# Monēta Tokenomics <table style="width: 100%"> <tbody style="width: 100%; display: inline-table"> <tr> <th>Authors</th> <td>Nikola, Ivan</td> </tr> <tr> <th>Advisors</th> <td>rubber^duck</td> </tr> <tr> <th>Status</th> <td>Draft</td> </tr> <tr> <th>Version</th> <td>0.4</td> </tr> </tbody> </table> ## Allocation and Distribution [TBD] Monēta plans to adopt a standard approach when it comes to token distribution. Influenced by [DAO - First capital formation](https://blog.synthetix.io/dao-first-capital-formation/). ## Supply [TBD] The token is supposed to be inflationary - gradually decreasing inflation to the terminal value of 3%. ## Token Purpose The Monēta tokens will be obtainable through the secondary market and yield farming based on algorithmic performance - this acts as an incentive for the [algo-creators](#Glossary). There are two purposes for the token. The primary one is staking - granting the staker fees generated by the algorithmic trades. The secondary purpose is governance. ## Initial Algorithmic Coin Offerings The Monēta protocol allows [algo-creators](#Glossary) to represent their strategy as ERC20 tokens on the Ethereum blockchain. [Algo-creators](#Glossary) raise liquidity for their algorithm through token generation orchestrated by the protocol. [Algo-tokens](#Glossary) will be available for purchase either from the protocol or on the secondary market. ### Value The initial value of every [algo-token](#Glossary) issued by the protocol is $1. Once trading operations are initiated the token value is determined by the performance of the algorithm. ### Minting When the entire supply is bought out, the secondary market might decide to place premium price on the token. Increasing the supply at that point is sure to have impact over the public price. To minimize any negative effect the additional supply could have the protocol sets a process in place. The mint date is set to a point of time that is based on several factors: - Tokens' current [floor price](#Glossary) - Algorithms' operating liquidity - Algorithms' growth speed (performance per time unit) - The size of the additional supply to be minted ### Burning [Algo-tokens](#Glossary) can be sold to the protocol for their [floor price](#Glossary). This effectively reduces the liquidity with which the algorithm operates. ### Locking Reaching negative market impact levels - algorithm liquidity is big enough to result in losses due to slippage or other side effects. In those scenarios, the [algo-creator](#Glossary) can lock a portion of the operating liquidity. [Algo-token](#Glossary) holders can claim part of the locked liquidity that corresponds to their share of the supply. The result is reduced operating liquidity and lower token [floor price](#Glossary). ## Fees There are three types of fees that are applied for every trade. ### Protocol Transaction fees Fees are applied over the volume used in the trade done through the protocol. The typical fee range is 1-50 bps (0.01% - 0.5%). ### Creator Performance fees [Algo-creators](#Glossary) can determine fees in the range of 0-5000bps (1% - 50%). Any change in fees is announced in advance (duration is determined by the protocol) so that interested parties can react in time. ### Protocol Performance fees These fees are applied only over the value collected through the **Creator Performance Fees**. The fee ranges are 100-2000bps (1% - 20%). The fee size is based on the floor price and operating liquidity. <iframe width="768" height="432" src="https://miro.com/app/embed/o9J_lABGXQc=/?pres=1&frameId=3074457366500654598" frameBorder="0" scrolling="no" allowFullScreen></iframe> ## Incentives There are two types of incentives available for stakers and [algo-creators](#Glossary). ### Algorithmic Performance Mining Based on weekly performance trade algorithms will be granted Monēta token rewards. Currently, the only requirement states that the [algo-tokens'](#Glosary) [floor price](#Glossary) needs to be above the previous weeks' floor price: the trading performed over the reviewed week should not result in loss. The rewards size is based on the liquidity locked-in protocol and the current floor price. The escrow period is still in discussion. ### Staking rewards Protocol performance fees and Protocol transaction fees will be distributed to stakers. ## Glossary ###### algo-creators: The people responsible for algorithm creation and maintenance. ###### algo-tokens: Algorithmic Tokens issued by the Monēta protocol. ###### Floor price: The price of an algo-token recognized by the platform. e.g. There are 2 tokens that form the entire supply. The value locked in the protocol for the corresponding algorithm is $10. The *floor* price of each token is going to be $5. ## Projections - Work in progress Analysis of what the protocol generates for its creators, stakers etc. can be found here.