SonicSwap.IO | Introduction to Roadmap & Tokenomics
“SonicSwap was an idea — an idea created to simply build on and support both the Harmony network and the surrounding community. The next priority was tokenomics, creating a sustainable environment for both liquidity providers and users alike.
With the focus on tokenomics and community involvement, we hope to build something that all can participate in and contribute to, while catering to the needs of users and providing a more stable portfolio growth to liquidity providers.”
With that in mind, we have followed the model of previous projects we admire and decided to implement some improvements to our own tokenomics model. Our first concerns were to mitigate token inflation and the “farm-and-sell” attitude that has continuously followed many DEX projects. These issues have been addressed through a variety of means that will be implemented as the project progresses and as the community voices their opinions through voting governance practices on which exact implementations they would like to see.
Upon the initial launch, our base foundational layer of tokenomics will be 90% locked rewards and 10% unlocked. Just like in other projects, this model allows earlier adopters to be greatly rewarded, while not subjecting the value of their tokens to quickly diminish.
For claiming rewards, we have implemented a burning feature to burn a certain percentage of the tokens depending on the amount claimed. For example:
1,000 tokens claimed –> 1% burnt
2,000 tokens claimed –> 2% burnt
3,000 tokens claimed –> 3% burnt
10,000 tokens claimed –> 10% burnt
Every additional 10,000 tokens claimed –> 5% increase in burn fees
These burns, as well as burning from trading fees and developer burns, made though community votes, also will create the foundation which will enable SONIC tokens value to increase over time. It’s a simple yet very effective countermeasure for the initial inflation of the token. It also puts some limitations on large liquidity providers’ ability to farm and sell tokens leaving smaller providers vulnerable to price depreciation. So as time passes, the tokens minted will lower, yet the tokens burned will always remain increasing. This creates effective means to mitigate the desire to farm and sell long term as the tokens value will grow.
Unfortunately, this alone cannot be relied upon for the guarantee of the token’s success, which also lies in token’s use cases. As for many projects, a solid use case is not always that evident — we do not plan to follow down that same path. We have many pre-thought use cases that will be periodically put to vote to see which will be implemented next. Our first addition will be the “SonicCitizen” — a pool that locks SONIC tokens permanently, for which “the Citizen” is rewarded with fully unlocked tokens rewarded from the pool with a stable and generous APR%. Additionally, these token sacrifices, which can also be viewed essentially as a version of “burning”, will help to encourage the growing value of SONIC and create more of a stable value throughout the project’s life span, all the while the user can effectively claim a form of passive income indefinitely.
Tokens are distributed in 2 phases:
During phase 1 (approximately 2 weeks) a base emissions rate of 1 token per block will be issued with a multiplier of 128x to reward early liquidity providers. Phase 2 — base emissions rates will remain unchanged but multipliers will be reduced by half per each consecutive period.
Reward tokens earned will be unlocked on a timed-release schedule with the unlocked rewards percentage being 10% and locked tokens being 90%. This type of tokenomics is implemented with the aim to incentivize users to compound and create exponential and sustainable growth rather than redeem and sell rewards out of fear of a depreciating reward token, leaving other holders exposed to volatility.
Single Staking
The single staking (solo token reward pools) have been around for quite some time and aren’t new to the industry, however we have noticed that many projects do not seem to implement more then one version of this type of pool. SonicSwap will be implementing many versions of this idea with many different results depending on the users’ future goals. One of the first examples of which we will implement is a time lock pool of 10 days upon withdrawal request, with 100% of rewards being unlocked after the 10-day period. More favorable APR percentages will always be given to the single staking pools and SONIC pool pairings to promote utility and appreciation value. With these multiple pools in place, with a variety of uses for providers and holders, depending on their personal investment strategies, will give users a chance to create a more customized experience to deliver results based on their personal tastes.
Token Burns
All pools in SonicSwap will be subject to token burns — this was enabled to allow for a constant burning value that will eventually outweigh the tokens minted, creating a foundational deflationary token. With all users and providers contributing to these burning fees, it creates a level playing field for all providers, users, and holders regardless of their personal liquidity and prevents systematic large scale claiming and selling of tokens without some cost to the claimer and benefit to the community.
2/3rd of the trading fees also collected will stay in the liquidity pools and single staking to help with alleviating impermanent loss to liquidity providers. The other 1/3rd of fees collected will be used to buy SONIC tokens which will immediately be burned causing prices to rise as supplies diminish. In time with more users and liquidity providers, SonicSwap will quickly become a deflationary reward token.
Core Development Tokens
The founders and development team will receive 10% of the total supply for the first 5 years with an immediate allowance of 20% of the value of the overall 10% from total supply.
An additional 5% of the supply will be utilized for the liquidity funds, monthly lottery pool, quarterly giveaways, and competition rewards.
The remaining 5% will be locked in a community fund and time-released monthly for the first 5 years, to be voted on by the community for its desired use that best meets the interests of the community. Store in treasury/token burn/add to lottery pool/create competition would be general examples of community voting options.
Total issuance over 5 years = 500,000,000 tokens.
20,000,000 pre-minted tokens will in total add up to 4% of total supply and and will be divided into four addresses two being community driven and two being development and founders, meaning in total only 2% of total supply will be allocated to dev/founder wallets.
These funds will be used in the immediate development of the project guaranteeing continuous usability of the service including marketing promotion and maintenance, upgrades, etc. The main goal of SonicSwap is to create a sustainable environment, with smart tokenomics being at the forefront. More incentive is put toward long term continuous growth rather than “get-rich-quick” methods leading to extremely volatile environments leaving many rather apprehensive to participate in decentralized finance. We aim to solve the issue, of inflationary qualities of reward tokens and create more peace of mind for holders, and that the rewards they earned will hold value among users.
Fees
Fees are set at 0.3% per trade. Half are sent to SonicCity (SushiMaker base). Fees collected are converted to the SonicSwap token through the use of the ONE/SONIC pair. Converted SonicSwap tokens are then burnt, causing the price to appreciate as supply diminishes.
Liquidity
Liquidity Providers can select tokens and add corresponding liquidity to their pool. If a pool does not exist, you will be prompted to create one. You will be asked to set the initial price. If set incorrectly, loss by arbitrage will happen, so make sure you set the price correctly. Once you have provided liquidity, if the staking pool for that pair exists, you may stake your liquidity to earn more rewards. You may withdraw your rewards and liquidity anytime you wish. There are multiple staking pools available, where users may stake their corresponding liquidity token and earn their share of the fees collected in the form of SonicSwap Tokens which they can either compound, hold, or sell.
Liquidity Deposit Fees
Liquidity Deposit fees are currently set to 0%.
Liquidity Withdrawal Fees
- 25% fee for withdrawals of LP tokens in the same block this is to prevent abuse from flash loans;
- 8% fee if a user deposits and withdraws in between same block and 59 minutes;
- 4% fee if a user deposits and withdraws after 1 hour but before 1 day;
- 2% fee if a user deposits and withdraws between after 1 day but before 3 days;
- 1% fee if a user deposits and withdraws after 3 days but before 5 days;
- 0.5% fee if a user deposits and withdraws if the user withdraws after 5 days but before 2 weeks;
- 0.25% fee if a user deposits and withdraws after 2 weeks;
- 0.1% fee if a user deposits and withdraws after 4 weeks.
50/50 lottery (Coin Toss)
SONIC tokens will be contributed to, as a based fund, to a monthly 50/50 lottery. The winning wallet is given 50% of the funds and the remaining 50% is then burned.
Competitions, Giveaways & Community Votes
Random giveaway events, along with charitable donations, will take place from time to time to promote the use of SonicSwap.IO and show appreciation to the community by giving back.
Additionally, competitions will be announced to the community regularly, as well as scheduled monthly votes on decisions regarding the treasury funds to be released. This aspect will be implemented to give the community as a whole a voice in the decision-making process of SonicSwap and its’ future direction. For example, if users were not satisfied with the level of market awareness, a vote could be made for further marketing campaigns. Other examples are to have more/less tokens burned, added to the lottery pool, or even made as a donation to a charitable fund.
The ultimate decision of the funds will rely on the majority vote of the community as a whole, which brings an aspect of true participation from users and a responsibility to all those who take part.
Conclusion
The future possibilities of SonicSwap are endless, and with that, the choice and influence will reside with the community. We will keep working hard in creating a project to set a new standard among DEX tokenomics. However, the ultimate destination of SonicSwap will rest in the diamond hands of users, as the way all decentralized ecosystems intended.
Additional in-depth documents will be published soon after the launch to continue updates with new changes made, as well as to show more perspective into the details of the project.
Useful Links
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