Introducing KLAP Tokenomics

Klap Finance Tokenomics — a deep dive into how it all works.

The goal of this piece is to take readers on an in-depth look at our unique tokenomics.

Before we get into that, it’s worth noting how excited we are by the early traction we have received since properly announcing KLAP some 48 hours ago. Since then, we have accumulated an enthusiastic army of Klappers whitelisted for our OG NFTs (which you can still win). We’ve also seen significant traffic to our social channels in the same time frame, with:

• 17k users on Discord;
• Close to 17,200 Twitter Followers and
• 130,000 entries into the kick-off S2E campaign
• Users from around the world, including Indonesia, Korea, USA, Australia, India, Vietnam, Canada, and many other countries.

It is clear that there is significant global interest for what we are building here, and we are dedicated to becoming a leader in this space.

Without further ado… Tokenomics!

Introduction

Our team’s vision is for Klap to become the liquidity base layer of Klaytn, where every asset is a productive one and users can constantly earn yield through lending and borrowing.

We are excited to introduce KLAP, a governance token to support this vision. We have prioritized adding several utilities to KLAP, including Ve-tokenomics, yield farming boosters, governance power, and more. Given that the protocol will be governed by KLAP holders after launching, there may be more features for KLAP that get developed by the community around it.

For early community governance, token holders should use the official Klap Community Discord (discord.gg/klapfinance). We are looking forward to moving to an upgraded governance platform as more DAO tooling emerges on Klaytn.

KLAP Tokenomics

KLAP has a maximum total supply of 1,000,000,000 (1 billion) tokens.

A burn and redeem mechanism can be voted upon and implemented by the community, and if so the maximum total supply will likely be significantly less than that. However, this wouldn’t be something the Klap team itself does — this is solely within the scope of the governance token voting power.

The breakdown of the token distribution is as follows:

• 25% given out as rewards for using the protocol (lending/borrowing)
• This will be released via a geometric decay function. The first “epoch” of 2 weeks will release 2.5% of the total supply. Each epoch, the emission will decrease by 10%.
• 10% to Pool 2 (KLAP/KLAY)
• Geometric decay function. First epoch 1%, each epoch decreases emissions by 10%.
• 15% to Ve stakers
• Released based on lock time and supply being locked. Formulas below.
• 5% for Early Incentives
• Early Incentives include rewards for pre-mining and potentially a lockdrop to distribute the KLAP token at launch.
• 1% Community
• Token rewards for early community members and small events to reward loyal Klappers
• 9% Treasury
• Controlled by the protocol DAO in the future — initially, some of the treasury KLAP will be used for protocol owned KLAP/KLAY liquidity to seed the pool.
• 10% Krust/Klaytn — 6 month cliff, 24 months linear unlock
• The protocol will receive KLAY investment, which will be used as liquidity rewards to further incentivize lending/borrowing and Pool 2.
• 12.5% Devs — 6 month cliff, 24 months linear unlock
• 7.5% Investors — 6 month cliff, 24 months linear unlock
• 5% Advisors — 6 month cliff, 24 months linear unlock

As of writing, “Ve” has been successfully used by several DeFi protocols in order to incentivize long term holding tokens. There have been several derivations of Ve, and we have chosen to put together several innovations into one model that incentivizes long-term holding/locking of KLAP.

The model below will naturally weed out mercenary farm & dumpers by:

1. Giving short-term mercenary capital a penalty on their total rewards.
2. Funneling those penalties to further incentivize lockers.

VeStaking/Locking

To increase token utility inside the Klap platform we innovated and modified a veStaking system. In this process:

• All KLAP rewards received from lending/borrowing are vested for 6 weeks (1.5 months) by default. Similar to Geist / Ellipsis Finance, they can be claimed immediately by paying a 50% penalty.
• The penalty goes back to the KLAP token treasury (separate from the treasury which holds protocol fees). VeNFT holders can govern the usage of this treasury. The KLAP in this treasury will likely be used to give more rewards to stakers/lockers. Therefore, those that claim early to sell are basically paying their rewards to the long-term holders and lockers.
• The minimum lockup for veNFTs is 3 months, and the maximum lockup is 24 months. The longer the lockup duration, the more ve “points” that the user will receive. The amount of ve determines voting power and boost multipliers on amounts of capital being lent/borrowed/deposited into Pool 2.

A unique KLAP addition to this mechanism is that by staking into Ve, users can get their 50% penalty waived.

• For example, if users have 100 in KLAP rewards (not fully vested), they can stake all 100 KLAP into Ve immediately.
• Ve stakers also get a bonus KLAP reward paid out at the end of the lock period. The formula for the reward amount can be found here.

The longer the lockup duration and larger the lock amount, the more KLAP bonus rewards they will get. In summary, by staking into Ve instead of claiming all, the user receives the following benefits:

• No penalty
• Yield boosters from Ve
• Governance rights through Ve
• Bonus KLAP rewards for VeStakers (additional APR)
• At least 100% to 300% more KLAP received

VeLP

We also developed a mechanism to lock LP tokens into Ve. From our observations, evidently it is difficult to maintain liquidity in Pool 2 long term without strong incentives. We will be adding to Pool 2 incentives by giving LP token lockers Ve NFTs as well.

By going with VeLP, users can also get their 50% penalty waived.

• We have implemented Alpha Homora’s Fair Value Algorithm for Uniswap V2 LP tokens in order to value the LP tokens at time of lock. This allows the protocol to attribute Ve points accordingly for LP lockers.
• LP lockers receive almost the same benefits as normal Ve staking.

Users immediately get boosted Pool 2 rewards thanks to Ve while their tokens are locked in Ve. On top of this, users get an additional boost in Ve points compared to single-sided staking (e.g. if you locked 100 dollars worth of LP tokens into Ve for 3 months, you would be attributed more points than if you just locked 100 dollars worth of KLAP into Ve for 3 months).

Conclusion

KLAP has the potential to onboard and rust on millions of people. Our Tokenomics are designed to actively reward and nurture a community of people who trade and participate in the ecosystem, and we are excited to share more information with you all before mainnet launch.

KLAP team 👏

Disclaimer

You understand that the $KLAP tokens may have no intrinsic value and are solely tools of governance, and as such have no intrinsic potential for future appreciation in any form whatsoever. You further represent and warrant that you are an active user of blockchain technology and blockchain-based software systems and have the pre-requisite technical knowledge to understand what has been mentioned in this article and the risks that follow.

The information provided within this article is for general informational purposes only pertaining to the governance tool. You understand that the Klap Finance governance structure is an experiment in the field of decentralization and community governed structures, in which participation via the KLAP token and otherwise is entirely at your own risk.

Information contained in this announcement should not be relied upon at any time as advice to buy or sell or hold the aforementioned governance tokens and particular note should be made as referenced prior to the solely governance based nature of the $KLAP token and their lack of intrinsic ownership or economic value. This announcement does not take into account nor does it provide any tax, legal or investment advice or opinion regarding the specific investment objectives or financial situation of any person. Klap Finance and its associated parties as appropriate make no representation or warranties, expressed or implied, as to the accuracy of such information and Klap Finance expressly disclaims any and all liability that may be based on such information or errors or omissions thereof. Klap Finance reserves the right to amend or replace the information contained herein, in part or in entirety, at any time, and undertakes no obligation to provide the recipient with access to the amended information or to notify the recipient thereof. The information contained in this announcement supersedes any prior representation, post or conversation whether informal or formal, concerning the same, similar or related information.

This communication is not for distribution to U.S. newswire or similar services or for any dissemination in the United States. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, KLAP Tokens to any U.S. person (including, without limitation, any citizen or resident of the United States) or in the United States or in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the laws of any such jurisdiction.