VAPOR
An overview of Vapor tokenomics.
Last updated
An overview of Vapor tokenomics.
Last updated
VaporDAO uses the VAPOR token as an algorithmic reserve currency and key liquidity pair. On a high level, the token has 4 axioms:
Every VAPOR token has an Intrinsic Value (IV) backing the token. While there can be more assets backing the token, there is a minimum value associated with the token. Hence, there is a price floor, but no price ceiling of the protocol. The IV will be initialized at 1 USDC. In other words, every VAPOR token is guaranteed a backing of 1 USDC.
The VAPOR token can only be minted or burned by the protocol. The protocol serves as the "decentralized, central bank" of the token, with the ability to expand and contract supply.
When VAPOR is trading above the IV, the protocol expands supply through staking incentives and bonding. Because the protocol can create more supply, as long there is the IV backing the token, it generates excess reserves from the spread between IV and market price.
When VAPOR is trading below IV, the protocol buys and burns VAPOR, contracting supply. Because it buys the token under the intrinsic value, the protocol bolsters reserves per VAPOR from the spread.
The VAPOR token will be the cornerstone asset for the Vapor Ecosystem. At launch, this will include the memecoin VAPOREON, as well as Vapor Inscriptions.
From these market operations, we can see that the protocol gives the user certainty that VAPOR will not be valued under intrinsic value in the long term. This provides a sense of security and confidence for the users that the protocol will step in as the last buyer of resort, because the protocol can and will buy VAPOR below the IV, even if the supply is reduced to 0. In fact, an event like this would be very advantageous for those who didn't sell, as their % supply grows and grows.
Whenever the protocol generates excess reserves, the protocol can utilize this in many ways. Today, the protocol distributes excess reserves to stakers via rebase rewards, and to the DAO from fees on bonding. All the rewards are paid in VAPOR, backed by treasury assets. This incentivizes users to keep their VAPOR staked, reducing potential selling pressure placed on the token. This greatly reduces the pressure for price appreciation for the users, and shifts the emphasis to supply accumulation in order to generate a return.
The end goal for VAPOR is to have a stable value dictated by the market that tracks the relative value of Sui and Vapor ecosystem assets which will comprise the treasury.
The initial supply of VAPOR will constitute 45,000 VAPOR tokens.
| Percentage | Number of tokens | Allocation |
|---|---|---|
The 3,500 team tokens will be subject to a cliff unlock vesting schedule over 3 months, unlocking each week for 291.6 VAPOR.
Additional VAPOR is distributed every epoch through Vapor DAO's staking incentives. These staking incentives are generated from the excess reserves the Vapor DAO treasury accumulates from selling bonds. A portion of these excess reserves are distributed back to stakers as sVAPOR staking rewards. sVAPOR is instantly redeemable for VAPOR at a 1:1 ratio.
Vapor DAO's staking rewards rate is set by governance. Note that the staking reward rate that a user receives for their staked VAPOR is equal to the Vapor DAO reward rate divided by the percentage of the circulating supply staked.
Learn more about Staking here.
VAPOR is also minted and distributed when users bond assets to Vapor. Users are incentivized to exchange Vapor and Sui ecosystem assets to build the Vapor treasury, and VAPOR is issued at a discount to users.
Learn more about Bonding here.
66.7%
30,000
Initial Offerings
22.3%
10,000
Initial LP
7.7%
3,500
Team allocation
3.3%
1,500
Airdrop
