Adventure Gold Token Proposed Economics v1
by [heygareth.eth], [Hill], [Eraser], [JX],and the AGLD community
- 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.
- 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
- 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.
- Vote on grants and protocol development
- Open LOOT ecosystem currency stack and loot economy aggregator
- Grants and rewards to ecosystem contributor via treasury
- Staking rewards to AGLD Loot/mLoot stakers
Means of Distribution:
We here proposed that additional AGLD issuances should be distributed to users who stake Loot & mLoot with AGLD.
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.
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
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.
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.
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