New AC Emission Model Explained and More
When the AC Genesis Liquidity Mining program first began, the AC emission schedule was set to 1% per week for 100 weeks. This represents 210,000 AC will be minted on a weekly basis and we envisioned building out the acBTC ecosystem in 100 weeks.
We intentionally kept the emission schedule simple because we thought the community would find a simple model more compelling. Keeping in mind the AC Genesis Liquidity Mining program started on October 4, 2020, this was during the last leg of the yield farming craze before DeFi projects took a stark correction.
The simple emission model got us off to a tremendous start, with total value locked on the platform growing rapidly throughout the first two weeks and eventually peaking at approximately USD 16mm before taking a plunge at the start of Week 4.
The freefall in TVL was detrimental to our momentum because the number of acBTC minted took a dive. This had a direct impact on the price of AC which further affected our go-to-market strategies. And all of a sudden, we found ourselves trapped in a death spiral.
Over the next few days, we went back to the drawing board trying to figure out a way to dig ourselves out of the sandpit. We spoke with a number of users who participated and withdrew capital from the Genesis Pool and we were able to identify some overlapping concerns that led to their redemption decisions.
This was a much needed exercise as it was our first attempt to attain product-market fit. Without any surprises, securing product-market fit in the crypto economy is even more complicated when a token is involved. Since the token immediately becomes an attraction for attention due to its nature of price volatility and short-term speculation behaviours.
Looking at the glass half full, the apocalypse we experienced in a matter of 4 weeks enabled us to define our north star metric. We believe that in order to acquire product-market fit, we need to maintain a steady pace between shipping products, building community and managing liquidity.
Product development includes everything from requirements gathering, product research and design, building, testing and production. This is a repeated process which we have to do for every single new protocol starting with acSwap (Swap, Mint, Redeem), acYield (Liquidity Mining, Savings), acLoan (Lending/Borrowing) and xcSwap (Cross-chain swap).
Community building involves creating awareness, locating potential users, educating and converting potential into actual users/advocates. This process requires us to iterate quickly based on user feedback and delivering consistent engagements with the community. In our case, our community building efforts span across the Bitcoin maximalists and DeFi community.
Liquidity management is a natural extension of a well designed token economics model. Specifically, it involves creating consistent demand and managing supply through establishing use cases, building liquidity channels for trading and embedding game theory strategies. The goal is to strike a balance between supply and demand for the AC token while sustaining market capitalization growth.
In hindsight, an overly simplified token economics model can be a double edged sword. In our case, starting out with a simple emission schedule quickly exposed our deficiencies as token circulation quickly outpaced product development and go-to-market efforts. On the opposite hand, a simple structure also provided us with flexibility to iterate and improve.
Therefore, we identified the token emission model as the key component that strings together product, community and liquidity. This is the engine behind the progressive development of the acBTC project.
The new emission model enables us to reach equilibrium between attaining product-market fit, scaling our community and managing the circulating liquidity on the market. It also provides us with a buffer to recalibrate in case any of the metrics fall out of sync.
Furthermore, dividing AC emission into 4 phases allows stakeholders to easily measure the intrinsic value of the project on an interval basis. This approach also better enables investors to make informed decisions on a short-term, mid-term and long-term timeframe.
Starting on 10:00 12/13/2020 EST, the acBTC project will enter Phase 1. Phase 1 marks the beginning of a new chapter as we work towards establishing acBTC as the de-facto platform for ERC20 BTC holders to save, lend, borrow and exchange their wrapped BTC assets.
While keeping the allocation ratio unchanged; for every 5 AC minted for Liquidity Allocation, 2 AC will be minted for Development Allocation. This will continue to keep interests aligned between community and early backers/ecosystem partners.
The total AC supply will be distributed across 4 Phases. Each phase is defined by a fixed duration and objective.
Currently, Phase 2 and 3 are intentionally left undisclosed as we work towards the transition of governance to ACoconut DAO, which would allow community governance to take up responsibilities in driving acBTC forward.
Hence, our primary goal for Phase 1 is to implement various value drivers for AC and acBTC holders in order to build a robust community with sound decision making capabilities and a long-term focus.
As we enter Week 11, we expect the new emission rate to synchronize optimally with our upcoming product release roadmap, community expansion efforts and liquidity management strategies.
So far, this has been a truly unique and interesting experiment on finding product-market fit in the crypto economy. I will be sure to provide an update in a few weeks on whether our north star metrics are leading us to new heights.
To be continued!
For more details on Phase 1’s emission schedule, please refer to the AC Token Economics
💬 Join Us on our Journey!