming 1 azero = 1.5$ ). Nothing good will come from making the first supporter of the project get rekt.

5,6 & 7. Need clear limitations on how to distribute this tbh, to not impact the market much when being distributed.

Would also be nice to give some % to azero stakers on the mainnet, to grab some early holders & azero supporters to the project

  1. Why the need for big % on liquidity mining?

Isnt it better to just completely wipe them out, and just make it stake for platform perks… instead of stake for more tokens that will dilute your own tokens. 60m / year is a big amount… especially in the 1st year, considering most in circulation would be from no 2 & 4 ( which is like 100m tokens in total ). 60m would be 60% dillution to the current circulating.

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Ad 1) The vesting sounds fair. Maybe 2% distributed on token creation and 2% vested during one year?

Ad 2) I think you have miscalculated. 40.000.000 * 0.05 AZERO is 2.000.000 AZERO, which is 2 millions of AZERO during first contribution.
I don’t know how you did come up with 75m$.

Ad 3) Based on the current proposition, after 1st public contribution the 8% of the initial supply will be distributed? Why do you think it is too much? We hope that holders of this 8% will actively take part in forming the DAO.

Ad 4) The subsequent 6 x 1% contributions will be subject to change based on the DAO on-chain voting. The idea behind the following contributions is to bring more value to the project as it grows. They may happen even a few years after the project when it gets recognition.

Ad 5,6,7) Based on the current proposition all of these are subject to DAO on-chain voting.

Ad 8) This incentivizes people to bring assets to the Abax lending market which is the most essential thing for Abax. However, the numbers are subject to discussion and may be adapted.

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  1. Length & amount of vesting in this section is completely up to you tbh. Some projects vest it over a long period of time to show the team confidence on the project itself, some would release it asap to remove the project from cloud of future unlocks.
    Just dont want any big chunks unlocked in a day, do it by vesting tbh

  2. 75m$ is FDV ( fully diluted valuation )
    All tokens in existence * price
    In this case 1.000.000.000 * 0.05 * 1.5$ ( estimated value of azero )
    Usually to gauge valuation, when all tokens comes into circulation.

  3. Keep in mind that all public sale in total ( first public contribution + subsequent contribution ) = 100m tokens
    What being added in the first year into circulation = 40m ( development team ( 160m/4)) + 60m ( liquidity mining (600m/10)) = 100m tokens
    Its already 100% inflation in the first year, not counting those being unlocked from founder & initial team, marketing, bug bounty & valuable community members.

  4. Back to no 2, my main concern is the full dilluted valuation that is extremely high. Not the % or the time of the sale.

Basically just saying that with this tokenomics, it will put people who contribute in no.2 & no.4 at a really bad place. High valuation at the start + high dillution from tokens unlocks

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60,000,000 ABAX (6% of the total supply) will be used for subsequent contributions. We propose six contributions, each worth 1%. The contributions will remain open until all tokens are distributed. The amount of AZERO required to receive 1 ABAX will be 0.1, 0.125, 0.15, 0.175, 0.2, and 0.25, respectively.

  1. Do you mean that you propose allocating 1 % to 6 different contributing individuals?

  2. I think it’s always hard to find a perfect percentage point for each of the allocations. The most important thing with the tokenomics is to ensure that the allocation recipients are aligned as much as possible with the project on the longer term.

  3. I think 4 % for the initial team sounds good. I suppose there will be some vesting there too, right?

  4. Is it possible that you can post a diagram visualizing the release schedule? I think there are some allocations that might have bigger requirements early (such as contributors, bug bounties, and dev team), and others later (such as marketing, partnerships etc.)

Because 4 % ABAX allocated towards marketing might seem fine, but I think it would be great to see it relative to circulating supply at various times, so we don’t end up with an incredibly small marketing budget when it’s needed.

Overall, I will say though, that the allocations look great!

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Fext has given fair review and feedback in his responses.
I want to however add some points to this thread as I incline towards the opinion here:

  1. The team unlock should be done over a course of at least 2-4 years with a cliff of atleast 6 months (I believe the case was similar for AZERO team) and do linear vesting as the number of people, lets say as an example, in the team is about 6 (considering 1 ABAX = 0.05 AZERO) that would be the case that each member would have about 500k usd or 333k AZERO worth of tokens (given 1 AZERO = 1.5 USD atm). Let’s assume, in some event of a dispute, a team member decides to let go or panic sell for whatever reason it maybe, not only does it project compromise the value of the project but it brings down total credibility that the team has strived to achieve thus far in the community and in the space. A cliff and linear vesting of small amounts for that span, would at one hand give the opportunity for attracting many users from within AZERO and non AZERO community, witness the dynamic operations of the project and build more credibility.

2 & 4. Upon calculation of FPC and SC, the team raise is around 2M (FPC) + 1M (SC1) + 1.25M(SC2)+ 1.5M(SC3) + 1.75M (SC4) + 2M (SC5) + 2.5M(SC6) = 12 M AZERO (~18 million USD). The initial marketcap, fdv should be kept at bare minimum, the funds raised by the team should be purely for running the project and covering the costs for doing so for about at least an year or two. Is this big a raise the right amount for covering costs for a couple of years? Subsequent contributions could possibly be vested for a long period of time, the question is should the community vesting should be longer than team vesting or pretty much how long the overall vesting should be
There have been some protocols in DOT ecosystem that have had an amazing product yet got their funding and tokenomics not really in the desired way. This result of this was they had high anticipated users but eventually ended up with few handful of users and they migrated to a similar protocol with better tokenomics and fundraise.

We witness AZERO team intense efforts in marketing and building to bring other crypto and mainstream users into our ecosystem, we should have sound tokenomics, fund raise and product once it happens. My discussion on this topic is primarily to keep the projects best interests at heart.

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Dear community,

I would like to address some concerns that have been raised regarding the first contribution, subsequent contributions, team token vesting, and liquidity incentives for the ABAX token. I appreciate your feedback and suggestions and would like to clarify some points and make some adjustments to the proposed tokenomics.

First Contribution
Firstly, I want to clarify the purpose of the first contribution and the intended use of the AZERO tokens that will be gathered. The tokens from the contribution are intended to be spent on DAO expenses only!, which include the following:

  • Audits - As a DAO governing Abax Lending Protocol, we need to finance audits of the smart contracts. This is an important step to ensure the security and reliability of our protocol.

  • Financing DAO Foundation - We need to establish a foundation that will realize the DAO voting in the legal world. This is an essential step to bring our on-chain decisions into the legal world.

  • Paying for Marketing - We may want to pay for some marketing services in dollars, rather than ABAX tokens. This will help us to reach a wider audience and promote our project.

  • Paying for Expertise - As a DAO governing Lending Protocol, we will need to set critical parameters in the Protocol System. This requires expertise and resources.

  • Usual Expenses - Domain, hosting service, etc.

As you can see, there are important expenses that must be covered, and we need funds to do so. However, we agree that 1.5m$ should be enough, and we have decided to decrease the limit to 0.0125 AZERO per ABAX, resulting in 1 million AZERO per 40 million of ABAX in the first contribution (as long as the AZERO price stays around 1.5$).

Subsequent Contributions
The subsequent contributions are subject to on-chain decisions, and the numbers will be adjusted depending on the DAO’s needs and market conditions. We believe that the subsequent contributions are necessary to cover our expenses that will help the DAO grow and compete with other lending protocols.

Team Token Vesting
Please note that 16% of tokens are already proposed to be vested over 4 years to the development team. We distinguish between initial team and development team as the latter shouldn’t be predefined and should be dependent on DAO decisions. This is an even more decentralized approach than most other projects take (in which the development team is predetermined and the development funds can not be transferred to another team).

We believe that the 4% initial supply allocated to the “initial team” at token creation is good for the project, as it will give them a strong vote in the first months of DAO existence. This will allow for fast and secure updates to our system. In addition, note that the term “initial team” refers to the creators/initiators only. However, it’s certain that the development team/team working on Abax overall will become larger - so the shares in the paid tokens will become more diluted. Furthermore, the development team membership is subject to the DAO voting.

However, we understand your concerns, and we have decided that only 2% will be released to the initial team on the token creation and the remaining 2% will be vested over 1 year. Moreover, 100% of initial team tokens (the 2%) will be staked in the governor contract even before the first contribution takes place. Everyone will be able to verify that before they contribute.

Liquidity Incentives
Liquidity incentives are crucial to bring liquidity to our protocol and the AZERO network. We will adjust the percentages based on the market conditions so the incentives are the most competitive. We agree that we should release the ABAX slower to avoid the flood.

Thank you for your valuable feedback and suggestions. We hope that these adjustments will address your concerns and make ABAX tokenomics more fair and sustainable for everyone. Please continue to share your thoughts and ideas with us!

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Maybe I have changed a little, just a suggestion

Founders & Initial Team (4%): Allocate 40,000,000 ABAX (4% of the total supply) to the ABAX protocol creators and initiators of this DAO.

Public Contribution (15%): Conduct a public contribution event where participants can contribute AZERO tokens to the DAO. Allocate 150,000,000 ABAX (15% of the total supply) during this event. The tokens will be distributed proportionally to the contribution, with a maximum of 1 ABAX per 0.05 AZERO. If not all tokens are distributed, the remaining portion will be used in subsequent distributions.

Development Team (10%): Vest 100,000,000 ABAX (10% of the total supply) linearly over four years to the development team. Initially, the creators’ team will be chosen as the development team, but this can be changed through on-chain voting.

Subsequent Contributions (15%): Allocate 150,000,000 ABAX (15% of the total supply) for subsequent contributions. Conduct three additional contribution rounds, each worth 5% of the total supply. The contributions will remain open until all tokens are distributed. The amount of AZERO required to receive 1 ABAX will be determined based on market conditions at the time of each contribution round.

Marketing, Partnerships, etc. (10%): Allocate 100,000,000 ABAX (10% of the total supply) for marketing efforts, partnerships, and other promotional activities.

Bug Bounty (7%): Allocate 70,000,000 ABAX (7% of the total supply) for bug bounties, incentivizing the community to identify and fix vulnerabilities within the platform.

Valuable Community Members (5%): Allocate 50,000,000 ABAX (5% of the total supply) to recognize valuable community members and DAO participants who contribute significant ideas to the project.

Liquidity Mining (34%): Allocate 340,000,000 ABAX (34% of the total supply) for liquidity mining purposes. Release the tokens gradually over time to incentivize liquidity providers. The specific unlocking schedule will be as follows:

10% unlocked immediately upon distribution.
The remaining 90% unlocked linearly over a period of 12 months, with an equal portion unlocked each month (7.5% per month).

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So how to test this app?

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very interesting Let’s Goo

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