Tokenomics
How the DAEM token orchestrates the whole ecosystem
The native token of the Daemons platform is called DAEM. The DAEM token can be used by:
- Script Owners to incentivize Script Executors to execute their scripts via tipping.
- Daemons platform to reward Script Executors each time they run a pending "executable" Script
- Token owners to get access to the platform's governance rights
- Token owners to get access to the platform's profits
The DAEM token and tokenomics have been designed with a clear goal: to have a sustainable and investible token, with a net deflationary model, to make sure its value increases over time. Its tokenomic model is a culmination of all the innovations and designs that have been successful in DeFi so far. We basically studied the history of all DeFi and got the best part of each model.
The main aspects of the DAEM tokenomic model are:
- Finite supply at 1B tokens
- Low emission, proportional to the platform volumes
- Profit redistributions, users are the first beneficiary of the platform's activity
- Platform buybacks, reducing the amount of DAEM in circulation
- Protocol-Owned Liquidity, a perpetually locked liquidity pool to stabilize the token's price
The DAEM token will have a fixed supply of 1B tokens. These tokens will be generated at the genesis and will be distributed in the following manner:
- 75% will be distributed to the platform's users
- 22.5% will be given to the team and investors, with a vesting period of 4 years.
- 2.5% will be placed in an emergency fund and will be used if the platform is in need
After the initial minting, no new DAEM tokens will be created and the supply will stay constant.
The DAEM tokens stored in the treasury will be given as a reward to the Script Executors, in a measure proportional to what they spend in gas to execute the scripts.
For example, if John executes a Script with ID 11225566 and spends 0.001 ETH for it, Daemons will reward him with an equivalent amount of DAEM tokens, that will be claimable anytime from the platform.
The execution flow always follows these steps:
- Step 1: anyone can create Scripts via Daemons' UI, without coding knowledge or costs. They just need to pick an action and, optionally, some conditions
- Step 2: The Executors run the Script without knowing who the Script belongs to (only the public address). Essentially, they will be paying for the gas required for the Script execution and will be rewarded in DAEM tokens
- Step 3: The Script Owner gets their Script executed and the cost of the Script execution is deducted from the coins in the Gas Tank
- Step 4: The coins deducted from the Script Owner are deposited into the Daemons Treasury, which splits it between Profit Redistribution, Liquidity Pool, and Team Commission.
The treasury will automatically split its funds into the following 3 categories:
- Profit Redistribution
- Liquidity Pool
- Commissions
The initial percentages are shown in the donut chart below. The percentages are subject to change through governance.
DeFi platforms generally push users to stake their tokens through hyper-inflationary strategies that dilute the value of the token over time. These strategies generally involve minting more tokens, increasing the circulating supply exponentially while increasing sell pressure for the platform's native token. Daemons is taking a different approach, that's why we'll reward DAEM holders with the chain's native coin (e.g. ETH for Ethereum, AVAX for Avalanche, etc.) rather than more DAEM tokens.
The Profits-Redistribution pool represents the amount of ETH (or other coins, depending on the chain) that will be redistributed to DAEM stakers over time. It will initially be set to 50% of all the ETH entering the Treasury.
Users will be able to stake DAEM directly on the platform without any locking period or restriction of any kind.
Due to this special design, the profits distributed are not influenced by the price of DAEM. For example, if the value of DAEM drops, the APY would rise accordingly, incentivizing more and more people to buy/earn the DAEM token and stake it. Even if the price dropped to 0, it would still be valuable to hold, as it gives access to the ETH in the treasury.
DeFi 2.0 tried to solve a huge problem in DeFi: mercenary capital. A common occurrence in DeFi applications is a lot of users joining a protocol to take advantage of incentivized yield farming. As soon as the incentives are gone, they dump the application's token and move their liquidity elsewhere, leaving the protocol vulnerable and with drained liquidity pools.
At Daemons, we took the concept of Protocol-Owned-Liquidity and stripped it of all the inflationary ponzinomics and rebasing token tactics. What remains is a sustainable way to lock capital forever in a Liquidity Pool, owned by the protocol, benefitting every user of the ecosystem.
Example: Each time ETH proceeds enter the treasury, it will be allocated to the Liquidity-Pool portion (initially 45%) and:
- use 50% of it to buy back DAEM at market price
- use the remaining 50% along with the purchased DAEM as an LP position
- deposit the LP position as Protocol-owned liquidity, locking the funds forever
Benefits of the proposed approach:
- Ensures that DAEM stays liquid and easy to swap
- Protects the price from fluctuations when whales sell or buy huge quantities of tokens
- Protects DAEM holders from bank runs
A small percentage of the ETH entering the treasury (initially 5%) will be used to pay developers, servers, marketing, etc. These funds will be utilized in a way that platform can work at its best, grow and expand its operations, and be maintained at the highest security and performance standards.
The novel concept of the Perpetual Token Machine (PTM) is a threshold that checks the Treasury's holding in both DAEM tokens but also in Protocol-Owned Liquidity in the form of a Liquidity Pool position.
As discussed earlier in this document, 45% of the protocol's profits are going to be used for DAEM buybacks through the open market. Those DAEM tokens will be used to increase the Treasury's position in the liquidity pool on that particular chain (e.g. DAEM-ETH). However, we don't want the Treasury to keep increasing its position ad infinitum. This is where the PTM comes into play.
- The treasury will keep increasing its LP position with the profits until it will contain 10% of the circulating DAEM on that chain.
- After reaching that goal, the Treasury will keep utilizing the same percentage of profits for pure buybacks in order to replenish its DAEM token reserves.
- The Treasury will continue dynamically adjusting its behavior according to this condition
The benefits of this approach are threefold:
- 1.It keeps the DAEM token reserves healthy in order to keep rewarding script executors.
- 2.It ensures that the DAEM liquidity pool has sufficient liquidity for swaps while not being amassed by the protocol.
- 3.Further helps with price stability as it manages to lock and redistribute DAEM tokens dynamically based on demand and platform usage.
Here is a schema to sum up how the tokens are distributed:
A schema describing the algorithm used to define whether the profits will be used to increase the LP position or purely to buyback DAEM tokens
Daemons' community is our most important asset. That's why we will let the community decide about all the thresholds we just discussed. You can find more info on the Governance page.
Last modified 1yr ago