AIP4: Simplifying and improving the ARCx Tokenomics

Key Points

  • ARCx tokenomics are unclear. Mint all outstanding tokens to simplify.
  • Publish a new emissions chart with updated and improved vesting schedules.
  • ARCx treasury wallet would hold over 52 million ARCx tokens. That’s a huge warchest to use for growth.

Abstract

There have been a lot of questions regarding the ARCx tokenomics. They are not clear and should be mapped out to allow investors to make informed decisions. The previous unlock schedule needs changing to produce a more healthy inflation curve.

Previous Issuance Schedule

As stated in the initial token release article:

“After the sale, the continuous schedule inflation will kick in. Every time that new tokens are minted by the protocol, they are minted in the following proportions.

  • 60% direct to the community - the users of ARC - as incentives for locking up collateral, providing liquidity, and other productive contributions
  • 19.1% to the Community Treasury (controlled by ARCx holders)
  • 15.5% to Founding Team (6 month lockup from the date of the sale, vesting over 4 years)
  • 5.4% to Angel Investors (6 month lockup from the date of the sale)”

The wording in some of the previous articles left a lot of ambiguity and made it impossible to know when certain releases were due and how much they were going to be. Moreover, when mints are happening at random intervals to free up tokens for the treasury the vesting schedules would be difficult to manage and track, leaving investors a tough task in judging inflation. Having discussed with the ARCx team, it was clear that some changes would be required. Without AIP-4, there will be a large token unlock in September of not only the phase 2 sale tokens, but all of the angel investors tokens and 25% of the team tokens (an extra 8 million ARCX in total). This would almost double the current circulating supply.

Further to this, the details on CoinGecko are confusing with respect to supplies. The “Total supply” and “Maximum supply” are two separate numbers, one being the total minted to date and the latter what can be minted. The industry standard is to mint all tokens and store them in relevant wallets that are considered locked. These wallet addresses are fed to CoinGecko to allow for easy tracking.

New Unlock Schedule

The below chart shows what the emission schedule would look like if AIP4 was to pass. It involves a one off mint of approximately 60 million ARCX to get the total supply to 100 million tokens. From here a new schedule should be formed for the Angel investors, ARCx Team and $KERMAN holders (detailed below) with various unlock dates in the coming months and a stream started where relevant. The initial unlock dates have been pushed back to flatten the inflation curve.

Note: There are still some ARCX OLD tokens (around 600) that are yet to be migrated across. This will add to the circulating supply as and when they migrate. There is no time cap on this, the migration portal will remain open indefinitely.

Token Distribution Breakdown

The below pie charts show how the different allocations change over three time periods. Each chart shows the total locked allocation and its change to becoming unlocked. For example, phase 2 is eliminated from the second pie chart since all tokens unlock and the circulating supply increases.

Passing this AIP would leave the ARCx Treasury with over 52 million ARCX tokens, leaving a huge opportunity for expansion. Incentives, when timed well, with the correct control measures in place can be used to massively bootstrap the DeFi Passport. Careful thought should be taken before making any decisions on utilising the treasury, but the project is in a very strong position with these reserves.

Key unlocks

  • 19 September: Phase 2* sale remaining ⅔ (6,183,439 ARCX).
  • 19 October: Angel round, 40% (2,160,000 ARCX) followed by 6 month stream.
  • 19 November: Team tokens and $KERMAN* holders. 10% unlocked (1,450,000 and 27,778) followed by a 3 year stream. There will be a blog post in October outlining how the distribution for $KERMAN holders will occur.
  • 19 December: 3rd raise, 50% unlock (798,300 ARCX) followed by a 6 month stream.

*Please note that there may be minor delays depending on the development resources to enable distributions in certain cases.

The Proposal

For: mint all of the remaining tokens to the originally proposed supply of 100 million ARCX tokens and approve the ongoing vesting schedules.

Against: leave the supply and vesting schedule as is.

8 Likes

As a phase 2 investor and active DeFi fund manager I support this and will be voting yes. Clarity around token emissions is extremely important for new investors, DEXs, CEXs, and information services in the space.

3 Likes

Will also support this.

2 Likes

Support! Thank you for the level of detail that you put into this!

2 Likes

Thanks for taking the time to put it up. This is really important. I’d also like to add-

  1. We need a technical whitepaper or “litepaper” for those of us who want to go deep into the protocol.
  2. A small document highlighting, what the future of being a passport holder might look like. It builds lot of trust, especially when someone new is joining.
1 Like

Will support this. There should be another proposal to use treasury tokens to generate yield.

I fully support this. Lets try to think how to put these tokens to work for all of us involved!

1 Like

Thanks Sangeet, agree this would be important to have in place. Maybe it could be a new section on the Wiki.

100% agree. If you or @Nikhil have any ideas please feel free to post in the discord (discourse channel) or in #general-discussions.

This is a fantastic proposal @knightsemplar - I fully support this!

1 Like

Great proposal! Fully support it.

1 Like

that is very much needed. AS mentioned, Tokenomics is not clear, and I really support strength treasury

1 Like