Tracer Drop Episode #06: Tracer Tokenomics

Tracer Token Distribution

Agenda

  • Introduction
  • Overview of the Tracer Token Breakdown
  • Market Distribution
  • Token Allocation
  • Tracer’s Growth Fund
  • Incentives
  • Tracer Token Airdrop
  • Tracer Ecosystem
  • Tracer Liquidity Mining

Call Recording Link: here

Call Notes

Introduction

  • Mycelium, alongside RMIT, are discussing the possible tokenomics model for Tracer

Overview of the Tracer Token Breakdown

  • The diagram below outlines the current and intend state of the Tracer DAO treasury
    image

  • Additionally:

    • Academic advisors - 1.75%
    • The 100, the first 100 Tracer token claimants from the contract in January - 1%
    • Yamashita, newest advisor - 1%
    • Governors, and Alpha testers - 0.51%
    • Flex Dapps - 0.20%
  • Current TCR Allocation token supply of 1,000,000,000

  • The diagram below outlines the proposed future token distribution:
    image

  • Market Distribution is the most notable change in token distribution

  • This sector includes the following allocations:

    • Perpetual Swaps liquidity mining - 10%
    • Perpetual Pools liquidity mining - 10%
    • Retroactive airdrops (varying metrics)
    • Future financial contracts liquidity mining - 9.3%
    • Potential public sale of TCR token - 5%
    • Additional Governors and Alpha Testers - 1%

Market Distribution

  • In a traditional VC industrial economy launch things are much more simple
  • There are clear definitions for the company, the owners, the customers etc.
  • This situation is more comparable to a co-op model, where the initial capital raise of a company is being used to invest in the marketplace populated by both the supply side and the market side
  • The basic principle of liquidity mining is seeding (developing and investing) the marketplace
  • Market distribution, when compared to an industrial or retail launch, is much larger as there is a need to create distributed capital, ownership and engagement from the entire marketplace

Token Allocation

  • From a traditional economic perspective, allocation does not matter in the long run because those who hold something value them the most
  • In the short run incentive effects need to be considered - when creating distribution tables incentive compatibility is important
  • This can be broken up into:
    • Past incentive compatibility - make sure founders, advisors, capital providers (i.e. those who got you to the present) are rewarded
    • Present incentive compatibility - getting the business model off the ground (i.e. how you generate network effects, how you start attracting more users)
    • Future incentive compatibility - when the system is up and running incentivising users matters less
  • Initial distribution matters a lot and the important questions to consider are:
    • Who will this incentivise?
    • Who will this bring into the system?
    • Why will this incentivise?
    • What signals are they receiving?
  • Trade-off between incentivising people and decentralisation, and you also want to get a price
  • At the moment tokenomics is a very informal learning process - it is very much based off of observing others and building recommendations from these observations
  • A phenomena seen across all new technologies is a type of innovation market failure - there is a weak incentive for someone to go first as others can use the existing information in their adaptation
  • It is imperative to monitor the broader ecosystem as it beneficial to be a fast follower
  • It is not about copying but rather copying with modifications

Tracer’s Growth Fund

  • From learning and observing there is one particular recommendation that the Tracer token distribution is taking - to have a very large unallocated treasury
  • This has been called the Growth Fund (25%)
  • The space is currently in a discovery phase - there are unknowns and it is very important to have a large unallocated store of capital that can be deployed (i.e. product is not working as thought, there is a market that could be served)
  • This is why such a large portion has been allocated to the Growth Fund and also why the Market Distribution is not being allocated on Day 0

Incentives

  • Mycelium will be recommending a range of liquidity mining incentives
  • With our current economy we have inherited existing infrastructure, rules and regulations - with blockchain we are building infrastructure for the future
  • In the crypto space we are essentially building entire economies from the ground up - however, there is a bounded rationality problem, we do not know the infrastructure we may need
  • Future needs are unknown - there needs a stock of funds to build the things that may be required to keep the system working and working well
  • In a political economy sense these are subsidies - from a corporate governance perspective looks more like a payment, tender or a prize (or any form of incentive compatible mechanism) to get what you need
  • This is a growing ecosystem - it is necessary to have a large treasury that grows as your ecosystem grows

Tracer Token Airdrop

  • The metrics of the airdrop will not be publicly specified until the airdrop occurs
  • Each airdrop will aim to be unique to prevent users from pre-emptively looking for airdrops
  • Airdrops will be distributed to the right people for the right reasons
  • Airdrops are often viewed as marketing stunts, however they are much sophisticated and have a much more interesting economic significance
  • Airdrops primarily build up capital within the community and facilitate decentralisation
  • Airdrops take a system that by definition has to start as a centralised mechanism and they provide a safe and random mechanism for decentralisation
  • The mechanism is retroactive on a parameter that is arbitrarily decided - ‘ungameable’ meaning tokens will be dropped on people who have contributed to the community in non-strategic manner
  • The combination of retroactive randomness and airdropping - fastest most efficient way to decentralisation in terms of capital distribution
  • TCR is going to be used as a utility regards to governance - it has to be distributed
  • Milton Friedman’s conception of an airdrop - a helicopter physically drops money over a city
  • This is a macroeconomic approach to distribution - can be likened to governments providing random stimulus to the economy and the money is completely wasted - the goal is about the weight of spending, not individual incentive effects
  • Crypto airdrops are becoming more sophisticated - want a specific group of individuals who are in some manner going to positively contribute to the system
  • Retrospective airdrop - airdrop on those who have been making large contributions to the community - akin to a prize
  • This idea of a targeted airdrop is much more efficient than the helicopter method of random distribution

Tracer Ecosystem

  • Ecosystem DAO - allocation of 3%
  • Include community initiatives - a group of interested individuals to help contribute to the Tracer community (i.e. moderating discord, creating a form of Tracer wiki, trading competitions etc.)
  • Proposal is still being built - the aim is to involve all types of members
  • Sub-DAO of the Tracer DAO - allows the transaction costs of coordinating the whole DAO to be reduced
  • Essentially have dedicated governors of the ecosystem in general who can push forward proposals - currently Mycelium is the putting forward proposals for discussion
  • Ecosystem DAO will ideally be a very significant stakeholder in Tracer
  • Growth Fund and Ecosystem DAO will allow many processes to be expediated - no long, protracted governance processes
  • Idea of an Ecosystem DAO token is being explored

Tracer Liquidity Mining

  • Sale distribution - allocation 5%
  • New product Perpetual Pools to launch in September
  • Once launched - looking to have some sort of public distribution event, an auction
  • In terms of liquidity mining there can be an actual liquid token - users can come to use the protocol and gain tokens as they are using it
  • Perpetual Swap and Perpetual Pools - 10% allocated to each
  • Looking to have it frontloaded - in the first year of a contract being released, early adopters gain more TCR tokens from using the products
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