AirDAO Tokenomics Upgrade
AirDAO’s proposed tokenomics upgrade will bring new features to the AirDAO ecosystem, including a hard cap on AMB supply and deflationary token-burning mechanisms.
Alongside the hard cap and token burning, the tokenomics proposal also includes upgrades to governance, an upgraded rewards structure, and rewards for governance participation.
Implementation of the upgrades proposed within the tokenomics paper will start in 2023.
The AirDAO community will vote on whether the upgrades are implemented using DAO governance and Snapshot to vote with AMB.
Updating AMB’s tokenomics is essential to the success of the next phase of the AirDAO ecosystem. Implementing voting tokenomics enables our transition to DAO governance and ensures that the community is represented in future changes to the protocol. The update to the rewards structure reaffirms the importance of the validators that secure AirDAO’s blockchain and rewards them for their contribution; introducing on-and-offboarding delays for nodes further enhances network security.
The new rewards structure also offers a liquid staking solution that ensures all community members can contribute towards securing the network due to its lower barriers to entry. The Bond Marketplace guarantees sustainable protocol-owned liquidity for the AirDAO ecosystem. And finally, the institution of a max token supply, with a goal for an eventual deflationary supply, is crucial for the long-term sustainability of the ecosystem — and implementing burning mechanisms is essential to accomplish this.
Together, these updates establish AirDAO as a community-driven Layer 1 project, set in motion the plan for a deflationary AMB token supply, and ensure the stability of the network for the long term with an upgraded rewards structure.
IMPORTANT: The following is a brief overview of the proposed tokenomics upgrade; please take the time to watch and read all of the tokenomics resources at the bottom of this post to get complete information on the proposed upgrade to the tokenomics.
HARDCAP ON AMB SUPPLY
The proposed tokenomics upgrade will cap supply at 6.5b AMB tokens, including the current circulating supply of 1.5b AMB. The additional, uncirculating AMB supply will be printed at once and put into publicly verifiable multi-sig wallets and smart contracts; each wallet will have clear use cases and functions that the AirDAO team will communicate to the community.
NEW TOKEN USE CASES
Synthetic AMB (sAMB) is AMB that will be wrapped for use on other blockchains.
Vote Escrowed AMB (veAMB) is AMB that is locked to participate in the DAO governance.
Vested AMB (vAMB) Users that stake AMB in validator nodes receive block rewards for providing assets and services to the network. To incentivize node operators’ reliability, they will receive a portion of the rewards immediately at the first reward payout date, with the rest vested in the form of vAMB.
vAMB bonds will be tradable on the AirDAO Bond Market for various crypto assets.
AMB BURNING MECHANISMS
Alongside the AMB hard cap, several burning mechanisms will be implemented to create a deflationary supply.
Governance burning: Any rewards accrued during the veAMB unlock period will be burned, and penalties accrued due to misbehavior during the governance process will burn AMB.
Transaction Fee burning: 70% of the Base Fee will go to validators, and 30% will either go to the AirDAO Treasury for revenue sharing amongst governance participants or be burned. The Extra Fee goes to the AirDAO Treasury to be shared amongst governance participants or is burned.
Ecosystem burning: Third-party dApps that build on AirDAO will have their own burning mechanisms. Current AirDAO subDAOs (Bridge, DEX) send 20% of gross revenue to AirDAO.
NEW TRANSACTION FEE TYPES
Base Fee: The basic transaction fee for AirDAO, initially set at 1 AMB.
Extra Fee: An optional fee to speed up transactions.
Contract Call Fee: A variable fee set by the contract deployer, with the fee going to the deployer’s address or assigned to an NFT. The Contract Call fee incentivizes developers to create dApps that generate activity on AirDAO.
DAO Governance will be implemented for AirDAO, with the end goal being the entire blockchain and ecosystem under the control of the community via DAO governance.
Token-based voting will be instituted, with users locking AMB to receive veAMB to participate in governance. veAMB holders participating in governance will be eligible to earn a share of the revenue from the AirDAO Treasury.
UPGRADED REWARDS STRUCTURE
Three types of staking will be implemented.
Validator Staking: Individual validator nodes.
Locked Staking: Pooled validator staking with an on-and-offboarding delay.
Liquid Staking: Fully liquid validator staking without delays in offboarding.
The current AMB block rewards are set at a fixed rate. The tokenomics proposal will implement elastic rate block rewards with higher percentages of AMB locked increasing the rewards per block.
The AirDAO Bond Marketplace will feature the offering of vested AMB (vAMB) in the form of bonds. These bonds will be available for redemption through AirDAO at the time of their expiry and will also be tradable pre-expiry on the open market.
The AirDAO treasury will receive a diversified income from multiple revenue streams, including transaction fees, subDAO revenue sharing, the yield from liquidity provision, and more.
veAMB holders participating in governance will be eligible to earn a share of the revenue from the AirDAO Treasury. The community can decide through DAO governance more revenue streams for the AirDAO Treasury; for example, they can vote for the AirDAO Treasury to receive a portion of the Base fee and the full Extra fee or if those fees are burned.
IMPORTANT: EDUCATIONAL RESOURCES MUST BE READ AND WATCHED.
AirDAO CTO Igor Stadnyk’s Tokenomics Presentation: AirDAO Bootcamp: CTO Igor Stadnyk - AMB Tokenomics Upgrade - YouTube
Tokenomics Announcement Blog Post: AirDAO: Tokenomics. Significant progress has been made in… | by AirDAO | Feb, 2023 | AirDAO
Deflationary AMB Blog Post: AirDAO: Deflationary AMB. Achieving a net-deflationary supply for… | by AirDAO | Feb, 2023 | AirDAO
Tokenomics Paper: Tokenomics