# Depeg Finance: Tokenomics and Initial Farm Offering

By [Oprich](https://paragraph.com/@oprich) · 2022-12-06

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**Introduction:**

As a first of its kind on the Fantom Network, Depeg Finance cares deeply about setting a good precedent, especially concerning such important matters as long-term protocol sustainability, which is highly dependent on the tokenomics. With so many variables and aspects that must be accounted for, designing a model for the tokenomics is never an easy or straightforward task. On top of that, tokenomics must satisfy the community, which in itself is a significant challenge due to the multitude of different opinions likely to be expressed.

With that said, in today’s post we will be focusing solely on the distribution and utility of the **$Depeg** token, DePeg Finance’s _native asset._ Let’s dive into it.

**Tokenomics:**

After careful consideration of many different approaches to formulating the tokenomics of **$Depeg**, the development team came to the conclusion that in the bearish and turbulent conditions of the current crypto market, the optimal choice is to allocate **100% of the token supply** to the community via a **3-Month** **Initial Farm Offering (IFO)**. Yes, that is correct. Roughly 90 days after the official launch of the protocol, all 2 million tokens will be in the hands of the community, as depicted in the image below.

Because some of you may not yet be familiar with the concept of IFO, in this paragraph we will break it down so that no doubts will remain on launch day. An IFO is a simple and fair method of distributing a project’s tokens across its user base — akin to an Airdrop in some regards -. In an IFO, users of a given DeFi protocol get the opportunity to stake a predetermined asset in a _farm_ in order to receive their _pro-rata_ share of the token being distributed. Note that IFO’s do not necessarily have to distribute 100% of the supply, only the percentage the team feels is right.

Now onto the specifics of the **$Depeg Initial Farm Offering**. First, recall that when a user makes a deposit into either vault, _Peg_ or _Depeg_ (i.e.: buys or sells _insurance_) the protocol mints and sends a receipt token that follows the ERC-1155 semi-fungible token standard. The point of these tokens is to represent a user’s position. During the initial 3 months — while the IFO is ongoing — users with open positions on DePeg Finance may head over to the “FARMS” page on the dApp and stake their receipt tokens. After successfully staking the receipt tokens on their designated farms, the user will begin to gradually receive **$Depeg** tokens at the advertised rate (the farm Annual Percentage Return, or APR). Naturally, once the IFO period is over, the “FARMS” page will serve no alternative function.

**The Utility of $Depeg:**

**$Depeg** will be relatively limited in utility during the earlier stages of DePeg’s roadmap, but users can expect utility to increase as the team ships new features. Yet, the **$Depeg** will serve a very important purpose: Revenue Distribution. On the Depeg Finance dApp, holders of **$Depeg** can stake their tokens on the “STAKE” page and collectively receive a 5% share of the protocol generated fees. It is important to note that **$Depeg** is not a yield-bearing asset _per se_ since it WILL NOT pay its holders unless it is staked.

**Closing Remarks:**

Although the team is confident in the efficacy of the model chosen for the tokenomics of **$Depeg**, we hope the growing community of Depeg Finance is pleased with the path taken. We would like to thank you for the support shown up until now and remind our soon-to-be users that feedback is dearly appreciated. Should you disagree with particular aspects of Depeg’s tokenomics and be willing to share your opinions, please head over to our Discord and take part in the discussion.

[**Discord**](https://discord.gg/2WxPQteJ2X) [**Twitter**](https://twitter.com/DepegFinance)

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*Originally published on [Oprich](https://paragraph.com/@oprich/depeg-finance-tokenomics-and-initial-farm-offering)*