Indigo Protocol Tokenomics and Fair Launch
Indigo Protocol has approached the issue of both tokenomics and a fair launch from a new perspective. Our focus for Indigo has always been to gain community trust, first and foremost, building with a vision of fairness and ease of use within the protocol for the native token itself in mind. Now, we’re excited to share a more in-depth look at our approach and how we got here!
First, let’s start with the token that users will be able to purchase, stake, provide liquidity (LP), and receive rewards through. INDY will be the protocol’s governance token. The INDY token’s utility comes from its use in Indigo Protocol governance where users are able to introduce and vote on proposals with voting power 1:1 to a user’s balance of staked INDY. The total supply of INDY will be 35M tokens with a 6 decimal precision. The max supply of INDY will be distributed to protocol users over the course of five years. We believe in a fair distribution of the INDY tokens to the early adopters of the protocol, therefore there will be no community pre-sale via ICO/ISO/ISPO, nor any private distribution to investors prior to launch. Core Team allocation will also take place over a three-year vesting schedule to alleviate any community concerns of a rug pull being possible. The INDY token generation event (TGE) will occur upon protocol launch and will use a Mary-era monetary policy that terminates blocks after, disallowing future minting and burning of INDY.
How Do I Buy or Earn INDY?
- INDY tokens will be available upon the official v1 mainnet launch of Indigo Protocol. This will take place sometime in Q3 2022.
- Stability Pools: We reward INDY to stability providers, who deposit their iAsset/s and stake them in stability pools of that specific iAsset in preparation for receiving a portion of collateral liquidation when they occur This is critical for both system solvency, user experience, and security against liquidity risks.
- iAsset LP via DEX: We reward INDY to iAsset LP stakers in the supported DEX’s for their commitment to the iAssets LPs, essential to the whole ecosystem’s liquidity. Without them, it’s not easy to do useful things with the minted iAssets.
- INDY LP and Stakers: We reward INDY to INDY stakers, who stake to participate in the governance processes of the protocol. We need such incentive for more people to hold INDY, which in turn balances our decentralized system. This prevents having a few whales who run the system.
- DEX Airdrop: Indigo Protocol will need a DEX to expose the iAssets further and create a revenue stream from yield farming for different agents in the protocol. Distributing INDY to DEX users isn’t just a nice gesture to be part of a bigger ecosystem; it drives our collaboration with the various DEX’s. The plan is to allow the community governance vote to choose the DEX that will receive the airdrop through democratic governance voting. This will take place near the end of yr1 post-launch. Indigo Protocol plans to have a ‘multi-DEX’ feature that will allow users of the protocol to select the DEX that they will then provide their iAsset liquidity to. SundaeSwap will be the integrated DEX at launch, the governance process will also determine which other community favorite DEX will be supported(if not SundaeSwap). While we don’t have a hard number of supported/integrated DEX’s we will end up with, our initial thoughts are 3 at this time. This does not preclude any users’ ability to swap iAssets or INDY on any active Cardano DEX.
- DAO Treasury/Community Funds: This is a small pool of funds that can be spent through a governance proposal to fund future contributors, partners, and changes to the protocol mainly.
Our Fair Launch Policy
The Fair Launch is a novel innovation on the journey to bootstrapping liquidity that is gaining popularity as community-led DeFi development teams look to deploy the next wave of web3 protocols and startups.
Fair Launch allows upcoming DeFi & DAO protocols to tap into existing (and aligned) communities to bootstrap governance token distribution and build highly collaborative, driven communities with low-time preferences. Recent forms of community collaboration and joint product development are essential to Fair Launch.
What does Fair Launch mean for decentralized networks?
-A DeFi protocol that is distributed and governed by the community from the genesis block.
-Everyone can provide liquidity to the protocol at the same starting time (genesis block).
-There is no insider token allocation to early investors or VCs.
Why did Indigo choose Fair Launch?
The fundamental element of the Fair Launch allows protocol teams to rapidly bootstrap token distribution while bypassing the normal VC funding step and increasing distribution amongst smaller token holders. From the user’s standpoint, Fair Launches allow everyone to provide liquidity or participate in the protocol at the same starting time, establishing new frameworks for community-led decentralized crypto networks.
Fair Launch represents a structurally innovative tool to bootstrap token distribution that protocol developers and end-users are both seeking. As all new innovations, there are elements of the Fair Launch that must be optimized.
An Experiment to Extend the Fair Launch
Fair Launch paths to bootstrapping a protocol with existing crypto networks are recent innovations and our team believes liquidity mining, staking, and yield farming are initial token distribution tools that will advance the founder’s toolbox. The drive to experiment across models will result in new base Fair Launch tools that can be utilized to bootstrap distributed and revenue-generating community-led protocols.
We are not satisfied just waiting for other upcoming Cardano DeFi protocols to adopt Fair Launch mechanisms, we are using the model ourselves to launch distribution of the Indigo Governance Token (INDY) to early users of the protocol. Combining the process of bootstrapping protocol liquidity as well as governance token distribution at v1 launch on Plutus mainnet is a significantly more equitable approach for users and produces similar outcomes in terms of sourced liquidity for protocol founders. We look forward to releasing more detailed user guides describing how ADA holders can participate in Indigo’s Fair Launch closer to v1 mainnet and we hope for upcoming DeFi teams to consider this model over traditional funding paths in the future. Please reach out with any questions or suggestions, this is a live experiment and we believe innovation in this framework is required to push the Cardano DeFi space forward.