TANGOnomics
A simple design to boost token liquidity, with a points twist to incentivize ecosystem growth.
TL;DR
- TANGOnomics was designed to deepen TANGO liquidity and incentivize growth by rewarding both stakers and traders, the main players of the Contango ecosystem.
- TANGO holders can provide liquidity to an 80/20 Balancer pool and lock their LP tokens to become stakers on Contango.
- 100% of protocol fees will be directed to stakers based on their share of total funds locked, as a compensation for facing potential impermanent loss on Balancer.
- 2% of TANGO supply is allocated each year for 3 years to reward traders, based on their share of Contango points.
- Points will enter new Phases where specific multipliers are given to incentivize staking and trading.
- Fees will be enabled a few weeks after the TANGO sale, but positions opened before the launch will not be charged closing fees.
Overview
TANGO is Contango’s utility token, with a total supply of 1,000,000,000 and represents the centerpiece of the protocol’s tokenomics, aka TANGOnomics.
More than 60% of TANGO supply is allocated to the community.
6.7% of the supply will be made available through a public sale on Fjord.
18.3% of the supply will be claimable through the oTANGO airdrop a few weeks after the sale.
32.6% will be allocated to ecosystem development. These tokens will be minted when needed. They appear in the initial supply as they don’t have any cliff or vesting mechanism. Here’s a few examples:
- Trading incentives (e.g. 2% of the supply will be allocated each year for 3 years to reward traders).
- Protocol-owned liquidity on dexes (e.g. initially, around $800,000 worth of TANGO will be paired against wstETH to seed liquidity on Balancer).
- Community grants.
3% will be allocated to AlphaDAO, which helped kickstart Contango in 2021.
The only tokens that have a cliff and vesting are those allocated to:
- the team (1 year cliff, 2.5 years vesting)
- investors (6 months cliff, 2 years vesting)
- AlphaDAO (1 year cliff, 2.5 years vesting).
The full unlocking schedule is presented in the chart below.
The initial circulating supply will consist of the amount sold via the public sale on Fjord (66.67M TANGO), plus the seeded liquidity on Balancer (17.78M TANGO). Two weeks later, once oTANGO will be made redeemable, the circulating supply can increase by the amount that users redeemed.
TANGOnomics was designed to deepen TANGO liquidity and incentivize growth by rewarding both stakers and traders, the main players in the Contango ecosystem. Let’s look at how both are rewarded.
Stakers
After the initial sale on Fjord, an 80/20 pool on Balancer was seeded to create the first spot liquidity for TANGO, on Arbitrum.
Once the pool is up, an oracle for TANGO will be created and the corresponding oTANGO/TANGO redemption mechanism can go live. oTANGO is an option token that will be made claimable after the oracle is in place to reward early users of the protocol. The oTANGO mechanism was announced in June 2024 and has been widely explained here.
Providing liquidity to the 80/20 Balancer pool is rewarded to allow initial holders of TANGO (both sale participants and oTANGO receivers) to put their holdings to work and earn some APR.
More specifically, TANGO holders who provide liquidity on Balancer can stake and lock their LP tokens on Contango. When locking, users will be credited a veCBPT balance (CBPT as in Contango Balancer Pool Token) based on the amount and duration of the lock. Please note that each user’s balance of veCBPT decays linearly over time. Although veCBPT won’t have a voting mechanism at the start, we opted for the veCBPT naming because of its similarities with other veToken designs.
For simplicity, let’s call staker any user with a veCBPT balance. All staking and locking actions occur on Arbitrum.
By becoming Contango stakers, users will receive the following rewards:
- Balancer trading fees. While locking on Contango, users keep receiving a share of trading fees from the TANGO/wstETH pool each time a swap is made.
- BAL rewards from Balancer. While locking on Contango, users keep receiving BAL incentives too.
- Contango protocol fees. Initially, 100% of the protocol revenue will be distributed to stakers, who are compensated for providing liquidity on Balancer and facing the risk of impermanent loss. In the future, a portion of protocol revenue may be redirected to the Contango treasury. Fees are distributed based on each user’s share of the total veCBPT locked.
Since each staker’s balance of veCBPT decays over time until the end of the lock, it’s worth noting that both the amount locked and the duration of the lock play a role in determining how fees are distributed.
Traders
Traders are entitled to a share of annual TANGO rewards, based on their balance of Contango points.
Weekly Contango points from Phase 2 were distributed up until Tuesday 29th of October at 23:59 UTC (1M points per week).
Once the TANGO launch is completed, protocol fees will be enabled and Phase 3 will start, and it will last three months. Each three months a new Phase begins.
Points in Phase 3 entitle users to a share of the annual TANGO rewards. Each year, for the next 3 years, 2% of TANGO supply is allocated to these rewards. Points in Phase 3 are accrued based on the amount of $ traded, as per the following formula:
$1 in adjusted volume traded = 1 Contango point
Adjusted volume is defined as the sum of the volumes on all trading pairs, protocols, chains, adjusted by the coefficient C (where C=1 for non-correlated trading pairs, and C=0.2 for correlated ones). In other words, volume on correlated pairs counts 5 times less, as these pairs have higher leverage and less price risk.
XP system
To spur ecosystem growth, both staking and trading are further incentivized via an XP system which classifies users into different tiers. Users are entitled to a multiplier on their Contango points and a specific discount on trading fees depending on these tiers, as follows:
If there are ongoing partner deals on points multipliers, these will stack up on the current multiplier of each user.
The balance of XPs is determined by the amount traded and the share of veCBPT over the total locked veCBPT, as follows:
In other words, your total XP balance is the sum of the XP you get from trading and the XP you get from your share of total veCBPT.
The veCBPT balance, the 30 day volume and hence the XP balance are all computed daily at 00:00 UTC.
Protocol fees
Using Contango directly via its smart contracts is free.
Trading through the app will incur the following fees:
- Correlated pairs: 0.05% on any change of position size. This applies to TP/SL too.
- Non-correlated pairs, 0.25% on any change of position size. This applies to TP/SL too.
Discounts are applied depending on the XP tier of each user.
Correlated refers to those instruments where the base and quote asset are a flavor of the same currency, e.g. stable pairs like DAI/USDC, ETH derivative pairs like wstETH/ETH or PTeBTC/eBTC, etc.
Non-correlated refers to those instruments where the base and quote asset are not correlated, and are normally used for directional trading, e.g. ETH/USDC or ETH/BTC.
Migrating a position entails closing an existing position and opening a new one on a different market; hence migrations will incur just the closing fees, to avoid a double charge.
Moving the NFT that represents a position to a different address is also free. Contango currently doesn’t provide this interface, but you can easily do it yourself by calling the safeTransferFrom method on the NFT contract.
Please note: positions opened before the TANGO launch will not be charged any closing fees.
Disclaimer: the Contango team reserves the right to unilaterally modify the above-mentioned parameters (XPs, multipliers, percentages, discounts) if it deems it relevant for the benefit of the protocol.
About Contango
Contango lets you loop anything on-chain. You can create leverage (re)staking positions, arb rates differentials, farm points, or simply go long or short like a perp at low funding. Ape in like a degen with 1-click on the Simplified page, or trade like a pro on the sleek Advanced interface.
