ISS Token Distribution
Distribution of the ISSUAA Protocol Token
The distribution strategy for the ISSUAA Protocol Token (ISS) has been meticulously crafted to foster community engagement and enhance the platform. Approximately 90% of the total supply, capped at 100 million tokens, is earmarked for community members who contribute value to the ecosystem. This diverse group includes liquidity providers, ISSUAA DAO governance participants, voters, and veISS holders. Especially in its early stages, the platform's success hinges on attracting liquidity. Consequently, liquidity providers in ISSUAA assets and ISS pools are duly rewarded with liquid ISS tokens. Furthermore, tokens are allocated to users who lock their holdings for veISS tokens and actively participate in ISSUAA DAO governance voting processes.
Bootstrapping during V1 Phase
In the inaugural ISSUAA V1 phase, 35.5 million IPT tokens (the precursor to the ISS token) were distributed among various contributors. This included 15 million for early contributors, around 2 million for angel contributors, approximately 2.5 million for participants in the testing and bug bounty program, and roughly 16 million for liquidity providers. These tokens are set to be airdropped as IDT tokens at the commencement of ISSUAA V2.
IDT to veISS and ISS conversion
When transitioning ISS tokens from v1 IPT holders, an initial lock is imposed. Holders have the flexibility to select lock durations ranging from one to four years. Opting for the full four-year lock will yield a 1:1 ratio of IDT to locked ISS. Those locking for three years receive a 3/4 ratio, two years result in a 2/4 ratio, and one year results in a 1/4 ratio. Any unused tokens will be returned to the treasury, earmarked for potential DAO initiatives.
The calculation of your veISS balance follows the standard mechanics of the system, with your chosen lock duration affecting the ratio. Details of this mechanism can be found here. This ratio is layered atop the aforementioned conversion ratio. Consequently, individuals opting for a four-year lock will enjoy a 1:1 ratio of IDT to veISS, while users with just a one-year lock will have a 1:16 ratio of IDT to veISS.
Early contributors, who held 15 million IPT tokens, have committed to align their lock periods with the broader community, locking for a minimum of two years. This decision is rooted in the pursuit of decentralization. Initially holding 42% of the total IPT tokens in circulation, early contributors avoided holding a majority stake. Although this ratio naturally dilutes over time, enhancing decentralization, safeguards are in place to prevent early contributors from controlling the majority of veISS tokens at any given juncture.
This outlined conversion process ensures that the early users of ISSUAA v1 who are committed to the long-term success of ISSUAA will remain fully on board, while those who want to exit early get their holdings diluted. As a side effect, we will likely have a lower number of already issued veISS, thus making it more attractive for LP providers, which should help to attract capital for the ISSUAA protocol asset tokens.
Weekly Rewards Allocation
In order to help bootstrap liquidity for the ISSUAA asset market pairs, ISS tokens are paid out as rewards to liquidity providers and veISS holders.
The overall volume of rewards is managed by the multi-sig signers on behalf of the ISSUAA community. The main guideline for the multi-sig signers will be to allow for an attractive return for liquidity providers while at the same time safeguarding the total rewards pool. Over time, with rising trading fee volume and decreased smart contract risk, the target is to reduce ISS rewards as a percentage of the total liquidity.
Rewards for veISS Holders and Voters
The initial segment of the rewards allocation is dedicated to veISS token holders. Their share of rewards is determined by dividing the Total Supply of veISS tokens by the maximum possible amount, under the assumption that all outstanding ISS tokens would be locked for the full four years. This safeguards the proportionate share of ISS holders who commit to locking their tokens for the entire four-year period from any dilution.
In each individual ISSUAA DAO voting process, every account has the opportunity to accumulate voting points. These points are awarded to votes that align with the majority decision in YES or NO votes, or those within a 1% margin of the voting result for decisions related to the pricing of underlying assets.
To ensure that veISS holders receive rewards even during weeks with no active votes, the claiming of previous week's rewards will automatically accrue voting reward points in proportion to the current veISS holdings.
Rewards for Liquidity Providers
The second portion of the rewards is designated for liquidity providers. Each liquidity pool receives an equitable contribution each week, except for the ISS pool, which receives a 5x contribution compared to the other pools. The equitable contribution of rewards per liquidity pool should lead to a natural process that all pools will grow parallel to similar sizes.
Liquidity providers have the opportunity to earn ISS rewards that correspond to their share of LP provider tokens within the individual pools. However, the actual payout is contingent upon the quantity of veISS tokens held by a user.
Let's consider a scenario where a user possesses 10% of the LP tokens in one of the asset pools. Assuming that this pool is allocated 100k ISS tokens in the current rewards round, the user has the right to claim up to 10k ISS tokens as rewards.
Out of these 10k ISS tokens, 40% (4k) are regarded as the base payout. To receive the full payout, equivalent to a boost factor of 2.5x, the user is required to possess at least 10% of all veISS tokens. The boost factor is calculated using the following formula:
The maximum attainable boost factor is capped at 2.5x. Any rewards that are unavailable due to a suboptimal boost factor will remain within the reward pool. These unclaimed rewards serve to augment future reward distributions in subsequent periods.
ISSUAA DAO Grant Allocation
A total of 5% of all ISS tokens were minted for the ISSUAA DAO during the initial deployment, and these tokens are under the control of the VoteMachine smart contract. VeISS holders with a veISS balance of 100,000 tokens or more have the opportunity to apply for grants of up to 100,000 ISS tokens. These grants are intended to compensate individuals or entities for services rendered to the ISSUAA DAO, services which the veISS holder community deems valuable for the ISSUAA ecosystem. The allocation of these grants is subject to a democratic vote by veISS holders.
DAO Multi-sig Management
The Polygon multi-sig wallet, overseen by a group of community members, manages the reserve which is designated for various purposes:
● Bug Bounties: A portion of the holdings is allocated for bug bounty programs to encourage community involvement in improving the platform's security.
● Strategic Partners and Investors: ISSUAA remains open to strategic partnerships with entities that bring substantial value to the ISSUAA protocol. Any significant investment, exceeding 1 million ISS tokens or 100,000 USDC, necessitates an on-chain voting process. Once approved, these funds are under the purview of the multi-chain signers and can be utilized for strategic endeavors.
● Liquidity Provision for the ISS Token: These funds can also be utilized to provide liquidity for the ISS token, enhancing its stability and availability in the market.
The accompanying graph illustrates the planned ISS token distribution upon the commencement of V2 of the ISSUAA protocol.
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