The Token Economics of Konomi
Konomi will issue a native token in the network to facilitate decentralised governance and to bootstrap early users. The token economics are designed so that users could actively participate in trading, providing liquidity and also sharing the upside in network value growth.
● Decentralised governance
The design and implementation of the protocol would be determined by token holders. For parameters like pool staking fees, transaction fee burn, liquidity mining ratio, are initially set by the protocol itself; token holders could update the numbers and the smart
contract itself based on the voting process. In order to encourage users to participate in the process, there could be some profit set to reward the voting participants.
● User incentives
As a decentralised product, getting liquidity is crucial for the user experience and platform adoption. Therefore, a large proportion of the Konomi tokens are reserved to encourage users to add liquidity to the platform and to use the products. By depositing assets to the protocol, users could automatically market make for the protocol.
In designing the user incentives, the protocol also takes into consideration the long term sustainability of the token. As there are more liquidity mining programs launched by DeFi protocols, users tend to participate in those programs in order to earn tokens rather than to fulfil their true needs. In the meantime, as more tokens are generated, there is continuous selling pressure to the network if no strong use case is designed to create demand for the token. Therefore, in designing the liquidity mining program, priorities would be given to long term supporters and market makers for the protocol.
● Asset staking
Konomi token could be staked to participate in the base layer consensus and earn system rewards. It is also the staking currency to share platform revenue and ensure that the debt positions are safe.