Tokenomics
It has a direct influence over how Reitio protocol is designed, types of incentives, as well the potential effect that it has on the price of reitioGOV (REG).
6.1 Defining reitio token use case
Token Economics, or Tokenomics in short, is an important component for tokenized projects like reitio. It has a direct influence over how reitio protocol is designed, types of incentives, as well the potential effect that it has on the price of reitioGOV (REG).
We will be taking a deep dive into some of these aspects in the following sections to better illustrate how REG could benefit the reitio ecosystem.
REG tokens will first exist in the form of ERC-20 (Ethereum) and it will subsequently be made available on Polkadot and other blockchains in later stages of our project development.
The total supply of REG will be 1 billion tokens, in which various segments noted in the following section will determine its token distribution and overall network adoption. REG will act as a governance and utility token on the reitio platform, facilitating transactions and enabling interactions within the ecosystem. Moreover, it will encourage the participation of the network users in the area of platform’s governance, future development and more.
6.2 Core token economic model
Decentralised governance forms the basis and objective of the blockchain and cryptocurrency industry. Oftentimes, decentralisation as mentioned within the industry refers to the governance in securing the network, tokenization and more.
At reitio, our project uses the uni-token mechanism, where:
reitioGOV (REG) is the governance token issued for 1 billion in total and will not be increased further. It enables protocol governance, allowing REG stakers to vote for and receive rewards. It is intended to allocate control rights over reitio protocol such as change of fees and protocol amendments. It offers a clear path to decentralization in our project lifecycle, gradually handing over control from reitio to our distributed community after launch.
In order to create an effective decentralised governance, we will be shaping our tokenomics with an incentivisation system that ensures REG holders are able to vote for the greater good of the ecosystem. This will in turn, create a robust model for the long term sustainability of reitio Protocol. Thus, instead of distributing REG as a secondary token, we will be distributing our governance tokens through our early stakeholders from private to public sale.
In addition to the basic governance features that REG confers, the token will also double as an utility token in the reitio Liquidity Protocol where it will be used as a connector to achieve highly efficient routing.
Since the reitio Protocol will be focused on cross chain interoperability, REG will be a multichain token. It will be first minted on Ethereum and later on other blockchain protocols via token bridging methods, with no additional token issuance.
On the release day, 5.2% of the REG token's total issuance of 1 billion was unlocked. The remaining tokens will be gradually unlocked over a 4-year period through Feb 1, 2025. This is to prevent a large amount of sell pressure and/or gamification of the token price.
This lockup is especially important for early investors and team members. Early buyers and users of the platform should be able to accumulate and hold REG without worrying that investors nor team members will sell large amounts of tokens all at once. As such, we propose a slow-release vesting schedule whereby the majority of the token supply is locked early on, then tokens are released daily.
6.3 reitioGOV (REG) token
The team at reitio strives to design a fairly executed governance structure and thereby leveraging REG, its governance token, as an effective means to grant token holders the right to participate in the decision making process of the project’s operations. Each token holder is also conferred a certain veto power, while the protocol transits to a Decentralised Autonomous Organisation (DAO).
DAO is a crucial infrastructure for reitio as it represents one of our core beliefs of community building. Our community will have the right to exercise voting, so as to ensure that reitio users could participate in the direction of the platform. Simply put, anyone who stands to benefit from reitio should have been able to make decisions on the long term sustainability of the reitio Protocol.
Our flagship product - reitio Virtual Asset Creator, is built to reward creators and platform users. Hence, the first goal of reitio is to design the tokenomics for virtual assets creators’ incentivisation.
Two years after reitio’s mainnet launch, the reitio DAO will be introduced to handle the ecosystem’s governance. The DAO will be responsible for the platform growth, voting rights and other proposals by REG holders. Other aspects may include crucial project’s decisions, oracle providers, trading fees, platform transaction fees, virtual world listings, and more. It will eventually govern the network parameters through an instantaneous token governance model that enables REG holders to easily participate, benefit and vote for various protocol settings without a time consuming voting window.
Another important to note is the presence of a decentralized autonomous organization or DAO to oversee the platform’s governance likely means some REG tokens will be locked in the DAO as part of its functioning mechanism.‍
reitioDAO I: REG token distribution (Q3 2022 - TBA)
During the kickoff stage, REG will be distributed to community members through various token fundraising and incentivization activities in accordance to a lockup release schedule. The goal of this phase is to create a ground community to implement DAO.
reitioDAO II: DAO governance launch (December 2023 - TBA)
Community participants could anticipate a full DAO launch in the second stage, giving its participants an access to the extended governance mechanisms on the mission to completely decentralise the reitio network, and gradually achieving the fully decentralisation status.
Virtual Assets Creator Incentivisation
The growing mainstream popularity in NFT has brought about massive market opportunity not just for the cryptocurrency industry, but for the virtual assets creators space as well. We do envision a future where the sale and issuance of NFTs become commonplace within a decade. Thus, the NFT ecosystem will thrive far beyond the current hype revolving around the new monetisation means of digital artworks.
In order to establish a firm foothold in the bustling NFT economy, the onboarding process of great virtual assets creators are of paramount importance for the reitio platform. While analysing existing NFT marketplaces and virtual asset creation processes, a problem has been identified by the reitio team. Most creators have no prior cryptocurrency experience, and many users with great concepts fail to create their own virtual assets due to a lack of coding or design experience. Existing NFT marketplaces also do not facilitate an easy way to allow ordinary users to realise their artistic visions.
To counteract the issue pertaining to creators, reitio will propose a rewards program called reitio Squad to incentivise creators to join and use the reitio platform. The program’s fund will be derived from the Ecosystem wallet and the token supply will be announced in the next iteration of this Greenbook.
Features of the reitio Squad program will include, but are not limited to REG grants and privileges such as: To encourage NFT minting on the reitio platform, gas fee waiver is available for eligible virtual assets creators and users of the virtual assets creation tool. Familiar registration onboarding process that will allow users to choose login methods via email addresses. Easy-to-use REG and NFT staking interface Discounted transaction fees as well as higher rewards for early adopters, ie. virtual asset creators and users of the virtual assets creation tool. Eligible creators artwork to be promoted on reitio’s media and community outreach initiatives. Dedicated support for newly onboarded creators and users of the virtual assets creation tool.
Additionally, the reitio Squad program will be manually vetted for grants approved for early creators of the platform, and later a code-based verification system will be installed to ensure the authenticity of all creators and their work. The authentication method is similar to the mandatory Know-Your-Customer (KYC) process used in most centralised exchanges today. This is to prevent situations that Rarible has encountered such as wash trading on the Rarible marketplace.
Loan facilitation for the blockchain-powered Metaverse economy
The reitio platform is catered primarily for the blockchain-powered metaverse, and the fast-growing space with valuable NFT transactions will require loan features to allow users in the platform with sufficient REG or NFT as collaterals, or to lend their assets to users within the reitio ecosystem.
Lenders will earn dividends for every successful loan executed in reitio. To counteract massive price volatility in the loan process, the reitio protocol will require borrowers to have sufficient REG tokens or liquid NFTs in their connected cryptocurrency wallet in a smart contract to serve as collateral for the loan.
These assets will be unlocked once borrowers have fulfilled the repayment within the stipulated timeline as determined by the smart contract, with any interest accrued to be paid in full as well.
Deflationary Burn events for REG
To encourage price stability and REG holders traction, reitio will burn up to 10% of the Ecosystem wallet and mined rewards over the next 8 years.
The burn events will coincide with BNB deflationary burn mechanism which accounts for factors such as unspent budgets, fees, network growth in TVL and users, as well as the stability of the protocol.
Proposed model will be announced over the next iteration of the Greenbook.
The initial proposed token supply for the reitio Ecosystem fund will also be reviewed bi-annually, and subsequent rewards not given to creators or buyers of NFTs will be burned as well. The goal of said function is to provide a strong deflationary pressure for the overall supply of REG. Future proposals relating to the burn event will be open for community vote and suggestions.
Stake-for-Data API
To foster a democratic exchange of data processed and listed on the reitio platform, anyone could draw data from the platform through an open API. This will enable virtual assets creators to access creator liquidity preference and the ability to swap various assets using NFTs. In order to pull data through the API, reitio will require data partners to commit to the network by staking REG to unlock the accessibility of the data.
Multichain deployment
reitio Protocol supports multiple chains, and therefore, any public chain may be deployed with REG output through mining.
6.4 REG for Rewards
TBA
6.5 Transaction fees, buyback-and-burn, and governance mechanism
While many token swap platforms earn profits through transaction fees, reitio takes a different approach. The token buyback ensures that the platform controls the supply of the tokens in the market, a good strategy for ensuring price stability and transactional demand. It is similar to share buybacks in the corporate world, where companies maintain control of the supply of their shares in the market.
Token burning is a common practice to ensure a balance within their blockchain’s protocol. For example, a platform performs a token burn to produce a type of reward that’s later distributed to the market’s participants. Rewards also indicate that the platform will allow people to participate as liquidity providers by staking their crypto holdings. And those who decide to run a node to help further decentralize the network will also be rewarded.
Burning tokens also ensure that the supply is deflationary, meaning that there will be fewer tokens in circulation. Token burning in the crypto is usually done by sending tokens or digital assets to a dead wallet, where they’ll be rendered useless.‍
The minimum initial values of transaction fees of reitio Protocol are the following:
Fixed-price platform transaction 3.5%; Auction 0.3%;
The transaction fees of reitio Protocol are mainly used for deployment of the smart contract, cross-chain, invocation of other contracts, Oracle, etc. After deducting necessary expenses, 50% of the profits of the reitio Protocol will be used for REG buyback-and-burn once per quarter.
6.6 reitio’s Token Distribution
A token’s distribution to specific stakeholders and community segments highlights several aspects important to the project’s evolution. For example, some projects conduct private funding rounds to gain capital for the project's development, while the investors gain early access to the token at lower price levels. In addition, some tokens are reserved for future developments while a fraction of them are sold to the public.
For instance, in the REG token distribution case, 13.0% of the tokens are allocated to the private sale with a vesting schedule.
Instead of an initial coin offering, we'll conduct an IDO as our token generation event (TGE). The TGE unlocks up to 10% of private sale tokens, with the remaining token placed in a lock-up period ranging from 3 months to 3 years, where a small portion of tokens will be distributed monthly. 36% of the total token supply will be set aside for foundation and ecosystem usages, and future developments.
The project’s team will receive 12.0% of the token subject to a 1-year lock period after the token generation event (TGE), after which tokens will be unlocked monthly for 2 years. Advisors will receive 5% of the total REG supply. Their tokens are locked for 180 days after TGE. After the locking period, tokens will be unlocked monthly for the next 28 months.
Finally, the general public will receive 25.0% of the tokens, unlocked at TGE public sale, after which tokens will be unlocked monthly for 3 months. ‍
Inhibiting Volatility in Price
Note that the vesting schedule will impact the token supply and subsequently influence its price. Cryptocurrency prices tend to be highly volatile, and some projects counteract this through their vesting schedules as the first line of defense against too much volatility. For example, the limited nature of the REG tokens at just 1 billion in total supply with a starting public supply of 52 million tokens means it might quickly spike in value. However, the vesting schedules with limited releases will counteract that price spike.
The reitio platform has a deflationary economic approach tied into its fee mechanism. It will charge a 2.5% percent fee on every transaction, and those fees are essential for maintaining the platform’s operations. In addition, smart contracts on our platform send half of the fees to reitio’s insurance fund to ensure its security.
The remaining 50% of fees are allocated across different areas, including on-chain referral fees, competition prizes, lottery prizes, and a buyback program that will also feature a token burn. The latter plays into the token's deflation since it will reduce the circulating supply. Note that lower supply with constant or higher demand is a recipe for a higher token price.‍
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