Introducing AC Tokenomics v2
Long lasting fuel for the most powerful Bitcoin DeFi protocol!
As part of the ACoconut v2 protocol suite upgrade, we are delighted to introduce the key features of the new AC Tokenomics v2!
tl:dr;
- Outside of governance, AC tokens will have two new utilities for holders: Liquidity Mining Boosting and rights to purchase insurance cover.
- vAC is introduced to represent holder’s AC position stored in Locker. vAC provides holders with increased mining power and voting rights in community governance.
- A dynamic emission boost model is introduced via Liquidity Mining to stimulate TVL growth and game theory behaviours between holders.
- Single+ Boost is activated as the mint volume of Single+ tokens increases, resulting in global AC emission increase.
- BTC+ Boost is activated as the mint volume of BTC+ increases relative to Single+ tokens. BTC+ Boost enables BTC+ holders to enjoy an increased share of the global AC emission.
- Mining Pool Replenisher mechanism is introduced to provide consistent returns on BTC deposits. AC tokens are continuously repurchased from the open market to replenish liquidity mining pools.
Prelude
AC token serves as the governance token for the ACoconut protocol suite. In AC Tokenomics v1, we adopted a weekly emission model where AC is minted and distributed on a weekly basis.
To briefly recap, one of the challenges we faced with v1 Tokenomics was the inability to tie overall protocol performance (ie. TVL, protocol fees earned) with various groups of stakeholders.
AC Tokenomics v2 strives to align the common interests between traders, farmers, holders and builders!
Token Distribution
Max Supply = 21,000,000 AC (100%)
Community Allocation = 15,000,000 AC (71.43%)
Team Allocation = 6,000,000 AC (28.57%)
Community Allocation is further allocated between Liquidity Mining, Ecosystem Building, Insurance Reserve and Community Growth Incentives.
Tokenomics v2 New Features
Liquidity Mining
With the launch of BTC+, we are introducing a dynamic emission boost model to stimulate TVL growth and game theory behaviours between holders.
- Single+ Boost is activated as the mint volume of Single+ tokens increases, resulting in global AC emission increase.
- BTC+ Boost is activated as the mint volume of BTC+ increases relative to Single+ tokens. BTC+ Boost enables BTC+ holders to enjoy an increased share of the global AC emission.
Let’s go through a simplified example together (numbers are arbitrary, a detailed mathematical model will be released in a separate post).
AC Reward/Week = 10,000
Single+ Boost benchmark = 1,000 Single+ tokens
BTC+ Boost benchmark = 500 BTC+When the total mint volume of Single+ token reaches 1,000, the overall AC emission will increase by 2x. Therefore, the global AC emission increases to 20,000 AC/Week
When the total mint volume of BTC+ reaches 500, BTC+ holders will earn up to 60% of the global AC emission. Therefore, BTC+ holders can enjoy 12,000 AC from the global AC pool.
Single+ Boost is designed to promote overall TVL growth while providing consistent AC yield to Single+ token holders.
BTC+ Boost is designed to promote usage of BTC+ by incentivizing users with a greater share of the global AC emission.
vAC
With the growing maturity of the ACoconut community, we will be launching Community Governance shortly after v2 deployment on Ethereum.
vAC is introduced to represent holder’s AC position stored in Locker. vAC provides holders with two key benefits:
- Increased mining power across respective liquidity pools
- Voting rights in community governance
AC for a specified duration to receive vAC. Mining power and voting rights will change on a proportional basis according to the overall amount of vAC locked.
A detailed summary on locker mechanics will be published via a separate blog post.
Insurance Reserve
acSafe is an insurance reserve designed to protect users from potential protocol security breach. Furthermore, it serves as an asset protection measure in case when any underlying pegged-BTC or BTC-yield tokens within the ACoconut system depegs from BTC.
AC holders can utilize AC to purchase insurance cover on any underlying assets in the acBTC and BTC+ protocol. Insurance cover holders could make claims against acSafe in case of loss of funds.
Mining Pool Replenisher
ACoconut is designed to be a robust BTC DeFi solution, enabling BTC holders to generate consistent risk-adjusted returns. Currently, the ACoconut protocol suite captures value from:
1. Management fees collected from the BTC+ protocol
2. Swap/mint/redeem fees collected from the acBTC protocol
One of the observations we made on yield farming protocols was the lack of consistent returns due to a heavy reliance on new token emission.
Leveraging ACoconut protocol fees to stabilize returns, we have designed a Mining Pool Replenisher mechanism where a constant stream of AC will be repurchased from the open market to replenish liquidity mining pools.
The objective is to segregate returns from new emission dependencies.
Closing Remarks
AC Tokenomics v2 was designed to combat the inefficiencies we faced with conflicting stakeholder interests witnessed in v1.
Furthermore, the new design is a true representation of collective interests from traders, farmers, holders and builders. We are very excited to witness the potential of AC within the ACoconut ecosystem!
Resources:
- Introducing ACoconut v2
- ACoconut: The First Cross-Chain BTC Yield Aggregator
- Join Telegram → https://t.me/acbtc_community
- Join Discord → https://discord.com/invite/mvANFYe
About ACoconut
ACoconut is a BTC DeFi protocol suite designed to enable frictionless movement of BTC liquidity between decentralized systems. The ACoconut protocol suite consists of BTC+ and acBTC, powered by NUTS Finance.
About NUTS Finance
NUTS Finance is a blockchain development DAO focuses on building secure, composable and open source technology to empower financial applications on the blockchain. Our team is composed of experienced developers, financiers and serial entrepreneurs.
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