Responding to ReFi Community Feedback After Our Token Swap Announcement
Following the release of our latest articles:
… and various feedback received from the ReFi community, we wish to address a few of the key questions/discussion areas that have arisen since.
1. What is a vesting schedule, how does it work with our new token and why did we opt for it?
You will have access to your tokens from day one, however, they will be vested and you can only sell your tokens after the end of the first 6 months from launch.
Below you will find what the vesting and cliff period is for the ReFi OGs (group that opts for the $XYZ airdrop), the people that participate in the private sale and the ReFi Team.
According to BSC News, it is typical for investors to have a lockup period for 2 years with 0–12 month cliffs. Investor lockups help mitigate selling pressure and significant drops in price.
In their survey, only ~8% of projects have lockup durations of 6 months and less. Over ~90% of projects have lockup durations of greater than 6 months.
2. Why restrict token sales within the first 6 months and tailor the ability to sell your holdings?
To prevent massive volatility when we start the pool. We’re launching with an LP of 5% of the supply so if we suddenly get massive selloffs with 20% of the supply, we’d be severely impacting the growth of the protocol before it even gets off the ground.
The vesting schedule will greatly reduce any sell pressure and allow the protocol the best possible start, both optically and financially.
3. Why is only 20% of the new supply going to be given to ReFi holders, and is their potential for more?
This was an extremely difficult decision for us as we hope you appreciate, it was not taken lightly. We spoke with reputable tokenomics consultants alongside knowledge of previous projects, protocols and tokens that have launched, taking note of who was successful and who wasn’t.
Given the market we find ourselves in and the low value of ReFi Tokens, coupled with them being ‘untouchable’ for the past few months, there will be many that plan to sell, understandably, as soon as the new protocol launches or gains traction — as alluded to above this puts extreme sell pressure once we launch with a ‘fight to exit’ but it also deters any new investors into the protocol as the tokenomics become highly unattractive.
For example, we cannot imagine many investors wanting to invest into a project where ~90% of the supply is already owned by investors that haven’t been able to trade their tokens for 2 months. That figure when reduced to 20%, without a vesting schedule, still creates negative optics for anyone looking to invest and large sell pressure once launched.
The community has given feedback about potentially locking their tokens for longer than a year to get a larger share of the 20% but with all the development going into getting the protocol up and running and the complexity of setting up this system it’s just not feasible at this time.
4. Could you tell me more about the new $XYZ token so thatI can make an informed decision?
Crypto prices and volumes are driven by narratives. This past year alone we have seen various narratives form including:
- “Curve Wars”
- Liquid Staking Derivatives
As investors, you have seen how we managed to capture product-market fit in the latter.
Looking ahead, we want to build a protocol that is both scalable and sustainable, which is built with the long term in mind. There are 3 narratives that we believe will likely grow over 2023 and beyond.
- Arbitrum as the dominant Layer2 for trading and risk management
- “Real Yield”, where protocol fees are paid out in stablecoins or ETH
- CEX volumes migrating to DEX’s
The protocol we are building is at the intersection of these three narratives. It is unique and solves a real problem for traders, treasury managers and retail investors alike.
It is not a GMX fork. It is not a delta neutral vault built on top of GLP. It is a protocol where a user has full flexibility to create an investment strategy which is otherwise very capital inefficient and operationally cumbersome to do currently.
The $XYZ token will be a utility token. It will accrue the majority of the fees generated by the protocol, with a staking mechanism to incentivise longer term holding. Over time, it will also be used to reward users of the protocol as well as assigning governance rights over how the protocol is designed and operated.