ABLE Nation Layer 1 // Treasury
This post describes the creation, rationale, and mechanisms governing ABLE’s Treasury. If you don’t know what ABLE is, start here.
The first layer of ABLE deals with “the money game”. Its purpose is to incentivize people to jump into the fray in a space where the cost of opportunity is high. To invite the first generation of ABLE pioneers and establish the nation’s Treasury. It aims to straddle a fine line between short-term incentives, medium-term opportunities, and long-term sustainability.
This is how we leverage frothy DeFi energy into what allows layer 2 to to come into existence, with its incentives for creating new non-zero-sum interactions — and for that to organically grow into layer 3 — all the while becoming and forming the financial underpinning of the entire structure.
TL;DR: we create a Treasury-backed, dollar-denominated, voting-share in ABLE Nation.
REMEMBER: THIS CAN ALL CHANGE WITH YOUR PARTICIPATION THROUGH DELIBERATIVE DEMOCRACY.
Basic Tokenomics
Somewhat similar to NXM, each ABLE represents a share of the Treasury. The Treasury functions as a curve (see below).
People who buy in first receive a slightly greater proportion of ABLE than those going in later; it’s a bonding curve. Rationale: those going in early take on more of the risk as well as more of the burden for bootstrapping ABLE and are thus rewarded.
The total ABLE amount changes based on minted/burned when buying/selling from the Treasury. No, there are no fees. This is your Treasury.
There are three ways for ABLEs to be minted:
- People buy a Passport from the Treasury — money stays in Treasury, people get ~$15* of ABLE regardless of Curve status.
- Buying into the Treasury — add one of the accepted coins and receive ABLE reflecting your % of the Treasury.
- Buying into the Treasury over the first “Founding Period”, where those in the Treasury are “Staking” such that they are “farming” ABLE (more shares in the Treasury).
Model clarification:
People who buy in first receive a greater share from the Treasury at the expense of those going into the ABLE treasury later (in true pyramid, or startup, fashion). ABLE’s challenge will be to grow the Treasury (from value creation rather than through bringing more people in) FASTER than the rate of decrease in the proportion of the Treasury buying into it provides.
And again:
Initial ABLE buyers all get the same amounts of shares in the Treasury in proportion to their buy-in size. For every order of magnitude (1000%) growth of Treasury size in USD value after that, the proportion the next person who buys into the Treasury receives of the pool is reduced by ~xx% (~20%). But it’s slightly more complex than that -
New ABLE nationals will always receive ABLEs representing the exact value they have themselves injected into the Treasury. If they join and immediately wish to redeem, all the value is there to be withdrawn. However, they may not be able to realize all the value in the situation where there is a run on the Treasury, leading to it being wiped out -
Early stakeholder-citizens continue to hold the same proportion of the Treasury as long as new funds don’t come in and as the Treasury grows. A newcomer buying in later receives a smaller proportion of shares, in the form of ABLEs, despite being able to withdraw the same value right back. This is realized through having a total amount of ABLEs in the world that is > 100% the amount of money it stands for in the Treasury itself.
The rationale is that the more ABLE grows, the more the value it represents transcends just the Treasury. It’s in the network, community, partnerships, services, and so forth. The Treasury is the foundation of the Nation, but the Nation is greater than the Treasury.
Becoming a Stakeholder-Citizen
[This idea originated before Andre Cronje’s “StableCredit” system** was announced. It may be implemented using an upgraded version of it, adding a low-slope bonding curve.]
A bonding curve represents the USD value of all Treasury-acceptable tokens (ETH, LEND, NXM, etc). After the first passport purchase, the next ABLEs are priced on a curve such that buying in sooner gives slightly more ABLE. Don’t want to go overboard with this; this is a number that incentivizes people to go in sooner but doesn’t detract anyone from coming in later.
The passport is an NFT showing at which order of magnitude of Treasury you became an ABLE national. It identifies you as an ABLE citizen for all intents and purposes. Initial period passports also get “founder” tags, then “pioneers”, then “ABLE stakeholder-citizen” (or such).
Buying in during the initial launch period (~24h) is on a curve similar to Hegic’s IBCO such that everyone gets the same price (proportion of Treasury) to begin with. (Consider only a slight incentive such that the first token is less expensive by 10–15% than the last)
The Treasury is capped by governance decision to allow the funds that are in to be properly utilized. When new allocations open, people can deposit over ~24–48h and get a pro-rata allocation. Buying ABLE on the market is always an option, of course.
“Staking”
People in the Treasury during the initial, short “staking” period simply get more ABLEs for the duration of their stay in the pool.
Ramp up rewards as such: day 1: 0.25X, 2: 0.5X, 3: 0.75X, 4:X, 5:X, 6:X, 7:X (or similar). Fairer distribution as more people find out about this.
“Quadratic staking”: the more you stake, the fewer staking rewards you get proportionally. Need to align such that gas fees are detrimental to whales trying to game this (but not overkill so). Discuss!
Staking will be open for a very short time, allowing people to receive only a minimal amount of extra ABLEs as an initial incentive to FOMO in. Remember that ABLEs are shares in the Treasury — we don’t want to flood them as rewards.
ABLEs received through staking are vested over a ~year.
“Rebase”
Each address essentially holds a share in the Treasury, slowly decreasing as more people join and grow the Treasury. The Treasury’s Oracled USD value is then translated to a changing amount of ABLEs, each pegged to $1 (possibly mBTC later).
ABLE becomes a currency equivalent to yCRV and such. Holding it allows one to continue enjoying the benefits of the growing Treasury.
Vesting
Coins earned from “Staking” are released over time. ~10% immediately and the rest over a year. Remember that these are not “coins” but extra shares, received through vesting as ABLEs.
Successful participation in governance and other Layer 2 activities releases some of the vested tokens (aside from the rewards related to these activities).
Loaning Out
ABLEs can be deposited as collateral against an equivalent in the tokens held in the Treasury.
Withdrawing
To cushion against a run-on the Treasury, and as a stabilizing mechanism for the Nation, its affairs, and its non-Degen nationals,
Stakeholder-citizens can only withdraw from the Treasury over a period of time. There is both a percentage limit per address (calculated from the amount of ABLEs in the first withdrawal made) and a global percentage limit. Withdraw orders come in daily and are summed such that a max of x% of the treasury can be released per day, allocated proportionally to the demand between those asking to get out.
In the beginning (small Treasury), going out is less restricted. % allowable goes down as Treasury grows and the project has more heft/feels more safe. The restriction also increases independently of Treasury size as the staking period draws to an end.
Insurance
Funds going into the Treasury will immediately be used to purchase insurance for the Treasury smart contract, and later, for contracts the Treasury uses to grow itself. As the ABLE Treasury holds NXM, setting this practice as a standard benefits ABLE in a roundabout way as well.
Initial Treasury Tokens
I’ve chosen tokens of projects that are the most decentralized, governed by their communities, and that I believe have the most potential. This is, like everything else, open to discussion.
ETH: Made this all possible
YFI: DeFi DAO Exemplar
NXM: Market leader, working product with no competition, community governance
LEND: Most advanced lending platform, moves fast, existing ties to real world
SNX: Decentralize And Synthesize All The Assets, governed by multiple DAOs
USDC/USDT: Concession to existing financial systems, hopefully made obsolete by ABLE in the future
I would have liked to have BTC in this, but wBTC is supremely custodian and renBTC still relies on trusting its devs. If USDC/T are in, it might make sense to have wBTC as well. You decide.
Next >> Layer 2 // Governance
Notes
*A new prospective national pays ~$15 for the passport — an amount that makes it not worth much to spam infinite addresses (wargame this and confirm). Move ETH to new addresses, buy passport, sell ABLE on AMM, move ETH to another address = lots of fees, though perhaps not $15 on a slow day. This allows everyone to own a small slice of ABLE, and become a national, at any point, as well as provides an NFT for bragging rights.
**Explanation for Andre StableCredit model:
