The oTANGO airdrop
Time to stretch your legs. Soon we’ll be dancing a beautiful $TANGO all together.
The Contango token launch is approaching — it may not perfectly fit the Q2 timeline but it’s a matter of weeks now. Patience is of the essence. Bear with us.
Below we outline a key piece of the token launch: the airdrop to early users.
The TL;DR is:
- Points holders will be entitled to an oTANGO airdrop depending on the share of points they have accumulated (you’re still in time to earn some).
- oTANGO is an option token to redeem TANGO at a discount. Under the current points system, 1 point = 3 oTANGO.
- At least 12% of the total supply is reserved for the airdrop.
Let’s dive in.
Airdrop to early users
In the spirit of DeFi, there will be an allocation of TANGO tokens to early users who have previously engaged with the protocol and supported Contango during its early days.
The current points system began on January 24th and has been the first step to reward early users and incentivize initial usage of the protocol. The system rewarded users in different ways and phases, and during its second phase it’s currently distributing 1M points each week until TANGO is launched.
Up until the token launch, points will keep being distributed, so you can still earn some! Currently, around 40M points have been distributed.
At least 12% of the total TANGO supply will be allocated to points earners with oTANGO.
Why at least 12%? And what’s oTANGO?
What is oTANGO?
oTANGO is an option token for TANGO, inspired from the Bunni docs on oLit.
An option token allows you to redeem the underlying token at a discount. This mechanism aligns incentives among all parties:
- It rewards early users who believe in the long-term success of the protocol by giving them tokens at a discounted price.
- It allows the protocols to transfer cash gains from short-term airdrop farmers to its treasury.
- It incentivises parties to hold the token as the discount becomes bigger with time.
Let’s unwrap this with an example:
Let’s assume the price of TANGO is $0.1. The discount curve shown below implies that 1 oTANGO grants its holder the perpetual right to acquire 1 TANGO at around a 20% discount.
An airdrop farmer can exercise the option to buy 1 TANGO for $0.08 on the Contango smart contract and sell it on a secondary market for $0.10, locking in a $0.02 profit, which is equivalent to a 20% gain.
Please note that the user does not necessarily need to bring the initial $0.08 to lock in a profit: he could initiate a flash loan for $0.08, exercise the option to buy 1 TANGO for $0.08, sell 1 TANGO token for $0.1, repay the flashloan of 0.08$ and lock in the $0.02 profit, all in one atomic transaction.
We added a twist: to further ensure that users are aligned with the protocol growth, the discount to which users can redeem TANGO depends on the price of TANGO itself. The higher the price, the bigger the discount. This way, users are incentivized to hold in the hope of getting a higher discount.
- To ensure that the airdrop program doesn’t put pressure below Contango’s seed valuation, the discount is set to 0 when the price is at or below $0.045, which represents an FDV of $45M.
- For a token price at or above $1, the discount remains at 75%.
The following chart and table show the discount relative to the TANGO price:
The conversion of points to oTango is fixed at 3x, meaning that for each point you earned, you’ll receive 3x oTANGO tokens. This means that at least 12% of the supply will be allocated to users, since: (total points so far)*3 = 40,000,000*3 = 120,000,000 oTANGO.
120,000,000 oTANGO are redeemable 1:1 with TANGO, so this represents 12% of the total supply of 1,000,000,000.
We’ll release a detailed post about TANGOnomics in the coming weeks.
What should you expect at launch?
A few things need to happen before you can redeem oTANGO for TANGO.
To start with, we are currently auditing the smart contract to convert oTANGO to TANGO. Then, since the oTANGO discount depends on the TANGO price, an oracle feed is needed. And to have an oracle, at least one liquidity pool has to be seeded with good liquidity after the token launch.
When all the steps above have been completed and coupled with testing, oTANGO will be claimable through the Contango UI.
Please note: the redemption mechanism will be live on Arbitrum.
You will be able to either redeem oTANGO for TANGO or wait for a better discount curve at a later moment. All redemptions at any given moment go through the same mechanism. Let’s see a final example:
A user with 100,000 points is entitled to 300,000 oTANGO. He can:
- Target a TANGO price of $0.2.
- Redeem his oTANGO for TANGO with a 36.08% discount, according to the above chart.
- Cash out 300,000*36.08%*0.2=$21,648.
Got questions? Hit us up on Discord.
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 Strategies, or trade like a pro on the sleek Trade interface.
