Significant progress has been made in laying the foundation of the AirDAO ecosystem since our official launch on September 15th, 2022.
The AirDAO team successfully released its flagship suite of products: our FirepotSwap DEX (in conjunction with ecosystem partner Firepot Finance), AirDAO Staking, AirDAO Bridge, and AirDAO Network Explorer. We created an intuitive dashboard on our website, allowing all these applications to be accessed through a single interface. Our global community grew significantly with the launch of official regional communities for Turkey, LATAM, Africa, China, and Francophone speakers. We launched our Ambassador Program, receiving hundreds of applications within the first month. We also built AirDAO Academy, a hub of educational resources, including tutorials and guides for interacting with each of our products.
Additionally, we introduced a brand-new vision that combines a user-focused product strategy with DAO governance principles to create the first community-driven Layer 1 blockchain project. We laid out these fundamentals in our litepaper and addressed specific changes necessary to execute our roadmap moving forward. Many of these items are familiar to the community, with particular emphasis on our voting tokenomics, the structure of AirDAO governance, the maximum supply of AMB, burning mechanisms, AMB rewards, and incentives.
We will expound on these topics and more in this overview of our tokenomics update and elaborate on why we are making these changes and the critical role they will play in AirDAO’s growth and delivery of real value in 2023 and beyond.
VOTING TOKENOMICS
One of the most significant innovations in decentralized finance has been the creation of DAOs and the integration of tokens into DAO governance frameworks. AirDAO will institute token-based voting as a critical component of our transition to DAO governance in 2023, and users will be able to lock their AMB and receive votes in the form of VOTE tokens.
VOTE holders will be able to participate in AirDAO governance by voting on proposals made through our community forum. Engaging in DAO activities on-chain will allow VOTE holders to earn a share of the revenue from the AirDAO Treasury. The Treasury will generate this revenue through transaction fees and profit-sharing from AirDAO’s various dApps and products.
Many protocols utilize token-based voting with fixed lockup periods, with holders unable to exit until the lockup period ends–even if their views no longer align with the DAO. Users who ‘soft-lock’ their AMB will be able to unlock and have access to their initial AMB stake at any time without accruing a penalty aside from the forfeit of any accumulated voting power and rewards.
DAO GOVERNANCE
Introducing the new voting utility for AMB kickstarts our evolution to community-based DAO governance. Our community forum is the central hub of our DAO governance. It will be the primary platform for the upcoming election of community members to AirDAO’s multi-signature wallets, with a transparent, three-stage voting process and a final vote using Snapshot. These individuals will serve as the founding members of the AirDAO Oversight Committee, whose duty is to represent the community’s best interests regarding the roadmap and team strategy. They will also be responsible in part for the evaluation of community discussions on these topics and the introduction process of governance proposals for voting.
The AirDAO community will also have the final say on implementing the new, upgraded tokenomics via DAO governance, with AirDAO conducting the voting process using Snapshot.
REWARDS STRUCTURE
The tokenomics update revamps AirDAO’s current reward mechanisms by adding elastic block rewards, AMB Bonds, and new staking methods.
Validator Node Staking has higher APY than Locked or Liquid staking. Individuals that stake AMB in validators will be subject to an on-and-off boarding delay. Node rewards will be vested in the form of AMB bonds with the percentage of instantly available rewards based on node maturity. Existing validator nodes will be retroactively credited for their current staking duration.
Locked Staking will have a higher APY than the Liquid Staking mentioned below, feature the same 1,000 AMB minimum stake and payout schedule as the current model, and will have an on/off-boarding delay.
Liquid Staking will be identical to the current AirDAO Staking model but will generate a lower average APY than either Validator Staking or delayed AirDAO Staking. The minimum stake, the payout schedule, and unrestricted on-and-off boarding will remain the same.
Elastic block rewards will ensure that validator nodes are adequately incentivized to continue providing service as TVL increases. The AMB generated per block will increase dynamically with the percentage of the total supply staked, guaranteeing that stakers continue to be rewarded consistently. To create sustainable protocol-owned liquidity, we will also build a market for AMB bonds in which users can buy vested AMB at a discount in exchange for the provision of particular tokens. These bonds will be tradable but cannot be redeemed for AMB through AirDAO until their expiry date.
MAX TOKEN SUPPLY
To honor the commitments made by the AirDAO team to the community and to ensure long-term sustainability for AirDAO as a project, a max supply of the AMB token at 6.5b tokens will be implemented, which will be printed at once and locked within a specifically-designated series of wallets that are either smart-contract automated or subject to multisignature control. These wallet addresses will be public, so the AirDAO community can verify the AMB within and monitor the use of the DAO’s funds.
The breakdown of this max supply figure is as follows:
1.5b AMB in current total supply—circulating or staked tokens.
1.8b AMB reserved for community rewards and incentives—calculated for ten or more years. Community rewards will be distributed automatically to validation providers.
1.5b AMB allocated for existing and future investors—including existing deals, subject to multi-year vesting. Secures sustainable, long-term working capital for AirDAO.
0.85b AMB in incentives for all current and future team members—multi-year vested.
0.85b AMB in ecosystem funding to be utilized by the DAO—locked indefinitely, with the community-owned DAO deciding on when and how to use the funds.
This was calculated with sustainability in mind so that AirDAO will continue to operate and grow for decades, eventually becoming an entirely self-sufficient and autonomous DAO. The specific breakdown of this figure was designed to ensure that, over time, the AirDAO community maintains majority control of tokens. Implementing burning mechanisms will have an increasing effect as AirDAO grows, and our goal is to achieve the highest rate of organic deflation possible over the coming years.
BURNING MECHANISMS
The AirDAO team is committed to achieving a net-deflationary supply for the AMB token in the long term. We will work towards this outcome by implementing several burning mechanisms for AMB. One of these will be executed through an update to the structure of our network’s transaction fees, which will split them into three possible parts.
The Base Fee will serve as block rewards, where 70% goes to validators, and 30% goes either to the AirDAO Treasury for revenue sharing among VOTE holders or is burned. The Extra Fee (optional to speed up transactions) goes either to the AirDAO treasury for revenue sharing among VOTE holders or is burned. The Contract Call fee, which is variable based on the contract deployer, goes to that deployer’s address.
The community will determine through a DAO vote whether 30% of the base fee and the entirety of any optional extra fees are burned or go to the Treasury and if the 30% figure should change. The community can revise this through future proposals should popular sentiment on where these funds are allocated change over time.
Other subDAOs founded by AirDAO will burn a percentage of profit and revenue. Currently, 20% of subDAO gross revenue is shared back to AirDAO — such as DEX and Bridge transaction fees. A portion or entirety of penalties that a subDAO product user accrues can also be burned; for example, the penalty of an early withdrawal from a lending protocol.
Governance-related penalties will also burn AMB. It will take a two-week epoch for a user to receive AMB after unlocking VOTE, and the proportional amount of profits and rewards accrued during this period will be burned. Any other potential penalties a user may incur due to misconduct during the governance process will also be burned.
BONDED ASSET MARKETPLACE
As a component of the rewards structure and to secure sustainable protocol-owned liquidity for our ecosystem, AirDAO will create a marketplace for VOTE and vested AMB bonds. The bonds will be freely tradable and constitute a variable portion of validator staking rewards, with a bond market for validator rewards, a bond market for liquidity, and a bond market for new products.
The bond market for validator rewards is designed to incentivize stability and reliability among node operators, with nodes receiving part of their rewards immediately and part issued in the form of an AMB bond redeemable later for AMB.
AMB bonds will be offered for purchase in the bond market for liquidity at a relative discount to AMB market price, based on the length of the vesting period, in exchange for other liquidity or single-asset tokens. This will build a diversified treasury for AirDAO and build up liquidity to be deployed as sAMB (synthetic or “wrapped” AMB) on Ethereum and BNB Chain. Users will also be able to bond either their AMB or specific AMB liquidity tokens to receive assets issued by new projects that partner with AirDAO and wish to launch their tokens on AirDAO’s blockchain.
SUMMARY
Updating AMB’s tokenomics is essential to the success of the next phase of the AirDAO ecosystem. Implementing voting tokenomics enables our transition to community-based governance and ensures that the community is represented in future changes to the protocol. The update to the rewards structure reaffirms the importance of the validators that secure AirDAO’s blockchain and rewards them for their contribution; introducing on-and-offboarding delays for nodes further enhances network security.
The new rewards structure also offers a liquid staking solution that ensures all community members can contribute towards securing the network due to its lower barriers to entry. The Bond Marketplace guarantees sustainable protocol-owned liquidity for the AirDAO ecosystem. And finally, the institution of a max token supply, with a goal for an eventual deflationary supply, is crucial for the long-term sustainability of the ecosystem — and implementing burning mechanisms is essential to accomplish this.
Together, these updates establish AirDAO as a community-driven Layer 1 project, set in motion the plan for a deflationary AMB token supply, and ensure the stability of the network for the long term with an upgraded rewards structure.
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AirDAO is a community-governed ecosystem of innovative, user-friendly dApps powered by the AirDAO blockchain and its AMB token, streamlining the needless complexity of Web3 and bringing its benefits to the average consumer via a single, easy-to-use dashboard.
