Tokenomics

WHAT – Two parts

1. Takers/new users — We are proposing a new reward mechanism to attract liquidity and bootstrap trading volumes. Similar to Liquidity Mining, there will be a weekly distribution of L2 tokens based on volume traded. This is intended to be highly attractive to bootstrap trading volumes for the first few months of derivatives trading then become net-positive quickly over time. This means the amount of L2 earned in the initial period, will likely well exceed the value of trading fees paid by those traders.
2. Makers/Institutional Market Makers — A portion of this pool will be paid to market makers over a 3 year period to bring base liquidity to key trading pairs.

WHY

Attracting liquidity and trade volume is essential. As you are aware, the DeFi landscape is now highly competitive. So we wanted to implement an additional mechanism for users to earn rewards for supporting the ecosystem. This has proven to be a successful model that incentivizes usage and long term growth.
To assist in attracting traders, we also had to secure a full product pipeline. Thankfully our partnership with BNC allows for full access to their 12–15 indices. For example they have just launched a DeFi index.

Think DeFi is all noise? Short it to zero with up to 100x leverage. We even secured a global name to market make this index and many other upcoming products.

HOW

We are proposing 50m tokens issued over a 12 month curve which rewards executed taker orders each Friday. Full description of this exciting initiative will be posted closer to liquidity rewards going live. Again, expect it to be generous for early adopters in the first few weeks/months — this is designed to bootstrap adoption.We are proposing 10m tokens for institutional market makers, paid over 3 years. We can top this up from the treasury and some key partners expressed interest to chip in and grow this MM incentive pool if it’s required.

WHEN

You guessed it — Soon™… But hey! We’ve clearly delivered everything we said we would for 3 years now. This is priority and a matter of thorough testing. It is also important to get the Token Migration and Staking out of the way.

WHAT

We will be allocating 35M tokens for Ecosystem Growth, Bounties, Grants and Node Validators. We are also encouraging our partners to participate in matching funding to support the development of an ecosystem of apps powered by Gluon.

This will include:

• Development grants (who wants an AMM? Prediction Markets? Instant and gas-free ERC20 transfers/payments?),
• Validator operators, and
• An ecosystem fund to provide robust due diligence so the projects getting funded have a strong likelihood of success.

WHY

We keep hearing all the ways that projects could integrate Gluon to scale DeFi and provide a much faster/more responsive user experience. The competition between various Layer2 protocols will ultimately come down to the solution that addresses the actual needs of developers and has the broadest adoption. We are prepared to back that up with funding where it makes sense to do so.

HOW

We are proposing that a professional VC does commercial and technical due diligence on startups and companies which wish to develop on Gluon and the token community has full access to the due diligence materials and votes on which projects get funded. This is very similar to NEM Ventures (XEM), Cardano Ventures (ADA) or xSpring (XRP) using the treasury/reserve tokens to invest into their respective ecosystems — except we are proposing that our growing community has the final vote for which projects are funded. This is inline with further decentralizing our project and turning the token into a governance token over time.

WHEN

We have actually secured some incredible partners to help with these operations. Obviously we need to get token migration, staking and liquidity rewards in place but we feel it is realistic to make a start well before the end of this year on a few initial bounties and grants. And rest assured that there will be smart treasury management and likely KPI’s and vesting periods involved, to minimize supply pressure.

WHAT

Leverj has developed a governance framework that allows voting on proposals to migrate to newer App Logic smart contracts without undermining the balances of users that have committed assets. We will be using this for upgrading Leverj contracts from Q4 2020.

WHY

Distribution to users of Gluon can achieve a much broader and fairer governance to ensure the future stability of the protocol while avoiding centralization risks. By continuing to grow the percentage of tokens circulating among users of Leverj/Gluon we expect to see the decentralization improve over time.

WHEN

This increase in supply will be gradual. For example liquidity rewards will be paid to traders on a weekly basis. The Node Validator rewards monthly. Ecosystem grants and investments, we will likely have a bi-monthly batch that is voted on by token holders and so forth.

HOW

Part of the ‘how’ is a reconfirmation that because our intention has always been to migrate into a DAO, our company equity is actually worthless. This is the reason the founders/company own so many tokens. They are not for sale. They are so we can have revenues and pay for operations. We expect staking to be *the* key revenue driver for us and therefore will stake our tokens. The aim is to have the community own over 50% of the supply eventually (around 18–24 months from now).

We explored a wide range of concepts and the best way to surmise is to state that super-affiliates are a multi-billion dollar industry and they are used to life-time cash rewards. Instead of adding friction by offering payments in our native governance token, we are modeling out a % of staked revenues to go into an affiliate payout pool. Network / Affiliate marketing should be a powerful force if deployed correctly and we expect to have something in place by the time the token migration and staking has been activated.

We are setting aside a small amount of tokens to cover the costs of insuring the leverj.io platform against catastrophic technical failure. While our platform’s smart contracts have received several rigorous audits by 3rd parties, we have listened further to the community and agree insurance against unlikely technical failure will further protect the project.