Hi there, Spectrum Finance family! In the previous article, we discussed the project’s foundation, the airdrop for early users, and the method of token distribution among the networks.
In this note, we will dive deeper into SPF tokenomics design using digits and charts.
We believe that in a truly open and transparent ecosystem that strives to be as decentralised as possible, more than 75% of tokens should be owned by the community, not insiders. This way, the protocol ensures decentralisation regarding technology and capital distribution among its participants.
The tokenomics pie looks as follows:
- Community: 754,375,000 SPF (75.4%)
- Team & Advisors: 120,000,000 SPF (12%)
- Growth Treasury: 70,000,000 SPF (7%)
- DAO Treasury: 33,958,333.3 SPF (3.4%)
- Investors: 21,666,666.6 SPF (2.2%)
The percentage of tokens in circulation will start at 1% and gradually rise to 31% over the course of a year. With the help of Yield Farming incentives, this method was implemented to reduce selling pressure during the current market conditions and gradually build up liquidity on both sides of the protocol.
Please note that distribution through the Spectrum Network side-chain as a reward for network validators is not included in this chart. When the Spectrum Labs team publishes a consensus protocol for the network, this information will be accessible.
SPF tokenomics in detail
Community — 75.4%
A key component of the project is the Spectrum Finance community. You offer feedback, new ideas, and assistance with product testing to the team. Spectrum Finance wouldn’t have been where it is today without your assistance, and we can’t go further without you.
We have decided to allocate 3/4 of all issued SPF tokens to the community. You will be able to receive funds in different ways, which we will discuss in more detail in the future.
Community round (Ergo): 10,714,285.7 SPF (1.07%)
Public round (Ergo): 10,000,000 SPF (1%)
ISPO (Cardano): 80,000,000 SPF (8%)
Yield Farming (Ergo): 35,000,000 SPF (3.5%)
Yield Farming (Cardano): 65,000,000 SPF (6.5%)
Airdrop (Ergo): 1,461,140 SPF (0.146114%)
Airdrop (Cardano testnet): 2,199,574.3 SPF (0.22%)
Dev Grants & Bug Bounty: 50,000,000 SPF (5%)
Spectrum Network Validators: 500,000,000 SPF (50%)
Team & Advisors — 12%
Core Team: 100,000,000 SPF (10%)
The key team members will receive a portion of the reserved 10% SPF over a 36-month period, including a 12-month period of lockup. All team members who contributed on the protocol from the start until the TGE date are considered to be part of the core team.
Future Hires: 10,000,000 SPF (1%)
Individuals who join the team after the TGE date will receive 1% of the total (conditions are the same as for the core team).
Advisors: 10,000,000 SPF (1%)
1% will be distributed among protocol advisors over the course of 30 months, including 6 months of lockup.
Growth Treasury — 7%
Ergo ecosystem development: 30,000,000 SPF (3%)
Initial liquidity on CEXes: 30,000,000 SPF (3%)
Marketing: 10,000,000 SPF (1%)
DAO Treasury — 3.4%
IDO liquidity: 3,958,333.3 SPF (0.39583%)
Security reserve: 30,000,000 SPF (3%)
Investors — 2.2%
Private investors helped the Spectrum Finance team to start the Spectrum Network research and development back in May 2022. 21,666,666.6 SPF will be distributed among them over 24 months, including 3 months of lockup. 6% will unlock on the date of TGE on Cardano.
We’ve figured out digits, the purpose of each part of tokenomics and distribution rules. Let’s break down the process into its constituent parts now.
Our partners at ErgoPad (https://www.ergopad.io) will manage the token distribution on the Ergo blockchain through an IDO on their platform. The IDO will be divided into two rounds, as follows:
Community round. Each address that has engaged with the Spectrum Finance protocol at least once will receive whitelist tokens. A snapshot will be taken one day prior to the start of the round.
It will also be possible to participate in this round if you are staking ErgoPad tokens. A 20% reservation of the overall community round allocation will be made by the ErgoPad community.
On the day of IDO on Spectrum, 10% of the tokens will become available. The remaining tokens will be distributed and unlocked over a period of 6 months daily, as stated in the vesting schedule above.
Public round. Everyone who will fill the whitelist form on ergopad.io will be eligible for participation in this round. Conditions are the same.
After the Community and Public rounds, an SPF/ERG liquidity pool will be launched with provided liquidity, where everyone can swap and provide liquidity as usual. 10% of the airdrop, the community round, and the public round will become freely tradable on the platform.
Further distribution on the Ergo blockchain will occur with a help of the Yield Farming program (3.5%).
8% of tokens will be distributed among Initial Stake Pool delegators. The ISPO will be launched in Q1 2023. We will cover all the details in future articles.
Further distribution on the Cardano blockchain will occur via Yield Farming (6.5%).
As the protocol changes, more and more utility functions will be added. Let’s go over the main ones quickly:
Off-chain executors’ fees. Users will be able to pay fees to off-chain executors not only in native currencies (like ERG or ADA), but also in SPF. On the other hand, people who run bots off-chain will be able to earn SPF. This utility function will be available on Ergo right after the token launch.
Spectrum Networks validators reward. SPF will be used as a reward for validators who keep the network safe; Protocol fees will go down, and cross-chain operations will cost a penny in the future. SPF tokens will be used to pay this fee.
Protocol fee reduction. Protocol fees will go down, and cross-chain operations will cost a penny in the future. SPF tokens will be used to pay this fee.
DAO and Governance
SPF token will also take a part in Spectrum Finance ecosystem governance and DAO. Recent researches showed us that establishing governance on top of the Layer 1 blockchains is not efficient. So we decided to implement governance directly on top of the Spectrum Network side-chain so that we wouldn’t waste time implementing this functionality on layer 1 blockchains.
We plan to gradually increase the pace of the research and development of the best protocol governance solutions in order to transfer ownership to the Spectrum Finance community. Later we will cover this topic deeply.
In the next few days, we will share more detailed information about the token sale on ErgoPad, stay tuned.
Read the previous article about the SPF airdrop, minting and blockchain distribution.
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