Rights to future yueld

The purpose of this model is to let the users who create value e.g. to a DEX today have a part in the future profit of the DEX.

Tokens are issued with a predefined cap, initially owned by the DEX. Every month 20% of the cap is distributed proportionally to the users who create value for the DEX.

The distribution can be done in pools/seasons, e.g. every month etc.

Vesting period

The first month after receiving the right to future yields is a vesting period.

Depending on how active the user is in voting on governance proposals the vesting can be between 0 and 100%.

Performance measurement is dangerous. In accordance with the Principal-Agent Theory, it will lead to “perverse effects”. A consequence is that you will end up with a “you will get what you measure-problem”.

• There is a risk users end up voting without any consideration just because they have to.

• Responsible opinion makers risk being drowned in noise.

• It becomes hard to know if the governance model works at all because it looks like everything is good based on the level of activity.

• It is hard to have an idea about the direction the project is moving.

On the other hand, this is only a theory. There is a chance the users are interested in making considerate choices when voting. This might especially be the case where

• the values and aligned and

• the motivation is present.

Other experiments could be to:

• create more refined goals e.g.

• the financial performance of the protocol,

• accountability for voting or

• asking the users control questions before the actual voting to make sure they know, what they are voting on. Initially giving wrong answers will simply exclude the person from having the right to cast the governance vote.

If a vesting period is not applied, the preferred model is to create motivation for voting well-considered and actively. This could be done by providing the necessary information and to make the gov-token holders feel their vote can make a positive influence on their future profit.

Yield period

When the vesting period is over, the tokens payout proportional yield for three continuous months, after that period it is burned.

The consequence of this feature is, that 80% of the cap is always on the hands of the users that help the platform create value.

The 3-month period can easily be extended as an experiment later on if this is needed.

Non-transferability

Based on the Howey test, tokens are considered to be a security, if it is (1) an investment of money, (2) in a common enterprise, (3) with the expectation of profit, (4) to be derived from the efforts of others.

To avoid becoming a security, the token should be non-transferable by design. This way it is not possible to obtain the token due to an investment of money.

The holders might develop secondary markets. However, there will not be set a starting price.

The remaining 20%

20% distribution each month in a loop of 4 months in total makes it a total distribution of 80% to the users creating value for the DEX.

The remaining 20% can be distributed to e.g. a surplus buffer, core developers, the founding team etc.

The rights associated with this stack of tokens might differ from the ones distributed to the users.