The future of the EGG token
This article explains the EGG token’s mechanics in the Waves Ducks game, complementing the Duck Paper and sealing its status as a GRU (Governance, Reward and Utility) token with a deflationary model.
EGG was conceived as an answer to the question “duck or egg?”, primarily enabling players to hatch a new NFT character. But, as the game mechanics developed, it acquired more functions. Currently, EGG is used for farming rewards, payment for farm improvements and as the game’s governance token.
Let’s look into the specifics of its distribution and pricing.
EGG distribution
Out of the total supply of 1 mln EGG, in accordance with the Duck Paper, only 200,000 tokens will be available for use in the first 12 months of the project’s operation. The majority of the tokens are supposed to be distributed among players for completing tasks, such as social media activities of utilizing Waves-based products.
In the first two months, 57,000 tokens were distributed in the game’s rounds for activities, including the use of Swop.fi and Lambo staking on Waves.Exchange, as well as supporting Waves on social media (retweeting posts and implementing creative tasks, such as coming up with new characters, memes and infographics).
Part of the remaining 143,000 tokens will be allocated for farming rewards. 36,000 tokens will be distributed in equal portions over a 12-month period as rewards for NFT farming, in accordance with DIP-2.
The remaining tokens in the total supply will be distributed in the coming years, and each year, the number of distributed tokens will decrease by 50,000. Thus, the distribution of 500,000 tokens in the game’s rounds will be complete by 2024, but the inflow of EGGs to the tokenomics will continue through farming.
Separately, a limited number of tokens will be allocated to marketing activities, which will correspond to 7.5% of the total EGG supply.
Scrambled or fried EGGs?
The game’s first two months saw very moderate sell pressure on EGG, even though tokens were distributed at a high speed (57,000 in two months). The majority of users prefer to use EGGs for obtaining duck NFTs or hold them in their wallets for subsequent use in the game.
Here’s some stats. Out of the distributed 57,000 tokens, 10,700 were locked in the incubator’s smart contract, used for hatching ducks.
To compensate for a constant inflow of new tokens into the game, the project’s team suggests that supply should be decreased, guaranteeing that 100% of tokens sent to the incubator for duck hatching would be burned. Burn transactions will be sent regularly, gradually lowering the number of EGGs in the game and making the token a deflationary asset. This step will also lead to a cap on the number of duck NFTs in the game: they won’t be able to be hatched infinitely, as the supply of EGGs could stop.
EGG buybacks
To boost the project’s market appeal, a high EGG price is vital, as it determines farming APY and profitability of taking part in the game’s rounds. Therefore, to support EGG’s price, certain amounts will be accumulated for EGG buybacks.
A fee will be introduced for auction deals on WavesDucks. Since these deals are denominated in WAVES, a WAVES reserve fund will be accumulated and used for EGG buybacks, for instance, on Swop.fi. Similar fee mechanics will be used in the game’s other aspects that will be part of further updates.
Regular buy pressure due to buybacks will help to establish a fair connection between the project’s usage, shown, for instance in auction trade volumes, and EGG’s price, as well as to support its investment attractiveness.
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The above mechanics will make EGG’s tokenomics complete, except for governance mechanics, which will be described and introduced in Q3 2021.
The release of farming functionality and introduction of fees for Waves Ducks auctions will make the token’s pricing mechanics completely balanced, while its market position will be transparent and predictable.
Remember to join the Duck Hunters chat and subscribe to the Waves protocol’s Twitter to stay up to date on rounds of distributing EGG tokens for the promotion of Web 3.0 the Waves ecosystem.
