This segment will explore the design and practical implementation of the Kinetix tokenomics model, and provide Kinetix community members with a comprehensive overview of the KAI token and how its allocations and emission schedule are designed to support all ecosystem contributors individually and the Kinetix DeFi hub as a whole.
Kinetix is committed to building a vibrant DeFi hub on Kava that is fully sustained by user-generated fees. After observing the life cycles of several DeFi projects throughout the previous market cycle, Kinetix understands that longevity and sustainability are cornerstones of success and has designed KAI and its tokenomics accordingly.
“For Kinetix , it is not only paramount to deliver a cutting-edge DeFi hub with all the features modern traders demand, but to build one that will stand the test of time.”
Kinetix aims to provide its users flawless execution and a secure, decentralized trading experience throughout the next cycle and beyond.”
–Alexi Atlas, Kinetix Founder
Token Allocations
Looking first towards the generous community rewards programs, there is a substantial allocation for farming rewards over 6 years, and an allocation for farming rewards over 4 years that will remain under foundation control. Kinetix’s goal is to provide users with an initial stage of increased rewards to drive adoption, followed by a more sustainable rewards program to promote long-term usage.
Another notable segment is the partnership allocation. Both the Kava and broader IBC ecosystems are full of talented, community-focused builders; thus, reserving a budget for campaigns that facilitate cross-pollination between communities is essential. The Kinetix community believes that as the Kinetix DeFi hub grows and becomes more widely adopted, there will be opportunities to partner with new teams deploying their own innovative products that complement the existing Kinetix product stack, thereby allowing users to explore and implement even more complex investment strategies.
Voting Escrow and Bribing
In order to create optimal conditions for a token launch, the KAI token will only go live after the various elements of the Kinetix DeFi hub, such as the V3 DEX and the perpetual exchange, are complete and thriving. Professional, third-party market makers will support post-IDO trading of KAI to ensure sufficient liquidity and trading depth across all platforms where KAI is available.
Following the token launch, a Voting Escrow model will allow token holders to lock their KAI tokens for up to 1 year. As per standard voting escrow models, longer lock times will provide stakers with greater percentages of platform revenue and voting power. Elevated voting power will also provide stakers with an opportunity to earn greater yields via a standard bribing system.
Kinetix will support bribing, whereby other projects and protocols may present offers to voters in exchange for voting in the affirmative for the augmentation of specific liquidity pools.
For instance, project XZY may present a $2,000 offer — that is, a bribe — to users that vote for an XYZ-ETH liquidity pool. In the event the votes pass, the $2,000 bribe is to be shared among all voters that voted in the affirmative, where each voter receives an allocation in proportion to his or her voting power. On this accord, individuals that have staked KAI — and in particular, those that have staked KAI for longer lockup periods — will receive greater allocations of bribes by virtue of their increased voting power.
Token Inflation Schedule
As illustrated in the schedule above, KAI’s inflation schedule has been meticulously designed to provide the Kinetix DeFi hub with adequate resources and rewards to facilitate sustainable growth and adoption while ensuring token inflation is kept in check. The maximum unit supply of KAI will be capped at 1 billion tokens.
At the TGE (Token Generation Event), there will be 10.9% unlocked, which will gradually increase to 47.43% at the end of the first year and 72.1%, at the end of the second year, with the remaining 27.9% gradually unlocking over the ensuing four years. Once the original vesting concludes following year six, there will be a community vote to increase the supply by 1.5% per year as an annual emission for farming rewards.
It is worth noting that the term ‘unlocked’ does not always imply that tokens are released into the market. For example, in the case of 12.5% for the partnership allocation, Kinetix will only deploy that allocation strategically when partnerships are formed rather than arbitrarily along the vesting schedule.
In addition, the Kinetix treasury will be managed with sustainability and longevity in mind. While unlocks will occur along a predefined schedule, the vesting schedule is best viewed as the theoretical maximum number of tokens that may be deployed into the market at any given point, rather than an exact, quantitatively accurate schedule.
Revenue Distribution
The above graphic illustrates the proposed revenue share for fees paid to the various parties contributing to the Kinetix DeFi hub. The majority of fees are recycled into rewards for Kinetix liquidity providers and stakers, with a modest percentage for the foundation and certain Kinetix partners.
This generous fee-sharing model will allow the Kinetix community to accrue maximum benefit from any economic activity on the Kinetix DeFi hub, while allocating the minimal viable amount required to sustain operations to the Kinetix Foundation and its partners.
Tokenomics models are delicate and require thorough consideration to develop. Kinetix has worked in concert with launch partners and advisors to ensure the development of a sustainable and economically viable model that strikes the right balance between incentive modeling and value retention.
Hungry for more on Kinetix? The Kinetix community would love to hear your feedback and offer support while you’re using Kinetix. Join the discussion via the social links below or visit the Kinetix website to find out more.If you are interested in partnering with Kinetix, email: socials@kinetix.finance
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