KPI-based Emissions

$ION tokens rewarding protocol users will be emitted based on protocol KPIs.

How does this work?

Growing with Borrow Volume

Each epoch, ION will emit a base amount of tokens that, at epoch 0, amounts to 0.1875% of total ION emissions (~0.75% monthly).

As of June 14th, 2024, Ionic has roughly $179M in Total Value Locked and $10.04M in Borrow Volume. If the level of protocol activity remains stagnant at these levels, Ionic will continue to emit tokens at our base rate.

However, as Ionic continues to grow and expand to new chains - eventually connecting the Superchain via a single money market protocol - we expect the nominal amount of borrowing to increase over time. As borrowing increases, we will increase the amount of $ION emitted at a rate less than the growth of borrowing and revenue. This ensures that emissions are non-dilutive as revenue generated by the protocol and distributed throughout the ecosystem grows faster than tokens emitted into the ecosystem.

Protocol Emissions

Emissions Formula

Our emissions schedule follows the equation below:

Where:

  • E = current month

  • SE = the month of the most recent step change

  • X = growth threshold

  • Base Rate = epoch emissions rate

  • SUR = step-up rate; the rate of emissions increase

  • Step-up Period = # of times the growth threshold has been breached, inclusive of month E

Our Base Rate is 0.1875% per weekly epoch, which equates to 0.75% of ION emissions released a month, or ~2.25M tokens. Additionally, the growth factor will initially be set to 20% and the step up rate will be 15% to ensure that growth of borrowing > token emissions growth.

Note: to ensure a accurate measuring of total borrowing volume, the protocol will institute a 14-day geometric moving average.

Bootstrapping & Early Adopter Rewards

That being said we want to find a way to continue rewarding our earliest supporters; thus, in addition to our previous airdrop we will be rewarding this user base through the following methods:

  1. Over the course of the next 3 months, we will emit monthly tokens to our Mode, Base and Optimism pools. These emissions will be exclusively available to $veION holders.

  2. We have reserved our second airdrop for early users as well. To that end, we will be sunsetting our points system as we build out and launch Ionic Score. A snapshot of all Ionic points has been taken and will be rewarded in Airdrop #2, along with early $veION adopters. More details soon!

  3. We are exploring a one-time boost to Ionic Score for users involved in the pre-sale and airdrops #1&2.

Team Vesting

In order to more closely align the team with the Ionic community, the Team allocation will also follow a KPI-based emission schedule.

The team has a base-case vesting schedule, as outlined in Stage 1: Points Squared:

Allocation%Vesting

Team

15.00%

12 month delay; 48 month vesting

Similar to protocol emissions, we have instituted step-up functions, based on the 14-day geometric moving average of Total Borrow Volume on Ionic. However, whereas Token Emissions are set to a 20% step up rate for every 15% in Borrow Volume growth, Team Vesting will step up 15% every 25% of Borrow Volume Growth.

To illustrate how KPI-based emissions may impact circulating token supply, we can compare how token emissions look in our Base case compared to a system in which TVL and Borrowing grow 2.5% and 5% month-over-month, respectively

In our Base Case, assuming flat protocol activity, Team tokens fully vest over 48-months, whereas Protocol Emissions vest over an 11-year period.

However, in a steady growth state, 2.5% TVL and 5% Borrow Growth a month, Team tokens vest over ~24-months and Protocol Emissions vest in ~36 months. It is important to note that we expect more volatility/market-based fluctuations rather than steady growth; yet, we find this illustration valuable enough to share with our community.

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