Adventure Gold Tokenomics Proposal v1

Adventure Gold Token Proposed Economics v1

by [heygareth.eth], [Hill], [Eraser], [JX],and the AGLD community

Background:

  • As the first community based fungible token on Loot, Adventure Gold(AGLD) enjoys the most liquidity after being listed on major exchanges. And approximately 45% of AGLD tokens reside in Loot wallets representing a significant overlap in community interests.
  • AGLD’s token utility and value capture have not yet been clearly established.

Target:

  • AGLD is to become a core component of a LOOTverse currency stack that aims to be a ready made set of strong currency tools to be used in LOOT related games and to be used across them to help tie together a single metaverse economy.
  • AGLD becomes the incentive token for the Loot and mLoot communities: to make Loot & mLoot a yield generative NFT; stake Loot & mLoot to get AGLD yield.
  • AGLD serves the Loot ecosystem goals via the deployment of monetary policy funding projects in the wider ecosystem and becomes a Store of Value token that appreciates as the community and ecosystem grows

Principles:

  • AGLD will be mildly inflationary to invite participation from the wider community, including mLoot. Inflation will be smooth, previous AGLD stakers will not be radically diluted.
  • Governance of Agold will be community driven and governed. Design is to be kept as simple as possible to reduce moving parts and create a reliable and easy to integrate currency system.

Token Utility

  1. Vote on grants and protocol development
  2. Open LOOT ecosystem currency stack and loot economy aggregator
  3. Grants and rewards to ecosystem contributor via treasury
  4. Staking rewards to AGLD Loot/mLoot stakers

Token Issuance

Means of Distribution:
We here proposed that additional AGLD issuances should be distributed to users who stake Loot & mLoot with AGLD.

Epoch:
We suggest that an Epoch time is 1 Week, subject to governance adjustments.

Staking model and Formulas

New AGLD tokens are issued to staked Loots and staked mLoots. The amount of AGLD that will be distributed between staked Loots and staked mLoots is proportional to the floor market cap of Loot & mLoot to ensure that Loot & mLoot stakers are treated fairly. For example, if Loot has a floor market cap 10 times that of mLoot’s, Loot stakers collectively should be entitled with 10 times the reward mLoot stakers receive in total.

The average floor market cap for Loot is calculated with the average floor price of Loot multiplied by the average circulating supply of Loot. The same formula applies for mLoot.

AvgLootFloorMCap = AvgLootFloorPrice * AvgLootCirculatingSupply

AvgMLootFloorMCap = AvgMLootFloorPrice * AvgMLootCirculatingSupply

Then a weighting is produced by looking at Loot’s and mLoot’s respective percentage when their average floor market cap is added together. Ideally the weighting is automatically calculated at the end of each epoch. The ratio at the beginning is to be adjusted by the DAO governance mechanism.

LootWeighting = AvgLootFloorMCap / ( AvgLootFloorMCap + AvgMLootFloorMCap )

MLootWeighting = AvgMLootFloorMCap / ( AvgLootFloorMCap + AvgMLootFloorMCap )

The total number of AGLD tokens available for staked Loot is calculated by multiplying it’s weighting percentage to the total reward. Then each individual Loot’s reward is calculated by dividing Loot’s overall share of reward by the amount of Loot that are staked. This applies to mLoot as well:

No.AGLDperLoot = TotalReward * LootWeighting / No.LootStaked

No.AGLDperMLoot = TotalReward * MLootWeighting / No.mLootStaked

In the end, each individual staker’s entitled reward is calculated by adding up the reward from Loot and reward from mLoot. Again to prevent fluctuations near epoch ending, the average number of NFTs staked are used.

Reward entitled = AvgNo.Loot * No.AGLDperLoot + AvgNo.mLoot * No.AGLDperMLoot

Adventure gold would be required to be staked with LOOT and mLOOT to ensure that stakers are fully aligned to the Adventure gold currency ecosystem.

Example
Floor MCap of Loot sits ~101k ETH (13 ETH floor price * 7779 supply at the time of writing), while floor MCap of mLoot sits at ~812 ETH (0.01 ETH floor price * 81240 supply at the time of writing). For the sake of calculation, it was assumed that this figure does not change during an epoch, therefore equal to the averaged figures needed for the formulas.

LootWeighting = 101k ETH / ( 101k ETH + 812 ETH) * 100% = 99.2024%

mLootWeighting = 812 ETH / ( 101k ETH + 812 ETH) * 100% = 0.7975%

Therefore, for this imaginary epoch, 99.2024% of newly issued AGLD tokens will be entitled to Loot stakers, and 0.7975% of newly issued AGLD tokens will be entitled to mLoot stakers. Assuming 100,000 AGLD tokens were to be distributed to this imaginary epoch:

Loot stakers will get in total: 100,000 * 99.2024% = 99202.4 AGLD

mLoot stakers will get in total: 100,000 * 0.7975% = 797.5 AGLD

Assuming there are 1,000 Loot and 10,000 mLoot staked:

Each staked Loot will be entitled: 99202.4 / 1000 = 99.2024 AGLD

Each staked mLoot will be entitled: 797.5 / 1000 = 0.7975 AGLD

Assuming that Alice, a Loot and mLoot collector, has staked 2 Loot and 50 mLoot on average throughout the epoch, she will be entitled:

2 * 99.2024 + 50 * 0.7975 = 238.2798 AGLD

Inflation

By the end of an epoch, a predetermined amount of new AGLD tokens will be issued. This amount follows a halving schedule similar to that of Bitcoin to ensure reduced inflation and a limited supply.

Issuance on the first year will be 8,000,000 tokens. Havlings happen yearly.

Thanks to the halving mechanism, circulating supply will gradually approach a soft cap of 96,000,000 AGLD tokens. Cumulative additional issuance will reach 19.37% by the 5th year and ultimately not exceeding the proposed 20% inflation soft cap.

Note that the APR estimation is entirely based on the supply side fixed price assumptions. No assumptions on AGLD consumptions are made and assume all Loots & mLoots be staked. Also anything beyond year 1 might be meaningless so greyed out.

Implications:

The mechanism makes sure that the interest of the AGLD community is aligned with the Loot community and the mLoot community as a whole. Although more than 98% of newly issued AGLDs in the 1st year will be distributed to Loot stakers, a staked floor mLoot is just as profitable as a staked floor Loot when looking at their rate of return.

Our proposed method of issuance provides an “risk-free yield” or “UBI (Universal Basic Income)” for all Loots and mLoots alike, with a few interesting implications:

  • Loots and mLoots are not biased when it comes to reward distribution.
  • This yield only applies for Loots and mLoots near floor price. Having them staked for yield rather than listed on exchanges like OpenSea will strengthen the floor value respectively.
  • Higher value Loots & mLoots are encouraged to explore other utilities since they cost more than floors to buy but earn the same AGLD reward, resulting in much lower APR.
  • This yield sets a bar for games using Loot & mLoot: if the game is not fun enough or profitable enough (for play-to-earn) for users to justify their opportunity cost, users are financially incentivised to stake their NFTs rather than using them. This ensures that in the long run the Loot & mLoot communities can enjoy higher quality derivative & game projects building upon the ecosystem, not low quality, spammy projects.
  • Assumes that AGLD price, Loot floor market cap and mLoot floor market cap remains flat, every single year the comfy UBI on dollar amounts decreases by 50%. The UBI is not there forever. The community is encouraged to work, earn, and add value to Loot & mLoot collectively and sustainably in the long run.

Future work:

This proposal only covers the issuance & distribution of newly issued AGLD. It is crucial to align the mLoot community to AGLD tokens before other copycats issue their own tokens, which dilute the AGLD, Loot & mLoot community.

We have not yet covered other areas of the token economics such as consumption & incentives to use & build upon Loot & mLoot. A few ideas we are working on:

  • Treasury DAO
    • Lend & stake Loot & mLoot NFTs to a Treasury DAO. Users can claim 90% of staking rewards generated, the remaining 10% will be accumulated to payout grants and reward infra & tools for the AGLD ecosystem…
  • Reward Booster
    • Stake & lock AGLD tokens for a period of time to boost your reward. The longer they are locked the more multiples your reward gets boosted.
  • Expanded currency stack
    • Additional expansions to the Adventure currency system that provide additional utility and value back to the Adventure gold currency
  • NFT Integration
    • Rewards participants with community NFT drops and additional value outside of staking
26 Likes

I like the idea of using AGLD within the Loot universe without giving it explicit governance rights over Loot (but with explicit governance rights over AGLD, of course). I think this is a move in the right direction. Good work!

6 Likes

I actually quite like this proposal. It does a nice job of incorporating mLoot into the ecosystem (and providing value to it) without diminishing the value of Loot - in fact, it will drive even more value to Loot through the staking/rewards mechanism. Nice write-up!

1 Like

I like this proposal. To be frank it doesn’t screw any party over and leaves the door open to give governance power to AGLD in some capacity once we iron out the details.

1 Like

This is great! I would love to see how it expands into in game usage and possible coordination for project funding.

I think this is the one that benefits everyone.

The only thing I don’t like is the suggestion for AGLD as an in game currency. Not necessarily here but in general. Once you have money involved inside a game you get bots, scammers, exploits, e.g., every MMORPG for the past 20 years. You create a greater attack surface. Make a “fun game”… exit scam. There’s also the whole gas fee issue.

Sometimes I wonder if there’s a FUD campaign against AGLD. Should I put on my bloot shirt? If AGLD was locked the entire time with zero value and we had voting for AGLD as a governance token, would everyone vote yes? Can loot be be listed on coinbase and binance bringing visibility to millions of users? When you have something that’s the first of its kind with a high potential of success, you go big. We have gaming nerds, techies, and whales with fat wallets and connections. A potential brand that can draw millions of players. This is a winning formula. I’m not going to say too much, but AGLD shouldn’t even exist. That’s why I love it, but oof RIP me.

2 Likes

This idea has my support unless someone can explain to me any possible shortcomings

2 Likes

Strongly agree. Agld can govern itself but not loot. loot can also govern itself.

2 Likes

This is the first well thought out proposal I’ve read that benefits the entire loot, mloot, and algd community. all the incentives are alligned. i support this proposal.

3 Likes

This is a AGLD tokenonmics proposal. If the proposal is to reward Loot staking and ultimately dilute AGLD holders, wonder if this has been agreed by AGLD holders first? Also many projects are offering LOOT holders stuff, AGLD is one of them, there is no need to seek LOOT holders consentment here via proposal because the decision should be within AGLD holders. I am just confused.

If there is a very tight integration between AGLD and LOOT then it is different. But giving yield to LOOT holders already happened.

1 Like

Great point. The purpose of including LOOT holders is to strike the most common interest between two communities. AGLD stems from Loot eco and should contribute to loot eco.

1 Like

This makes a ton of sense and is extremely reasonable. We as a community should rally behind this and move the project forward.

2 Likes

I think we should put this proposal to vote.

5 Likes

This is a good proposal because it ties Loot and mLoot together.

However, my one criticism is that the “floor price” of mLoot will always be roughly 0.01 ETH (Aka the gas price it costs to mint new mLoot). The fact that mLoot is inflationary means the floor price will never change. Everyday you can just mint more for the gas price. This essentially breaks the staking calculation for AGLD that is distributed to mLoot holders.

Not sure what the solutions here is. Perhaps staking rewards for both Loot and mLoot should be driven by rarity.

Like this proposal guys! Believe we could garner even more support from AGLD and LOOT holders if we not only created staking rewards, but also tied them to additional actions – i.e., created a play to earn reward system.

I believe this will several big advantages for AGLD holders:

  1. Reduce inflation because new tokens will only be issued to real players who actually earn AGLD (XP) – vs passive stakers

  2. Transform AGLD into a “user acquisition tool for the LOOT ecosystem” – which is a much more compelling narrative for the token than “staking rewards”

  3. Help us juice actual engagement in the LOOT ecosystem, which should benefit both LOOT and AGLD holders just as Axie’s numbers caused AXS and SLP to catch fire

  4. Make it easier for us to create deflationary sinks for the AGLD token, like “pay AGLD to play a new game,” or “pay AGLD to get a new weapon” – which will again accrue value to AGLD holder and the LOOT holders who are playing to earn AGLD

  5. Better set up the grants committee to pay AGLD to partners and contributors since the token will have a clear in-game value and already be seen as a valuable user acquisition / marketing tool.

If we want to reward LOOT or mLOOT holders at a group level, we can just give them a “bonus multiplier” so that they receive more XP than other users when they complete a quest.

2 Likes

Here is the proposed inflation curve since the link hasn’t been included. Feel free to download the spreadsheet and play around with numbers. Love more feedback. AGLD Inflation - Google Kalkylark

There is a lack of long term vision for AGLD and LOOT together to become the ETH of metaverse. AGLD needs to be the loyalty currency for LOOT. This proposal is going to be liked by Loot holders for short term benefits -staking APY but for this there is no need to get buy in by Loot holders first. The lack of strategic partnership for long term is an opp missed IMO.

3 Likes

Slightly disagreed, but what do I know and I assume we are out of choice. So go go bullish!!!

Instead of using mcap floor to calculate the distribution, I propose that we use a weighted mint percentage for Loot and mloot to distribute.

Assuming Loot is 100% minted, we can assign 50% of all staked rewards to Loot.
mLoot being minted 96,620/1,300,000 at the time of writing, only 7.43% are minted. So taking a 50% weightage, only 3.72% of all rewards will go to mLoot.
The difference in %, which is 46.28% will go to Loot as stake rewards, thus totaled at 96.28%

Currently,
difference in mint % total rewards allocation
Loot percentage minted 100.00% 50% 50.00% 46.28% 96.28%
mLoot Percentage minted 7.43% 50% 3.72% 3.72%
92.57% 50% 100.00%
If mLoot minted at 25%
difference in mint % total rewards allocation
Loot percentage minted 100.00% 50% 50.00% 37.50% 87.50%
mLoot Percentage minted 25.00% 50% 12.50% 12.50%
75.00% 50% 100.00%
If mLoot minted at 50%
difference in mint % total rewards allocation
Loot percentage minted 100.00% 50% 50.00% 25.00% 75.00%
mLoot Percentage minted 50.00% 50% 25.00% 25.00%
50.00% 50% 100.00%

This distribution will guarantee Loot at least 50%, while also encouraging new minters of mLoot with a higher percentage; albeit a increasingly larger circulation supply.

Agreed. What we need to grow the value of the token is to attract new, engaged users who need the token to play games. Practically speaking, this means creating a play to earn AGLD economy and charging AGLD to do things like buy weapons, enter new games, etc.