A Tokenomic Proposal For the ZEOS Launch Group: Creating A Zero-Knowledge Bitcoin Equivalent on Ultra

Written By: Matthias Schönebeck & Kameron James

Dear Community,

We’re excited to share this proposal after a brief hiatus. This document presents a tokenomics framework for the ZEOS Launch Group to consider and potentially implement, should they find it aligns with their vision for the project.

For those familiar with our previous ZEOS tokenomics framework, you’ll recognize much of the core structure. However, we’ve made several strategic adjustments to ensure long-term sustainability and accommodate the project’s evolving needs. These refinements focus on securing the necessary resources to maintain project health and support future growth initiatives at the founder’s discretion.

Introduction

Tokenomics are crucial in shaping the future success of cryptocurrencies. Bitcoin’s success, for instance, can be attributed to its straightforward tokenomics model, characterized by a fixed supply of 21 million coins. This limitation not only fosters value preservation but also instills investor confidence, contrasting sharply with the limitless issuance of fiat currencies. Bitcoin’s embedded scarcity underpins its credibility as a long-term store of value.

In the evolving crypto landscape, where cryptocurrencies transition from speculative assets to practical mediums of exchange, transparent and understandable tokenomics are essential for real-world application. Bitcoin’s clear issuance and policy framework lay the foundation for its widespread trust and adoption.

As ZEOS nears its long-awaited launch, a pivotal aspect yet to be defined is its tokenomic structure. Matthias, the lead developer, advocates for a community-driven approach to shaping ZEOS’s tokenomics.

It is our hope that the Launch Group will consider this proposal, as its aim is to spark a constructive dialogue about the ideal tokenomic framework for ZEOS.

The Proposal

As the Launch Group explores ways to enhance ZEOS’s position in the cryptocurrency market, we propose adopting a deflationary tokenomic model. By integrating ZEOS’s inherent privacy features with a scarcity-inducing token model, we could position ZEOS comparably to Bitcoin, offering a compelling blend of privacy and financial prudence.

The Explanation

To utilize the ZEOS Protocol, users would incur a transaction fee. This involves setting the transaction fee, which the ZEOS Fractal Council will continuously adjust in response to the market value of the ZEOS token. This fee is then allocated into three distinct areas:

1. The ZEOS Team (30%)

Thirty percent of transaction fees will be allocated to the ZEOS team to be used at their discretion. The vision of the project’s founder is that this fee amount would enable further development of the ZEOS protocol and ecosystem.

2. ZEOS Fractal Council Fund (60%)

Sixty percent of transaction fees generated are allocated to the Zeos Fractal Ultra account, managed by the ZEOS Fractal Council.

The role of the Council is to strategically direct these funds towards financing impactful projects that align with ZEOS’ goals, as well as rewarding participants in the weekly ZEOS Fractal meetings.

The 60% allocation is based on the current global supply of ZEOS tokens. Upon reaching 21 million ZEOS, the 60% allocation will be increased to 70%.

3. Burn Mechanism (10%)

The transaction fee mechanism in the ZEOS ecosystem is designed to enhance the scarcity of ZEOS tokens by permanently removing a portion of them from circulation. This burn would be set to 10% of the transaction fee set by the ZEOS fractal, with that 10% burn being reduced to 0% upon the total supply of ZEOS deflating down to 21 million. When this happens, the ZEOS fractal would see an increase of 10% of the transaction fee allocated to it.

(Adjusted from the last article to meet the founders vision)

The rationale for each area of transaction fee allocation:

1. ZEOS Team: All though not for the sole purpose of continued support and development, this component is designed to allow the ZEOS Team to continue development on the ZEOS protocol and ecosystem at their discretion.
2. The Fractal Account: Central to the ZEOS Fractal community, the fractal account is instrumental in driving ecosystem initiatives. It rewards active participants in the ZEOS Fractal meetings, fostering decentralized governance. This setup allows the community to direct funds towards initiatives that bolster ZEOS’ adoption, utility, and growth. Ongoing funding ensures continuous support for community engagement and grassroots projects, enhancing ZEOS integration and usage. Essentially, this account balances rewarding community involvement with functioning as a treasury for decentralized project funding.
3. The Burn Mechanism: This mechanism not only makes ZEOS rarer but also strengthens its value as an asset. The decreasing supply, coupled with its ecosystem utility, builds trust and long-term appeal. Additionally, this diminishing supply incentivizes early participation while token price is low and rewards existing members as the adoption rate climbs, aligning with the declining token count. The burn mechanism serves to position ZEOS as a scarce, valuable asset and drives ecosystem growth by encouraging early and ongoing involvement.

An Example

To enhance the clarity of our proposal, consider this scenario: The ZEOS Fractal Council has established a transaction fee of 10 ZEOS. In this context, Satoshi Nakamoto wishes to transfer 1 Bitcoin to Matthias utilizing the ZEOS Protocol. To facilitate this, Satoshi ensures his wallet contains the necessary 10 ZEOS and proceeds with the transaction.

Here’s how the transaction fee is distributed:

1. ZEOS Team: From the 10 ZEOS fee, 3 ZEOS (30%) is allocated to the ZEOS Team.
2. ZEOS Fractal: 60% of the transaction fee, which amounts to 6 ZEOS, is directed to the Zeos Fractal Ultra account. This sum is managed and distributed by the ZEOS Fractal Council throughout their weekly meetings.
3. ZEOS Burn Mechanism: 10% of the fee, equating to 1 ZEOS, is permanently removed from circulation as part of the ZEOS burn mechanism.

The Vision

ZEOS’ tokenomic model incentivizes accumulation, savings, and usage while providing crucial financial support for developments and community-driven projects. Through its deflationary mechanism and Zero Knowledge transactions, it also safeguards user identities and financial well-being. This fosters adoption and expansion.

The aspiration is for ZEOS to emerge as a mainstream privacy protocol, seamlessly merging private exchange capabilities with the stability of a long-term store of value. If realized, ZEOS has the potential to uniquely combine the speed of Ultra with unparalleled anonymity protections.

In an inflationary era that erodes purchasing power, ZEOS’ promise truly excites us. The vision is a future where Bitcoin and ZEOS stand side by side as dominant, trusted cryptocurrencies. This tokenomic model can drive the necessary user base, infrastructure, and interest growth to bring this vision to fruition.

If the Launch Group decides to accept this proposal, it is our dream that a day when the question “What if a Bitcoin equivalent existed on Ultra?” becomes reality through ZEOS. By incentivizing the community to actively shape its evolution, this model places that ambitious goal well within grasp.