Introducing VAPE

With VaporDEX now in public beta, our reward program Stratosphere in pre-enrollment, and our node evolution in full swing, it’s time to begin the transformation of VPND and the deployment of the highly anticipated VAPE token!

Design Philosophy

As we walk through the design of the VAPE token and its surrounding token economy, there are several important things to note in order to fully understand our token economy design strategy. We are building in a bear market, not for the next bull market — but for the next 10 bear markets as well.

• Tokens used for paying the development team, securing partnerships, airdrops, or exchange listings are dilutive in nature and undermine the mechanics and value experiences built around the remaining allocations. When those value experiences are undermined, the token economy will stagnate and fail to grow long-term
• Tokens used as incentives are dependent on their value stability. If the token’s value (real or perceived) declines — it’s power to function as a meaningful incentive is greatly reduced. Compensating for reduced value requires increased emissions, which in turn — exacerbates price declines. The result is a death spiral that eliminates opportunities for incentives, stripping away a critical growth lever for a platform
• Assets easily gained are just as easily parted with. If tokens are handed out and received easily, at no cost, or don’t require any real commitment to acquire — there are low-to-no psychological or financial barriers to selling them for whatever value they can be exchanged for
• One-dimensional economies have a single point of failure and lack diversity in value experiences. This lack of diversity gives way to everyone employing the same strategy — and ultimately oversaturating an experience, causing its ultimate demise. Multi-dimensional economies, while more elaborate and complex — offer adaptability and insulate value experiences from obsolescence by unleashing game theory in full force

While other DEX’s have used their native token to pay their team, fund their journey, or secure partnerships — we have elected to remove this common practice from our design. Eliminating these dilutive and irresponsible practices is a critical step in ensuring that VAPE starts as, and always remains as… our community’s token.

VAPE’s economy is not designed to incentivize — it’s designed to reward and recognize. VAPE is a reward for taking specific and purpose-driven actions that add value back to the VaporFi ecosystem and community. You won’t earn VAPE just for showing up, but when you use our products, help grow value for the community, and participate in our curated value experiences — VAPE will be there to say thank you.

And finally, but most importantly — while other DEX tokens have distributed their token like candy on Halloween, VAPE will be very difficult to acquire. Getting it will not be easy. VAPE is not a participation trophy, it’s a medal for going above and beyond. When you earn VAPE, it means that you’ve created value for your fellow community and the community is increasing its investment back in you.

Throughout our introduction to VAPE, you’ll see the above philosophies put on full display and brought to life. When building VaporDEX, simplicity and ease of use is paramount, as seen in our UI/UX. However, when it comes to the principles and mechanics of VAPE’s token economy, we have constructed an economy that has traditional mechanics, as well as more elaborate ways to acquire value.

Simple designs will require less effort but will be less rewarding. Those who take the time to engage with our most challenging value experiences will always be rewarded disproportionately.

Getting Started & About this Introduction

We’re going to walk through a variety of foundational topics that are important in order to contextualize the role of VAPE and how it impacts our growing ecosystem and community. Over the next several months, we will have a steady stream of additional details and deeper dives into some of the most exciting facets of VAPE.

For now, we’re going to walk through the broad strokes on as many of our most exciting, planned features of the VAPE token and its surrounding token economy. When you’re done reading this you will have learned about all the following:

• What is VAPE and what’s its role in the VaporFi ecosystem
• How does the existence of VAPE impact VPND
• Why we chose to build a 2nd token versus bolting on more utility to VPND
• What our north star is, and how we’re building differently from prior DEX tokens
• What our design and evolution guiding principles are
• The different ways to earn VAPE through each of its primary markets
• The maximum supply of VAPE and its innate rarity
• How the initial supply of VAPE is being allocated and emitted
• An introduction to node-powered manufacturing and how the node economy is now expanding

Disclaimer: All details shared within this publication and future publications are not final until they are deployed. VaporFi Labs strives to provide maximum visibility and perspective to our community for planning purposes but reserves the right to continually pressure test and refine previously shared details between publication and deployment. Post-deployment refinement is subject to our community governance protocol.

What is VAPE?

VAPE is the governance and utility token for VaporDEX, our decentralized exchange on the Avalanche network. As VaporDEX grows and evolves, VAPE will be an increasingly integral part of our DEX and ecosystem. Holding VAPE gives you access to participate in governance measures related to VaporDEX and VAPE itself — as well as giving you access to incremental value experiences that require VAPE to participate or benefit from.

As VaporDEX and our ecosystem grows, VAPE will play a critical role in enabling our community to benefit from the value experiences that are available through our products, solutions, and services. With the VAPE token, we’re designing a token economy that is ideally suited to continually adapt and evolve with our macro ecosystem. VAPE’s role grows in the direction that the ecosystem grows.

When you earn VAPE through one of its primary markets, it’s evidence and a celebration of you contributing value to your peer community through one or more ways. VAPE is not an incentive, it’s a reward. VAPE is not for everyone, its for anyone who adds value through our carefully designed products and value experiences.

Revisiting the expanded role of VPND

With the deployment of VAPE, the exciting transformation of VPND from a node token to a mining token will officially be complete. As we continue to grow the services, solutions, and products offered in the VaporFi ecosystem, VPND plays a new and critical role. It functions as both a governance token for VaporNodes as well as now also functioning as a mining token.

What is a mining token?

VPND as a mining token means that it will be taking on a specialized role as a token that can be used to mint, mine, and earn other tokens from and native to the VaporFi ecosystem. VPND’s value over time will evolve and adapt relative to what tokens it can help you unlock, and what the transitive value experience is for you through the acquisition of those tokens you mine using VPND.

Above and beyond this huge new role, VPND will continue to be emitted as rewards to VaporNodes — ensuring that node owners reap the benefits of our expanding ecosystem for years to come. Success for VAPE means success for VPND, creating a symbiotic relationship between their respective token economies (and the adjacent node economy).

Role of VAPE in our ecosystem

VAPE’s token economy is being designed to grow, adapt, and evolve with our ecosystem — but the initial design and deployment will serve multiple initial functions for our community, specifically relative to VaporDEX.

1. Governance for VaporDEX and VAPE
2. VaporDEX Fee Harvesting

It’s also important to note that this is just the initial integration of VAPE into VaporDEX and VaporFi. We expect to continue to integrate VAPE into other critical and memorable value experiences (e.g., Stratosphere). These additional integrations will come organically as our services expand.

Let’s look at both initial integrations.

Governance for VaporDEX and VAPE

With governance, holders of VAPE will be able to participate in community votes centered around VaporDEX and the VAPE token itself. Participation in these community events is both exciting and beneficial — as it allows our community the opportunity to design its destiny and chart its course forward.

VAPE governance events include but are not limited to token economy & mechanic design policies. VAPE is the community’s token, and we want our governance scope and standards to go above and beyond what has come to be expected from similar or comparable tokens.

Stay tuned for additional details on VaporDEX and VAPE governance mechanics.

VaporDEX Fee Harvesting

Our community is always the fiercest advocate for our mission and our products — and VAPE allows the community the opportunity to reap the rewards of their advocacy.

Holders of VAPE will be able to stake their VAPE on VaporDEX to earn their fair allocation of fees that we harvest from VaporDEX usage. This includes but is not limited to fees generated from our Aggregator and Bridge, along with future monetized features coming to VaporDEX.

Stake VAPE, earn USDC. The more we grow, the more value that VAPE can directly access for you.

Why a new token?

If you haven’t asked yourself this question, pause. Ask. We’ve become desensitized to everyone creating a token for everything. Why are we introducing a new token? Does it have a truly distinct purpose? And most importantly, why not just expand the role of VPND indefinitely to fill this new role?

The VaporFi ecosystem already has a well-designed token with VPND, and with the recent transformation to its emission mechanics — it’s ready for the next chapter in its constantly evolving role and value proposition. So why did we elect to build a new token and its economy from the ground up instead of extending the role of VPND?

Most projects launch a token, or additional tokens for one or more reasons. Some selfish, others more functional or practical in nature. Typically, when a token is launched, the project team conducts an initial sale of the token — using the funds to generate capital to build and operate. They will then also allocate a percent of the total supply to themselves to be used as payment or incentives for their team. We believe both are tremendously flawed and ultimately hurt the community. We’ll talk more about these fundamental flaws in our next section.

So why not build a new layer of utility around VPND?

Simply put, VPND is not designed in an optimal manner for what we want the economy around VaporDEX to look like and how we want it to function. It is designed and optimized for its role as a mining token, but not for what we need it to do with VaporDEX and our growing ecosystem.

VPND has four specific elements to its design and history that make it impractical to use as our DEX governance token.

• High maximum supply
• Full supply already in circulation
• Branding aligned specifically and explicitly to our original product, VaporNodes
• Challenging marketability due to the prevailing sentiment around the original NaaS token economy model

With this in mind, we determined that launching a new token for the community, but not in the standard fashion, would be best for VaporDEX and the community. Let’s explore how we’re breaking the mold on DEX tokens and how we hope to inspire the next generation of governance and harvest tokens for DeFi products.

Breaking the mold

As we began designing our new token economy for VAPE — we explored the broader market. We looked at high performing comps, as well as low performing comps. What we saw made it clear that for us to continue to be a community-centric protocol, we need to throw out the DEX-token playbook and reimagine it for what it should be… and not what it is, has been, and continues to be for other participants in the DeFi space.

We immediately sought to eradicate the following concepts and industry standards from our design:

• High supply
• Lacking scarcity
• Easily earned and acquired
• Unrealistic or hyper-inflated initial valuation
• Initial token sale to raise capital
• Large team allocations of initial supply
• Allocations set aside for marketing or partnerships
• FOMO-based initial trading action
• Unfair launches favoring insiders
• Excessive or spam-based whitelist and whitelist checklists
• High or accelerated emissions
• One-dimensional utility without room to grow
• Tokenomics that pigeon-hole and type-cast a token into a single function or value experience
• Dilutive emissions or allocations that place value in the hands of parties that are focused solely on quick and absolute ROI vs. long-term value creation

As we unveil the initial view of VAPE’s token economy, we’re proud to say that we’ve successfully eliminated these traditional and “normal” concepts from our token architecture — and have instead, opted for a design that we believe is capable of inspiring and influencing a new generation of community-centric token designs in the DeFi space.

Our design north star

When we set out to design a token our north star and rally cry was very clear and simple. Yet in an age of copy/paste DEX tokenomics, our mission is also quite aggressive and different compared to what others who have come before us.

We want to build a token and token economy that our community can be immeasurably proud of.

Getting to our north star requires strict adherence to the guiding principles that inspire our design. No design was started or completed without being pressure-tested under each of our guiding principles. They evolved over time, and we even added to the list as we progressed in our research and design stages. What you see in our next section is the culmination of self-reflection on what our own gold standard should be.

Our design and evolution guiding principles

At the beginning of this article, we talked about our design philosophies and how important they were in informing how we thought about our mechanics. Now we’ll look at hyper-specific principles that were born from those design philosophies.

Our new token economy was inspired by designs and concepts that held these key guiding principles in the highest of regards. Everything we’ve included or excluded in our final economy design was because of its alignment relative to these principles.

• Decentralized finance needs a new gold-standard in token economy design — one that focuses on sustainability, adaptability, longevity, and the ability to transcend macro and micro trends
• We are building, designing, and establishing a token economy, not a token
• Start with community, end with community. Community is everything
• Responsible emissions are the bedrock that we build our economy up from
• A successful token economy requires consistent opportunity cost to enable appreciation, and exceptional yet practical marginal cost mechanic design to protect against perpetual depreciation
• A token economy should have no single point of failure and it should have the ability to continuously evolve and adapt to grow the number of value experiences available to its community
• The token economies of VAPE and VPND are independent, but adjacent. They should function like allied nations, helping each other grow and develop — giving their respective and collective community opportunities to benefit from the existence of the other
• Participation in the VAPE token economy requires the creation of new value or ongoing responsible management of existing value within our broader ecosystem
• A successful economy will have an immovable foundation built on mechanic design and future growth enabled by game theory, including but not limited to an expansion of our node economy
• We can learn from and be inspired by the some of the greatest fundamental philosophies and successes of Bitcoin, but adapt and refine some areas that will enable our economy to grow into an increasing number of different value paths and experiences

Primary markets

The initial supply of VAPE will be able to be acquired solely through four different primary markets. The establishment of four markets is a key enabler of game theory concepts that we believe setup this new token economy for long-term success, resilience, and longevity.

We’re excited to introduce four exciting and diverse ways to earn VAPE:

1. Genesis Pool
2. Liquid Staking
3. Enhanced Staking
4. Stratosphere Rewards

The establishment of four markets ensures a multi-dimensional economy can grow and thrive around the VAPE token. Four distinct value experiences, each with their own sets of rules, mechanics, and potential strategies.

The more distinct strategies that can be devised, the more resilient an asset is to negative market forces. As one strategy turns unprofitable or over-crowded, another strategy offers a better experience — helping offset negative forces with demand driven by the remaining relevant strategies.

To this end, we have designed the Genesis Pool and Liquid Staking markets to be our simplest and least mechanic-heavy markets. While they require less time, attention, and strategy to participate in — they will not be quite as rewarding as Stratosphere and Enhanced Staking, which offer a whole new way to experience and enjoy DeFi.

We’ll walk through each of these primary markets in short order later in this article — as well as a detailed dedicated article for each market shortly before it’s brought online to the community.

Let’s explore supply.

Maximum supply

The maximum supply of VAPE that can ever exist is preset and limited to only 21,000,000 tokens. VAPE is designed to be extremely rare from the very beginning and become increasingly challenging to acquire as time passes.

How did we end up with a final design that incorporated such a specific supply?

Cryptocurrency enthusiasts will immediately see the significance of a finite supply of 21M tokens — a nod to Satoshi Nakamoto and the supply philosophy of Bitcoin. Regardless of personal beliefs, biases, or priorities — Bitcoin is the gold standard for cryptocurrencies in long-term value creation made possible by scarcity and increasingly complex and challenging hurdles required to acquire it.

Bitcoin has become a phenomenon that successfully transcended national borders, time zones, religion, and continents. The global awareness of Bitcoin has exploded in recent years, and every day more and more global citizens come to understand Bitcoin beyond what the price-action focused headlines state. Each day, people are beginning to understand that the genius behind Bitcoin was how effectively it has weaponized human desire for value acquisition to create a system of checks and balances on its own circulating supply — and therefore, also its long-term value potential.

We think that decentralized finance can and should be a foundational pillar in our global society and should also be able to transcend or improve upon all human-made constructs as needed, just as Bitcoin has been doing for years. For this to occur in a meaningful manner — DeFi needs to take the globe by storm just as Bitcoin has. So as we embark on our mission to bring decentralized finance to every corner of the planet — we want a token economy that embodies and perpetuates the same concepts and opportunities that have allowed Bitcoin to disrupt an antiquated industry and give way to innovative new ideas, concepts, and realities.

Let’s look at how the initial supply will be allocated for distribution.

Allocation of initial supply

The total supply of 21M tokens will be allocated across each of the four primary markets in a very prescriptive manner. Each market will have its own independent supply and emissions schedule. These are the only allocations for the initial supply. There will be no tokens allocated to the team, project, or even partnerships.

• 2.0% for the Genesis Pool, equaling 420,000 tokens
• 8.0% for Liquid Staking, equaling 1,680,000 tokens
• 30.0% for Enhanced Staking, equaling 6,300,000 tokens
• 60.0% for Stratosphere Rewards, equaling 12,600,000 tokens

Above and beyond having their own independent supply and emissions schedule, each of the above primary markets have their own distinct and unique mechanics. This diversity in mechanics allows different value corridors to open up and function as dynamic markets in and of themselves (and relative to each other), enabling the development of different strategies.

Diversity in strategies is key in creating long-term value and an economy that is more resilient to temporary downturns. As one value corridor shrinks, another can expand or become more attractive. We expect and anticipate that as the market value for VAPE and VPND evolve — some primary markets will become more appealing, while others — less so until market conditions swing in favor of the other markets.

Expansion of the node economy

We’ve long said that nodes play a vital role in the expanding economy around VaporFi. We’ve also said that nodes aren’t dead — they’ve just yet to reach their full potential. Every time our VaporFi economy grows, we gain an opportunity to use practical design to further integrate nodes into the day-to-day operations of our full ecosystem.

To start, let’s ground in the known roadmap for VaporNodes — everything confirmed in one place

• When Liquid Staking goes live, the creation of new nodes will be turned off
• Upon completion of the Unchained NFT Marketplace, we’ll be converting nodes from Soul bound NFTs to a transferable asset that can be bought and sold on Unchained
• Upon conversion from Soul bound to transferable, we’ll be turning off compounding and deposits — the only way to grow your node TVL will be by acquiring nodes off the secondary market
• When the Passport Reward Pool comes online, nodes will start earning USDC harvested from revenue earned around the VaporFi ecosystem
• With the deployment of Stratosphere into beta, nodes will be able to be used to boost member’s benefits — allowing them to save more, boost more, and enjoy enhanced mechanics only available to members

DeFi and the broader crypto space have not been impervious to the bear market and while we are excited to continue building around VaporNodes — we recognize that a critical value experience for our existing community is to allow them to divest their node for liquidity. As we integrate nodes into our expanding ecosystem, we’re looking to create value for our community that is seeking long-term value from their nodes — as well as helping those that want to divest command maximum value for their assets.

With the introduction of the VAPE token, nodes will be stepping into the spotlight in a major way. Earlier this year we worked together to overhaul our node reward model to enable our reward pool to be fully self-sustaining for 5–10 years without major replenishment and without needing any new nodes to be created. With today’s announcement, we also add 10+ years of utility and earning potential to nodes outside of the VPND reward pool. More value for long-term node holders, and more reasons why someone will buy a node off the secondary market — enabling community members to more easily divest in a meaningful way.

Node-powered manufacturing is coming to the VaporFi ecosystem. Stake your nodes to help others produce and mint VAPE. Earn your fair-allocation of USDC fees and determine the overall efficiency and velocity of VAPE minting.

REMEMBER: In our node evolution design philosophy we noted that the TVL of a node is not going to be the only way to determine its value. Nodes will continue to evolve as multi-dimensional tools and new attributes will be added, enabling nodes of all sizes to play expanded roles in specific parts of our ecosystem.

More on this later! Now back to VAPE’s primary markets — and how they emit that sweet, sweet VAPE!

Primary Market Design

With four primary markets to earn VAPE from, which one is right for you?

Maybe all four. Maybe just one or two. Maybe none. We’ve designed primary markets and mechanics around VAPE that allow us to offer both traditional and enhanced gamified DeFi experiences. The broader DeFi space thrived in the heyday of passive income, but it’s also what came to cripple most projects. While VaporNodes will still produce VPND passively, VAPE is not a passive asset and our market designs reflect this.

Passive means little to no action. Little to no action means slowing, stagnant, or even negative growth. It’s imperative that our primary markets and emissions benefit our most active and engaged participants. All existing community members have an inherent advantage in each of these markets — you either have VPND already, or you have a node that produces VPND for you. Why is that so important and advantageous?

• 40% of VAPE’s full supply of 21M tokens can only enter supply by using VPND to unlock & earn it
• 75% of VAPE’s primary markets require VPND to participate in
• 100% of VAPE’s primary markets allow node owners and VPND holders the opportunity to potentially earn VAPE below market cost
• 90% of the full supply of 21M tokens require the collective staking of nodes by the community to generate the power needed to mint new VAPE tokens

Emission Types

VAPE will be emitted in one of two ways. Directly and indirectly. What’s the difference between a direct emission and an indirect emission? Let’s explore.

Direct emissions account for 10% of VAPE supply and results when a community member participates in either our Genesis Pool or Liquid Staking. Their participation results in them earning a fully minted and transferable VAPE token. They can claim it, send it to a wallet, and then hold, sell, stake, etc. No additional actions required.

Indirect emissions account for the remaining 90% of VAPE supply and results when a community member participates in Enhanced Staking or earns rewards through Stratosphere. Participants earn VAPE materials, which in-turn need to be processed and manufactured using our new node-powered manufacturing infrastructure. Once fully manufactured, participants can mint their materials into VAPE tokens, and then hold, sell, stake, and more.

In total, 90% of the supply of VAPE will need to be manufactured — while 10% will be directly emitted and available for immediate claim, transfer, and utilization. This design plays a very important role in the broader VAPE token economy. It ensures that there are markets for participants who want VAPE with less effort, without undermining our design philosophies, as well as offering a means to earn far more VAPE, but with additional effort and strategy required.

Our indirect markets, which require more strategy or interaction will provide incremental value for those who participate, as well as provide additional value and demand for the direct markets — as passive participants opt to focus on markets that require less hands-on management making those markets increasingly competitive.

Eventually, if direct markets are saturated with participants and demand for VAPE continues to grow — we will see passive participants begin adapting their strategy, which could result in additional demand and participation in our indirect markets.

Indirect markets play a vital role in not only creating additional value for nodes, the VAPE-USDC reward pool, and Passport — but also, function as a natural supply manager. Remember, 90% of the VAPE supply only enters circulation if the community chooses to manufacture it.

Indirect emissions will come in the form of one or more of the following types of VAPE materials, with each material requiring one or more manufacturing steps to allow the owner to convert it to a fully minted VAPE token.

1. Crude VAPE (cVAPE)
2. Refined VAPE (rVAPE)
3. Pure VAPE (pVAPE)

We’ll dive a bit deeper into indirect market mechanics later, for now let’s look at a birds-eye view of our four primary markets and how they work. An article with additional details will be published for each primary market before they come online. Todays unveil is the beginning of a large amount of information for our community to begin developing an informed opinion on the future of the VAPE, VPND, and node economies.

Genesis Pool (Direct Emissions)

The Genesis Pool controls 2% of total supply and functions as a unique one-time emission event that serves multiple purposes. First and foremost, since we are not conducting a token sale of any kind — we need a genesis emission, a way to get the first tokens into circulation in a fair manner with a community-determined valuation.

The Genesis Pool is the single largest emission of VAPE that will ever occur, and is a solution of our own design that allows us to enable and solve for several critical mechanics:

• Provide an initial emission of tokens that allow one or more liquidity pools to be established and paired with VAPE, which in turn allows for the establishment of a secondary market and functional ongoing price discovery
• Function as a one-time larger scale replenishment event for the VaporNodes reward pool, removing a large supply of VPND from wallets and lock it up in the reward pool for gradual emission back to nodes
• Establish a true foundational valuation for the VAPE token, based solely on the opportunity cost willingly accepted by the participants of our genesis emission
• Incremental and exclusive value experiences for our Stratosphere reward program members
• Function as a potential floor-escalation event, catalyzing the use for any VPND that can be acquired as an undervalued asset

How does the Genesis Pool work?

• VaporFi Labs pre-mines 420,000 VAPE tokens and locks them in the Genesis Pool
• On January 3, 2023 — the Genesis Pool opens, it remains open through February 7, 2023 (dates subject to change)
• Community can participate by going to a new UI on VaporDEX — designed specifically for this market
• Participants can voluntarily permanently surrender any amount of VPND into the Genesis Pool, this VPND is immediately removed from the participants wallet and is non-refundable. VPND must be in a wallet and cannot be taken from a node. This can be repeated as many times as desired
• Your share of VPND surrendered is your share of the 420,000 VAPE tokens
• Over the course of the Genesis event, as other participants deposit VPND — your share may decrease. To defend your stake and earn a larger allocation of VAPE, you will need to add more VPND
• As VPND is surrendered into the vault, the initial valuation of VAPE increases — every VPND token surrendered represents value that was willingly surrendered in exchange for VAPE
• At the end of the Genesis event, the Genesis Pool emits 420,000 VAPE tokens, claimable by the participants of the genesis pool. Each participant will be able to claim x% of the 420,000 VAPE tokens, with x% being equal to their share of total VPND surrendered
• Participants can claim their VAPE immediately after the event and create a liquidity pool on VaporDEX and establish a secondary market
• VAPE claimed from the Genesis Pool is fully transferable and does not require any manufacturing
• 1.0% of VPND surrendered into the Genesis Pool is permanently burned, resuming the deflationary mechanics of VPND that were paused during our GDM deployment
• The remaining 99% of VPND surrendered into the genesis pool is escrowed to replenish the VaporNode reward pool and extend its runway of VPND emissions

How do you determine how much VAPE you receive from the Genesis Pool?

Let’s use a hypothetical scenario where 100M VPND is surrendered into the genesis pool, and you personally account for 1M of that VPND surrendered. VPND at the end of the event is worth $0.002. Here’s how it would all net out.

• 100M VPND is surrendered into the Genesis Pool, worth a total of 200K USDC
• 420,000 VAPE is emitted to the participants, with the full emission being valued at 200K USDC, or 0.476 USDC per VAPE ([Value in USDC of VPND Surrendered] divided by [420,000 VAPE])
• Your 1M VPND represents 1.0% of total VPND surrendered, allowing you to claim 1.0% of the 420,000 VAPE
• You’re able to claim 4,200 VAPE at an initial valuation of 2,000 USDC
• A 3.0% claim fee (deducted from the 4,200 VAPE) is charged upon claim — and the 126 VAPE is sent to the VaporFi Labs treasury for liquidity management
• Your 1M VPND ends up netting you 4,074 VAPE, fully transferable to other wallets

IMPORTANT: VaporFi Labs cannot create any of the initial liquidity pools for VAPE, as it could be interpreted as an ICO. Only the community will be able to create the initial liquidity pool(s) — and the community will set the secondary market price. As part of our design, we are recommending a VAPE-USDC pairing to minimize risk of VAPE being impacted by the growth or decline of a non-stable pair.

We will be publishing a dedicated Genesis Pool medium article prior to January 3, 2023, to provide final details and a walkthrough on how to participate in this event. Note that the Genesis Pool will only be available to Stratosphere members.

Liquid Staking (Direct Emissions)

Next is Liquid Staking which controls 8% of the total supply and functions very similarly to your classic or traditional staking mechanics. When we polled our community, roughly 40% indicated that they wanted simple and traditional staking for VAPE. We think there’s an important role that traditional staking plays, but you know us… copy/paste isn’t our thing.

Liquid Staking will feel familiar to any DeFi veteran but include some fun mechanical perks for Stratosphere members — as well as some under-utilized mechanics to maximize the consistent replenishment of VPND back into the reward pool for nodes.

Liquid Staking carries several notable mechanics which we’ll expand on in future publications:

• Available to all community members, Stratosphere membership is not required
• Single-sided staking, deposit VPND to earn VAPE
• A small portion of VPND is taken from each deposit as a deposit fee, set at 5.0% for day one
• 1% of the deposit fee is burned permanently, 99% of the deposit fee is sent to the VaporNode reward pool
• Depositors can withdraw their entire allocation of VPND, but only after the completion of a cooldown period
• Stratosphere member’s deposit fees and cooldown periods are reduced
• Full supply of 1.68M VAPE tokens will be emitted over 10+ years
• Maximum VAPE emissions are preset, stakers earn their fair allocation of VAPE emissions
• As VAPE is claimed, a 3.0% Liquidity Fee is charged from the claimable and allocated to VaporFi Labs for liquidity management

Liquid Staking has something for everyone. A nod to the classic design and familiarity of DeFi staking mechanics, with our own unique design concepts to benefit our community, our sustainability, and our broader macro economy.

IMPORTANT: While Liquid Staking controls 4x the supply that the Genesis Pool controls, it’s emitted slowly over a 10-year period, compared to the Genesis Pool emitted one-time. The average daily emission from the Liquid Staking pool will be 460 VAPE tokens. Compared to the 420,000 VAPE tokens that will be emitted at the end of the genesis event.

We will be publishing a dedicated Liquid Staking medium article prior to it launching in order to provide final details and a walkthrough on how to participate in this event.

Enhanced Staking (Indirect Emissions)

The second largest allocation of initial supply goes to Enhanced Staking which receives 30% of the total supply. With Enhanced Staking, we’re going to set a new standard for staking looks like in DeFi. Enhanced Staking will have its own unique economy and value experiences built around it — powered by NFTs that can only be minted using VPND.

60% of our community polled said that they wanted to see gamified and engaging staking mechanics for VAPE that go above and beyond the traditional set-it-and-forget-it staking practices of yesteryear. Enhanced Staking is not your average staking experience. You’ll need to develop and employ your own curated strategies to maximize your yield and out-position, out-maneuver, and out-pace your competition’s staking power.

While Enhanced Staking will require more of each participant, it will also be exceptionally more rewarding than the more traditional Liquid Staking concept. Emitting roughly 3x more VAPE per day on average to Enhanced stakers than the Liquid Staking pool will emit to Liquid stakers.

Enhanced Staking has its own set of unique mechanics that we’ll partially explore now, and then expand on in exceptionally great detail in a subsequent article deep-diving how Enhanced Staking works. For now, here’s an overview of this never-before-seen concept.

Here’s how it’s designed to work:

• Anyone can participate, it’s available to members and non-members
• Members will receive some perks and boosts not available to non-members
• Participants can purchase Mining Equipment NFTs using VPND, and then deploy that equipment into the enhanced mining pool
• Each piece of mining equipment functions as a stake in the pool, with its attributes determining what % of the pool’s rewards its eligible for
• As Mining Equipment is purchased using VPND, 5.0% of the purchase price will be burned permanently, and the remaining 95.0% will be escrowed for replenishment back into the VaporNodes reward pool
• Mining Equipment will be able to be re-sold on the upcoming Unchained NFT Marketplace
• Participants in Enhanced Staking will earn VAPE materials instead of fully minted VAPE tokens
• VAPE materials earned from enhanced staking will then need to be manufactured in order to be minted into fully transferable VAPE tokens

Creating enhanced staking pools and bringing NFT staking to life affords us the opportunity to not only accomplish our objectives for VPND, but also replenish the node reward pool, establish an additional source of revenue for VaporDEX and Passport — and also function as a substantial point of differentiation for GameFi enthusiasts.

Enhanced staking comes with a much more mechanic-heavy design, and we’ll be publishing additional details in a dedicated deep-dive as we get closer to its release. Please note that Enhanced Staking is currently slated to be the last primary market that goes online.

Stratosphere Rewards

Last, but certainly not least, the largest allocation of the initial supply of VAPE goes to Stratosphere which receives 60% of the total supply.

Stratosphere is in and of itself a major point of differentiation for us, and now its utility and value proposition will massively expand with the addition of Reward Seasons and Personalized Rewards. Stratosphere will reward its members (based on their actions across our ecosystem) with raw materials that can be used to mint up to but no more than 12.6M VAPE tokens. The more value Stratosphere members add to our ecosystem, the greater their ability to earn and manufacture VAPE.

As part of our Stratosphere Beta design, members will become eligible to earn VAPE materials in a variety of ways. As we begin to move out of the Pre-Enrollment phase and into a multi-phase Beta, we’ll share a robust roadmap and timing for key Stratosphere features that open the door to allowing members to earn VAPE.

Stratosphere Rewards have their own set of unique mechanics, we’ll explore some now and unveil the rest in greater detail in subsequent publications and community releases.

• Rewards will only be available to Stratosphere members
• Stratosphere will emit rewards as one or more type of manufacturable raw VAPE element, but will not emit VAPE directly from the initial supply — it will always need to undergo some part of the manufacturing process
• Rewards can be awarded in a targeted or personalized manner, or as part of our Reward Seasons deploying during the Beta phase of Stratosphere
• Emission of manufacturable VAPE materials versus VAPE itself ensures that members still have a marginal cost baked into the minting process which will help manage new supply creation, and establish a price floor derived from the cost to manufacture the VAPE

Stratosphere Rewards is planned to be included in the Stratosphere Beta release as the next evolution beyond our current pre-enrollment stage. We believe that VAPE is best intended for members of the community that contribute the most value to our ecosystem — and Stratosphere allows us an exceptional way to make sure VAPE always finds its way to the individuals who have a vested interest in its long-term success.

Stay tuned for a lot more information on Stratosphere Beta and how Stratosphere Rewards will work.

Now that we’ve reviewed each of the four primary markets and their unique mechanics individually, let’s turn our attention to VAPE manufacturing — a critical construct that serves a variety of purposes for VAPE and the VaporFi community.

VAPE manufacturing & node-powered infrastructure

We’ve long said that nodes will always remain a critical component in our ecosystem, and with node-powered manufacturing we’ll be excitedly expanding the role, utility, and value proposition of nodes beyond what we shared in our node evolution roadmap. Manufacturing is all new and never shared… welcome to the exciting future of nodes and transformative DeFi mechanics at VaporFi.

While 10% of the initial supply of VAPE will be emitted and awarded directly through the Genesis Pool (2%) and Liquid Staking (8%) as VAPE tokens, the remaining 90% will be earned and then need to be minted using a process that we’re calling “Node-powered Manufacturing”.

Let’s look at some of the high-level mechanics of this process and how it impacts nodes, VAPE, and more! How does manufacturing work?

• A new experience is created on VaporDEX, for VAPE manufacturing
• VaporFi Labs creates public infrastructure for manufacturing. A refinery, a processing plant, and a tokenizer
• The refinery converts Crude VAPE into Refined VAPE
• The processing plant converts Refined VAPE into Pure VAPE
• The tokenizer allows you to take Pure VAPE and use it to mint a fully transferable VAPE token
• Node owners can choose to stake their node(s) on any public infrastructure to provide power to the building
• Nodes will receive expanded attributes beyond their TVL, which will determine how effective they are at powering each of the three types of buildings. Some may be great at powering the refinery, but terrible at powering the tokenizer. Others may be more evenly balanced
• As the community earns VAPE materials, they will deposit them into the appropriate building for manufacturing
• With each deposit of materials, the depositor will be charged a small USDC fee to use the building
• The efficiency of nodes staked on each building providing it power, will determine how long it takes for the materials to be manufactured, and what percent of the materials fail to manufacture and need to be re-deposited

IMPORTANT: These small USDC fees as well as the impact of staked nodes on a building function as a natural supply manager. If VAPE is not profitable to manufacture, new supply will slow or halt altogether. And if nodes are not staked strategically across all buildings, there could be inefficiencies in the manufacturing chain that cause new supply to slow. In addition to manufacturing functioning as a natural supply manager — it will also function as a source of revenue

How does manufacturing generate revenue?

• Every time materials are deposited into a building, a USDC service fee is charged to use the building
• 20% of the fee is sent to the VAPE-USDC staking reward pool (helping increase the demand/value of VAPE)
• 20% of the fee is also sent to the Passport Reward Pool (adding value to nodes)
• 20% of the fee is sent to the VaporFi Labs treasury to support daily operations and growth
• 40% of the fee is distributed to the nodes staked on the building (adding more value to nodes)

Here’s how the manufacturing process looks, from start to finish:

1. John earns 10 Crude VAPE from Stratosphere
2. He deposits 10 Crude VAPE into the Refinery, and is charged a USDC fee
3. 8 of his Crude VAPE is successfully refined into Refined VAPE, 2 fail to refine due to poorly staked nodes
4. John can re-deposit the 2 Crude VAPE that failed to refine, or he can wait until it becomes more efficient
5. John now deposits his 8 Refined VAPE into the Processing Plant, and is charged a USDC fee
6. 7 of his 8 Refined VAPE are successfully processed into Pure VAPE, 1 fails to process and remains Refined VAPE
7. John can re-deposit the 1 Refined VAPE to try to process it again, or he can wait
8. John takes his 7 Pure VAPE and deposits them into the Tokenizer, and is charged a USDC fee
9. 5 of his 7 Pure VAPE successfully convert and mint a VAPE token. He now has 5 fully transferable VAPE tokens
10. John can re-deposit the 2 Pure VAPE that failed to convert now, or wait until later
11. John sells, stakes, or holds his 5 VAPE tokens — and continues to manufacture more

Node-powered manufacturing is a concept that has never been seen before but plays a very important role in the economy of VAPE, VPND, Nodes, Unchained, and more. We’ll walk through this in greater detail in an upcoming article diving head-first into the mechanics and details of manufacturing.

We anticipate that there will be some unique strategies employed by the community — individually and collaboratively when it comes to manufacturing. So, to help get the conversation started, let’s look at some questions that we expect will be frequently asked.

FAQs

Will I need a node in order to manufacture VAPE?

No. You can manufacture VAPE without a node. Nodes are only required if you want to earn USDC fees from the manufacturing process, or if you want to help improve/reduce the efficiency of manufacturing to influence the velocity of new supply entering the market.

Why do we need manufacturing, it seems unnecessary?

There are many reasons for why manufacturing is a foundational requirement in our economy design.

1. Functions as a natural supply manager. People are less likely to pay manufacturing fees if the manufacturing process is inefficient (due to poor node staking) or unprofitable. This ensures that if value of VAPE declines, new supply will eventually slow or halt
2. Provides an added utility for nodes and an additional way for nodes to earn passive value. The three different buildings and steps allow for three different new node attributes, which in turn will allow some nodes to become disproportionately valuable on the secondary market (e.g., a node with a TVL of 10K may not receive much VPND from the node reward pool, but it’s the highest rated power source for the refinery — and in turn earns a larger stake in USDC fees from the Refinery)
3. Drives additional recurring traffic to VaporDEX. Manufacturing doesn’t require constant action, but it does require you to deposit and return later to withdraw and continue. The more times a user visits VaporDEX, the more likely they are to be retained — and the more likely they are to generate fees for the community
4. It ensures that while VAPE materials can be earned through a variety of actions — it’s still appropriately challenging to acquire a fully minted VAPE token. Minting a token should be a big moment, and manufacturing is a value experience that reinforces multiple design philosophies of ours
5. It ensures that if demand for VAPE is sustained or increases, both VaporFi as well as three different reward pools receive valuable liquidity for growth
6. A challenging manufacturing process means that while at most 21M tokens can ever exist, many will be lost and never minted if recipients choose not to invest additional time into manufacturing and minting them

What if I don’t want to participate in manufacturing, can I sell my materials or transfer them to someone else?

We are not currently planning to make materials transferable, however we will be continuously pressure testing. A secondary market for materials could have unintended consequences that undermines Stratosphere and Enhanced Staking. We would need to make sure that a secondary market is additive before confirming it.

Why should I bother manufacturing VAPE?

That’s entirely subjective and up to you — but we have designed VAPE to be an asset that is in-demand by the members of our community that wish to maximize their long-term value experience with VaporFi. If you’re a passive participant in DeFi, maybe its not ideal for you. Liquid Staking might be more in line with your aspirations. However, if you decide that you want to earn VAPE — 9 out of 10 tokens will need to be manufactured to enter circulation… so manufacturing is the fastest way to mint your own tokens.

How many nodes can I stake on buildings?

No maximum amount has been established yet. We will announce logistical details as we finalize the manufacturing design and conduct final technical feasibility studies. We do however anticipate that a node can only be staked on a single building at a time.

Will staking my node on a building burn my TVL?

Small, gradual, and practical TVL burns are part of our plans, however we have not yet confirmed that any TVL will be burned when staking. Our preference is that burns will occur only when the owner of a node chooses to take an action above and beyond the typical performance or limits of their node. Final decision on this will come as we get closer to the launch of node-powered manufacturing.

If I stake my node on a building, will it still earn VPND from the VaporNodes reward pool?

Most likely a node staked on a building will not be able to earn VPND from the VaporNodes reward pool — but we have not finalized this decision. An opportunity cost would be a healthier economy balancer, and if staked nodes don’t earn VPND while staked — it would function as a natural impermanent reverse dilution of the VPND reward pool. We will consider all pros and cons of this design prior to making a final decision.

Will a 10K Node be more powerful than a 10M node in the manufacturing process?

It absolutely could be. While large nodes may dominate the VPND reward pool, the playing field will get levelled with manufacturing. With new attributes for manufacturing being added to all nodes, it’s possible that there will be nodes that are in higher demand on the secondary market because of their manufacturing attributes, even if their TVL is lower than other nodes. Nodes are more than just the sum of their TVL. A nodes TVL will play a huge role in certain value experiences, whereas in others — TVL may play a less critical role. As the role of nodes expands in our ecosystem, the addition of new node attributes beyond TVL will begin. As a guiding principle, we seek to use on-chain data to inform how attribute values are assigned — not randomized assignment.

Do I lose VAPE materials that I deposit into a building, but fail to be refined, processed, or tokenized?

No, materials that fail certain manufacturing steps will not be lost. They will need to be re-deposited to successfully manufacture them. Maybe it would be cool to even have a biproduct material earned when your materials fail in a building. Something you could use somewhere else in the ecosystem, perhaps.