OptionBlox/YieldBlox Stellar Seed Fund Finals & Governance Token Tokenomics
Stellar Seed Fund Finals
We’re proud to announce that OptionBlox/YieldBlox have made it into the finals of the Stellar Seed Fund! This means we’ll now be competing with 7 other businesses building on Stellar to receive a portion of the Seed Fund Pool.
You can view our Seed Fund Submission here: https://communityfund.stellar.org/seed-fund#/entry/1e354b3b328209c85dc1d978cb1ea527d5df60dc04d8ae794f04517bea01d852
Governance Token Tokenomics
If you’ve had a chance to check out our docs pages (https://docs.optionblox.com/#/ | https://docs.yieldblox.com/#/), you’ll know that both OptionBlox and YieldBlox use a governance token governance model. Protocol users receive governance tokens for using the protocols and can use these governance tokens to submit and vote on changes to the protocol using our governance txFunction. There are separate Governance tokens for YieldBlox and OptionBlox, YBX for YieldBlox, and OBX for OptionBlox. Both of these tokens are issued on the Stellar Ledger, so users can hold them in Stellar wallets, send them to other Stellar users, and trade them on the DEX. In this blog post, we focus on the tokenomics for YBX as YieldBlox will launch before OptionBlox.
YBX Distribution Model
YBX tokens are distributed to protocol users every Monday with a 1 week lag time. This means if you deposit assets in YieldBlox or take out a loan from YieldBlox, you receive governance tokens for the assets you borrowed or lent at 00:00 UTC the Monday after next. We use our governance issuance function to calculate how many governance tokens to mint on a given Monday. Next, the protocol splits the calculated governance issuance between the asset types supported by the protocol. Finally, governance tokens are distributed to users based on the proportion of YBX pool tokens that a user owns. YBX pool tokens represent the assets a user has deposited into the protocol for lending or collateral purposes.
YBX Governance Issuance Function
The governance issuance function is an exponential K distribution with a peak transition to the origin. We chose this function form as we wanted to continually reduce the number of governance tokens minted in order to incentivize users to use protocol early on. This function form also allowed our only variable to be the total number of governance tokens currently outstanding. Total governance tokens outstanding is a desirable variable for a few reasons. First, it’s easy to track on the Stellar ledger. Second, we want governance issuance to decrease as more governance tokens are minted but to increase again if governance tokens are burned for some reason. Here is the equation:
This equation will lead to 15,000,000 YBX tokens being issued over 10 years assuming governance token holders do not vote to mint or burn additional tokens. Below is a graph that exhibits governance issuance over the first year.
Initial YBX Issuance
There will be a pre-mint of 3,000,000 YBX shortly before the protocol launches which will be distributed to Script3, initial protocol contributors, and community members through an air-drop. This will allow Script3 and other initial protocol contributors to maintain control over the YieldBlox protocol over the first few months to ensure that we can push any necessary updates through using the governance txFunction. This initial issuance will be quickly diluted through the governance distribution process so that the protocol will be controlled by the community. Here are some charts that show how the initial pre-mine will be distributed and how governance token ownership will change over time:
Script3 will also redistribute our governance tokens to the community through bug bounties and rewards for improving the protocol.
We’ve spent most of the last month testing txFunctions on the TSS test network. We’ve had very positive results and are excited to share more about the txFunctions in the near future.
We are currently hiring UX Design, Front-End Development, and Marketing positions. We’re considering both long-term positions and contracting work. Reach out by emailing us at email@example.com and we’ll be happy to set up a meeting with you.