Inside Carmine Options AMM: A Complete Breakdown of Token Distribution and Allocation
Carmine Options AMM is on mainnet and accessible for everyone! The protocol aims high and it cannot achieve its goals without the amazing community that we have. There is no way the Carmine protocol can change the world on its own — the community is a crucial part. As such, we do not want them to be just advisors, but to have tangible influence on the Carmine Options AMM. This is why we are kicking off the governance.
Distribution of tokens will be calculated on a weekly basis. The first four periods (weeks) will be heavily boosted in comparison to the following periods.
This article is longer than our usual articles, so here is an overview of what you will learn
- How the total token allocation looks like
- First 4 periods (weeks) token allocation amount and high level distribution
- Planned distribution in the first and following years
- Allocation to liquidity providers
- Allocation to traders
- Activity allocation
- Community projects allocation
- Investor allocation
Total token allocation
In total there will be 100 million tokens distributed throughout the next few years. The overall split will look like this
Community
- 12.5% to liqudity providers
- 12.5% to traders
- 10% to community projects (developers, influencers,…)
- 5% to traders/liquidity providers/community projects distributed on governance discretion
Owned by the community (managed by governance)
- 10% to security pool
- 10% as initial capital in the treasury
Remaining
- 20% investors
- 20% core team
For more in depth description have a look at Token allocation documentation.
The periodic allocation will aim at keeping released tokens corresponding to this distribution, with exception of the “Owned by the community” tokens that don’t have the release determined. “Keeping” this distribution through time means that if 1 million tokens are distributed to the community, then the aim is that
- 312 500 Carmine tokens (12.5% out of 40% to the community = 31.25% from the 1 million) will go to liqudity providers
- 312 500 Carmine tokens to traders (as above)
- 250 000 Carmine tokens (10%) will go towards community projects
- 125 000 (5%) will be dependent on the governance (activity allocation)
On top of this, the core team will receive 500 000 tokens from the core team budget and investors will receive 500 000 from the investor budget. Keeping the ratio 40%:20%:20%.
The Community projects allocation might be increased or decreased in the short term in expectation of bigger projects or lack of projects, but the aim is to keep the ratios the same.
It is also important to note that users have to claim their tokens on the AMM. Before the token allocation calculation is fully automatic, the amounts of tokens will be calculated and claimable every 4 periods (weeks). When automated, it will be happening every period (week). Meaning that first allocation will happen after 7th May.
First month token allocation amount
There will be 3.2 million tokens allocated to the community in the first four weeks.
- 1 million for traders
- 1 million for stakers
- 400k for activity allocation
- 800k for community projects
Each week starts with Monday and ends with Sunday UTC time. With an exception of the first period, that will be 9.5 days long.
Planned distribution in the first and following years
Distribution of tokens in the first year will be following:
- First 4 periods (weeks) are described above (3.2 million in total)
- Every following period (week) will receive 250k tokens
Split of tokens in every following period (after the first 4)
- 78 125 Carmine tokens will go to liqudity providers
- 78 125 Carmine tokens will got to traders
- 62 500 Carmine tokens will go towards community projects
- 31 250 Carmine tokens as activity allocation
There will be additional 2.2 million Carmine tokens ready to boost the adoption after the protocol is rewritten into Cairo 1.0. The boost will work similarly as in the first 4 periods. With the aim to reward those users that want to be with the protocol for a long time.
Following years
There will be less Carmine tokens distributed in following years.
- Year 2: 9.74 million Carmine tokens
- Year 3: 6.34 million Carmine tokens
- Year 4: 4.39 million Carmine tokens
- Year 5: remaining Carmine tokens
Allocation to liquidity providers
The distribution of the Carmine tokens will be calculated on a weekly basis and a proposal for distribution will be created a few days before the end of the first 4 weeks. Initial months being an exception with “4-week” long periods between distributions. The aim is to do this weekly.
In the first 4 weeks 1 million Carmine tokens will be distributed meaning 250k Carmine tokens will be distributed each week.
To be eligible for token distribution a user has to have their staked capital in the pool throughout the entire period. First period being an exception.
There will be no restrictions on the amount of staked capital per account. This is to prevent users from using a “sybil” approach to staking. However, we want to encourage as many users as possible to participate in the liquidity pools. In the event that there are only a few users staking, we will evaluate the situation and consider making changes to the conditions for the following weeks through governance measures.
Cap on pools
Please note that there is a cap on the liquidity pools. The ETH/USDC PUT pool has a cap of $50,000, while the ETH/USDC CALL pool has a cap of 30 ETH. Therefore, it is advisable to act quickly to take advantage of the opportunity to receive tokens for the amount staked.
It’s important to note that the amount of tokens received per dollar staked is a one-time offer and won’t be repeated.
The Carmine tokens will be distributed 50:50 between the two pools and the allocation of tokens within a pool to liquidity providers will be distributed equality based on staked capital and to those that fulfill the condition above.
The Carmine tokens will be distributed equally between the two pools at a 50:50 ratio. The allocation of tokens within a pool to liquidity providers will be based on the amount of staked capital and those who fulfill the conditions mentioned above.
Example:
Eligible users have $40k staked in the ETH/USDC PUT liquidity pool. User A has $400 staked in this pool and is therefore eligible for a share of the Carmine tokens for the given week. The User A’s staked capital represents 1% of the eligible staked capital in the PUT pool. Consequently, user A can claim 1% of the 250k allocated Carmine tokens, resulting in 2500 Carmine tokens.
It’s important to note that the amount of Carmine tokens allocated will decrease after the first month.
Allocation to traders
Allocation of Carmine tokens to traders will be based on the premium paid or received by each user. The tokens will be distributed equally based on the sum of absolute premium paid (i.e. paid or received). The calculation of the Carmine token distribution will be carried out on a weekly basis and will be done separately for each pool.
For the first four weeks, a total of 1 million Carmine tokens will be distributed. This means that 250k tokens will be allocated each week, with 125k Carmine tokens per pool per week.
Example:
In a given period (week), users traded options with a combined premium of $25,000 (paid and received) on ETH/USDC PUT options. User B bought a few options with a combined value of $200 and sold one option for a $50 premium, totaling $250 in premium. User B’s proportion of the overall sum of traded premium is 1% (250/25,000). Therefore, in that given week, User B will receive 1% of the distributed tokens, which amounts to 1,250 Carmine tokens in the first week.
Activity allocation
Allocation in the first 4 periods (weeks) will be based on
- help on testnet
- being part of newly released mainnet
- quiz
- …
400k Carmine tokens in the first 4 periods (weeks) and 31 250 Carmine tokens per following period.
First month the split will be based on collected “points”. Users will receive a percentage from the 400k Carmine tokens based on the “User’s points divided by all points”. Points will be collected only if user uses mainnet and will be collected for:
- +1 for mainnet trading — conditions are hidden to decrease sybil farming
- +0.5 for both trading and staking on mainnet (assumes single wallet address) — conditions are hidden to decrease sybil farming
- +1.2 for having testnet role (addresses will be collected over discord soon)
- +2 for having OG role (addresses will be collected over discord soon)
- +1 for having quiz role (addresses will be collected over discord soon)
Rules to receive a share from this budget in following periods will be determined based on community suggestions, behavior on the protocol, etc.
Example 1
- John has testnet role
- John did not trade on the Mainnet AMM
- John gets nothing because the Mainnet condition was not fulfilled
Example 2
- Helena traded $200 (or equivalent)
- Helena has OG and testnet roles
- Helena gets 1 for the trading, 2 for the OG and 1.2 for having testnet role
- Helena gets 1+2+1.2 = 4.2 points in total
- If 1000 points was distributed across users, Helena gets 4.2/1_000*400_000 = 1680 Carmine tokens
Community projects allocation
This section offers opportunities for earning Carmine tokens through contributions to community projects.
During the first month, 25% of the 3.2 million Carmine tokens (800,000) will be distributed at the end of the four periods. The evaluation of this distribution will be considered as if it was one period. After the first four periods, 62,500 Carmine tokens will be distributed on a weekly basis.
This section of the token allocation will be the most flexible across time. While the tokens distributed to stakers and traders will remain fixed per period, the budget for community projects will require more flexibility.
The distribution of this budget is determined for the first four periods and will be updated for the following periods. The budget will be split among different projects during the first four weeks.
- Moderators will receive a base payment of 1500 tokens for their work in a given month. In addition, in this round of distribution they will receive 1500 tokens for each month they moderate discussions prior to current period. There may also be bonuses available for those who assist with processing feedback from users
- 312 500 for influencers and partners (list might still grow)
- 187,500 tokens will be allocated to users who tweet about their experiences trading or staking on Carmine Options AMM. If you would like to participate, simply tweet your experience using the format “I traded on @CarmineOptions AMM and the experience was …” or “I staked on @CarmineOptions AMM and my experience was …”. To ensure that we don’t miss any tweets, please fill out the following form.
- 125 000 for contributors (graphics, etc). If you contributed, please fill this form.
- 125 000 for media articles/support. If you contributed, please fill this form.
- The remaining Carmine tokens will be allocated towards software development help. This section may increase community spending at the expense of future periods.
Next periods will have to be voted on, but the aim of this budget is to support the community moderators and development of the protocol.
Investor allocation
Investors can expect to receive their Carmine tokens approximately one year after the mainnet launch. The distribution of tokens to investors is still being determined as we anticipate additional investors.
However, in the meantime, investors are encouraged to participate in governance to provide their expertise to the protocol. To facilitate this, investors will be assigned voting power to their account through a “special” voting exception. Once the tokens are distributed to investors, this feature will be removed.
