# **15. Tokenomics**
###### tags: `Done`, `Education`

**Purpose:**
* Understand the tokens used by 3.Finance.
* Understand how the tokens on 3.Finance are obtained / minted.

Content:

> Definitions
> References
> Tokens (In brief)
> Tokens (In detail)
>> 3Fi tokens (ERC20)
>> 3Fi NFTs (ERC721)
>> Guild tokens (ERC20)
>> Guild NFTs (ERC721)

(NFT token standard to be selected and or defined by Sir.Conrad)

## Definitions
*(If there is a term in this document you wish clarification on, please add a comment and I will add a definition for that term)*

## References
* Compound tokens: https://hackmd.io/@3Fi-4-DeFi/3Fi-CompoundTokens
* Liquid tokens: https://hackmd.io/@3Fi-4-DeFi/3Fi-Liquid-Tokens
* 3Fi Collateral: https://hackmd.io/@3Fi-4-DeFi/3Fi-Collateral

## Tokens (In brief)
3.Finance utilises two (2) token stadards: ERC20 and ERC721 (ERC721 to be confirmed by Sir Conrad)
3.Finance utilises the aformentioned token standards in the following ways:

1. **3Fi tokens** are used as the governance tokens for 3.Finance.
2. **3Fi NFTs** and **Guild NFTs** are collectively used as a mechanism to distribute protocol revenue AND a second level of governance.
3. **Guild tokens** are used to account for investment (debt liability) loaned to the 3.Finance protocol and provide access to Guild NFTs.

> **Amendment** of the above description: Dec' 3rd, 2022.

## Tokens (In detail)

### 3Fi Tokens

>PURPOSE

3Fi tokens exist to consolidate governance rights and responsibilities at every level of an asset stack. This includes governance rights and responsibilities of the 3.Finance protocol.

> **Amendment:**
> 3Fi token holders will have the right to produce and make proposals for the community to consider.
> The community of 3Fi token holders will vote to pass or reject the proposals made.
> If a proposal passes, that proposal will pass to **Guild NFT** holders for a second and final vote.
> See: **Guild NFTs for further details**.

>MODEL

With respect to governance and voting power, 3Fi tokens are multi-dimensional. As the number of ‘asset stacks’ grow on 3.Finance, this multi-dimensional characteristic will surface more frequently.

***For instance:***

At the macro level - All 3Fi tokens from all asset stacks are used as votes to govern proposals and signal direction specific to the 3.Finance protocol.

At the local level - 3Fi tokens specific to an asset stack are used as votes to govern proposals and determine direction specific to the asset stack to which it belongs.

And…

At the micro level - 3Fi tokens specific to an asset stack retain and receive all governance rights, responsibilities and benefits found in each of the underlying assets. I.E. The assets that constitute the asset stack.

>BENEFITS

* 3Fi tokens are NOT pre-mined… EVER!
* 3Fi tokens inherit hard caps dictated by the tokens within the asset stack. (See below for asset stack description)
* 3Fi tokens are specific to one asset foundation, also referred to as an asset stack.
* 3Fi token governance rights and responsibilities:
* **Macro: 1 token, 1 vote**
* Votes allocated for or against, to signal 3.Finance protocol proposals.
* Votes allocated for or against, to decide 3.Finance protocol revenue allocations. (Growth, liability and debt (re)payments)
* Votes allocated for or against, to decide 3.Finance debt creation and management. (Mint and allocate)
* Votes allocated for or against, to decide 3.Finance debt allocations. (Growth and liability payments)

* **Local: 1 token, 1 vote**
* Votes allocated for or against, to accept or reject Money App applications.
* Votes allocated for or against, to accept or reject Money App design applications.
* Votes allocated for or against, to accept or reject Money App developer integrations.

* **Micro: 1 token, 1 vote**
* Votes allocating assigned weights, directing collateral allocations. (NO delegation available)

***Specific to Curve asset stack:***
Votes allocating assigned weights, Curve bribes. (Delegation available & automated)
Votes allocating assigned weights, Convex bribes. (Delegation available & automated)
Votes receiving pro-rata weighted Curve, Convex & Bent protocol revenue.

***Other notes:***
Different ‘flavours’ of 3Fi tokens will exist.
One ‘flavour’ of 3Fi token does NOT impede or dilute the rights of any other ‘flavour’ of 3Fi token.
One ‘flavour’ of 3Fi token can only exist within one (1) asset stack.
Only three (3) tokens may make up an asset stack: x1 Grass Roots asset and x2 control assets.
3Fi tokens are minted by locking both control assets.

***Example:***
3.Finance will be launching with the Curve asset stack first.
The Curve asset stack will consist of: CRV, CVX and BENT.
CRV is the grass roots token and is therefore also used as collateral.
CVX and BENT are both control assets for this asset stack.
Curve based 3Fi tokens (c3Fi) are minted when vlBCVX and vlBENT are locked within the applicable 3.Finance smart contract.
3sdCRV is used with 3Fi tokens to mint 3Fi NFT’s.

>Governance process

This will be defined within our first official Money App. **(The Guild Money App)**

### 3Fi NFTs

>PURPOSE

3Fi NFTs exist to distribute protocol revenue to committed 3Fi token holders.
As 3Fi tokens are required to mint NFTs, the share of revenue received is calculated in part; based on the number of 3Fi tokens held by the NFT smart contract(s).

>MODEL

Like 3Fi tokens, 3Fi NFT’s are specific to an asset stack.
Within each asset stack, there will be five (5) NFT levels. Each NFT a fractal to the level before and after. Here are how the 5 NFT power levels break down for the Curve asset-stack:

**ParAi**
Requires 100 3Fi tokens and 1,000 3sdCRV LP tokens.

**TomAi**
Requires 1,000 3Fi tokens and 10,000 3sdCRV LP tokens,
Or merge 10 ParAi NFTs.

**MolAi**
Requires 10,000 3Fi tokens and 100,000 3sdCRV LP tokens,
Or merge 10 TomAi NFTs or 100 ParAi NFTs.

**MatAi**
Requires 100,000 3Fi tokens and 1,000,000 3sdCRV LP tokens,
Or merge 10 MolAi NFTs or 100 TomAi NFTs or 1,000 ParAi NFTs.

**SorAi**
Requires 300,000 3Fi tokens and 3,000,000 3sdCRV LP tokens,
Or merge 3 MatAi NFTs or 30 MolAi NFTs or 300 TomAi NFTs or 3,000 ParAi NFTs.

>BENEFITS

All 3Fi NFTs receive a share of protocol revenue.

> **Amendment:**
> How this revenue is distrubted will be described under https://hackmd.io/@3Fi-4-DeFi/3Fi-Revenue-Share

>NFT Theoretical Hard Caps:

The following information reflect hard caps for each NFT individually. However from a collective perspective, these hard caps are unrealistic. To elaborate, each stated hard cap assumes the entirety of all underlying assets to be deposited and used as collateral for the purpose of minting that specific NFT.

* **ParAi**, THC = 1,000,000 NFTs
* **TomAi**, THC = 100,000 NFTs
* **MolAi**, THC = 10,000 NFTs
* **MatAi**, THC = 1,000 NFTs
* **SorAi**, THC = 333 NFTs

## The Guild

>PURPOSE

**Guild tokens** exist to account for and quantify investment contributions made during the initial creation phase and those future contributions made post launch for the continued growth of the 3.Finance protocol.

**Guild NFTs** exist as a second layer to governance proposals presented by the community of 3Fi token holders. This second layer ensures those who invest in the future of 3.Finance also have a say in the governance of the protocol.

>MODEL

Unlike 3Fi tokens or NFTs, Guage tokens and NFTs are not specific to an asset-stack. All rights and responsibilities afforded to Guild tokens and NFTs are therefore applicable to the whole of the 3.Finance protocol.

**Pre-Launch minting model:**
* For proven (on chain) out of pocket expenses by accepted, internally doxed and current team members,
* As compensation for time spent and intellectual property created during the ideation phase of the project,

**Post-Launch minting model:**

* *Details to be confirmed prior to launch.*

**Guild NFT minting model:**
* Any number of Guild tokens may be staked in the Guild NFT smart contract.
* Guild tokens staked in the Guild NFT smart contract will be auto-converted to DAI or FRAX unless the Guild tokens are locked.
* A Guild NFT may then be minted for every 10,000 Guild tokens staked. This process locks the Guild tokens.
* Excess Guild tokens within the NFT smart contract will be held as a floating balance until one of the following occurs:
* The excess is withdrawn by the owner,
* The excess is converted to DAI or FRAX at a rate of 1:1 by the protocol during the revenue distribution process.
* The excess reaches the defined amount needed to mint a further Guild NFTs. The user will then be able to mint the NFT at their convenience. (This action is optional)
* Guild tokens converted to DAI or FRAX will be claimable by the owner at any time from the Guild NFT smart contract.
* Only staked and unlocked Guild tokens will be converted to DAI or FRAX automatically.
* For more details on what happens next if there is excess DAI or FRAX after debt repayment is met, see: https://hackmd.io/@3Fi-4-DeFi/3Fi-Revenue-Share

> **Amendment:** Simplification of above steps.

>BENEFITS

Guild tokens hold the right to be converted to FRAX tokens at a rate of 1:1. As revenue is accrued, a portion will be convert to DAI or FRAX and assigned to debt destruction. Any/all staked Guild tokens are then converted automatically. Any FRAX excess will progress to other needs within the protocol as described in: https://hackmd.io/@3Fi-4-DeFi/3Fi-Revenue-Share.

Guild NFTs hold final voting rights over proposals made by 3Fi governance token holders.
In other words;

* 3Fi token holders are akin to a Senate; who produce and vote on proposals.
* Should a proposal pass, it is passed to the what is akin to a House or Board; who ratify or reject the proposal.

END