The support of our community has remarkably defined our journey in shaping ZKX. From early adopters to contributors who played a pivotal role in shaping the community, their unwavering contribution has positioned us as one of the biggest communities on Starknet and within the world of L2s.
Guided by a shared vision, the ZKX team is dedicated to creating a fair ownership mechanism for the future ZKX token, benefiting token stakers and traders. This strategic approach is a conscious step towards avoiding the pitfalls of over-tokenization while prioritizing a sustainable token model.
In line with this pursuit, we are excited to release the details on the community launch of the ZKX governance token, marking an important step ahead of the first locked airdrop.
ZKX Token: Your Key to Governance and Rewards
In designing the tokenomics, our core aim was to foster reciprocity for the value created by the users and institutions contributing to the exchange. As a result, the $ZKX token is the platform’s governance token, and staking the token unlocks governance power, protocol’s revenue in USDC, and long-term benefits for the community.
You can experience the exchange in the following ways -
- Trading
Trading is incentivized via a gamified rewards distribution algorithm called High Tide.
The High Tide algorithm analyzes the behavior of traders according to the following parameters -
- Consistency
- PnL
- Volume
- Past Season Participation
At the end of each trading season, rewards are distributed via the High Tide algorithm, generating a distinct score on the ZKX leaderboard. Digital Shares of ZKX are then assigned according to one’s position on the leaderboard. This strategic allocation of ZKX tokens as rewards aims to bolster liquidity right from the exchange’s inception. In the future, the community and anyone who wants to list a market on ZKX will be able to offer any ERC-20 as liquidity incentives through High Tide.
Our goal is to reward traders for their activity on the exchange while ensuring they have a compelling reason to stay for a sticky trading experience with equitable rewards. This choice is based on user research and insights from focus groups, ultimately leading us to the High Tide algorithm. The High Tide technical paper will be revealed in Q4 2023.
2. Staking
By staking ZKX tokens in a time-locked pool, you gain access to the protocol’s revenue share in USDC. Your share of the revenue depends on the duration, quantity of tokens locked, and the percentage of the protocol’s revenue distributed to the staking pool, which the community will decide. This token lock-up incentivizes ZKX’s growth and enhances its value accrual mechanism.
3. Voting
Staking $ZKX grants access to Digital Shares of ZKX (Soulbound). The duration and quantity of tokens staked directly influence your governance power within the ZKX DAO. The governance power enables you to shape the direction of the DAO and delegate any parameter or function within the protocol to any qualified team that wants to become a sub-DAO of ZKX. Stakeholders of the protocol, from traders to stakers, are represented in what we call Liquid Governance, a concept that will be revealed in 2024. The DAO governance will seamlessly integrate into the main platform UI to simplify participation.
The ZKX Token Economy Flywheel: Balance of Ownership & Power between the Stakeholders
Our High Tide algorithm and Liquid Governance have been designed to establish a power balance between stakeholders, all while incentivizing them based on their activity. This ensures a balance between ownership and control and sets the stage for the ZKX DAO. Once the DAO is established, it will prioritize the community’s well-being through democratic decision-making, preventing unilateral protocol decisions and keeping the power in the hands of our active users.
$ZKX Token Supply and Distribution
Total Token Supply
The total supply of $ZKX is capped at 100,000,000 (100 mil). The total token supply is fixed.
Token Distribution Breakdown
- Trading Incentives — 18% will be allocated to Trading Rewards through the High Tide Smart Contracts and Quests Rewards. These rewards will be given to users based on their trading activity, and will be distributed via the smart contracts over a period of 5 years. This aims to bolster participation, fostering a dynamic trading environment.
- Core Contributors — 17% will be allocated to core contributors representing the ZKX team’s holdings. This allocation will be distributed over 36 months of vesting, acknowledging their relentless commitment and persistent drive to fuel the platform’s growth.
- Advisors — This embodies the 1% advisor allocation reserved for our current protocol advisors. Advisors are pivotal in shaping ZKX’s strategic trajectory, offering insights and guidance throughout our journey.
- Investors — 20% of ZKX tokens will be allocated to our early investors who have supported our vision during the last two years. These tokens will be distributed via a 30-month vesting schedule after an initial 20% unlock of the investor allocation (4% of overall supply) upon token launch.
- DAO Treasury — The ZKX treasury overseen by the ZKX DAO (once formed) is allocated 20%. The DAO Treasury allocation will be fully controlled by the ZKX community and is a strategic reserve to be deployed across a variety of uses, including (but not limited to):
a. Operations
b. Grants
c. User Adoption
d. Sub-DAOs
6. Token Community Launch — 15% is allocated to the community for their contribution to building and shaping the ZKX community, distributed through two phases of locked retroactive airdrops before the mainnet launch. The first phase is dedicated to our early adopters of the community, and the second phase will align with our forthcoming Road to Mainnet Journey.
7. Liquidity Provisioning— 9% of ZKX tokens are earmarked for incentivizing users and market makers to provide liquidity to the exchange and the token on AMMs and exchanges. Deep liquidity is pivotal in achieving ZKX’s vision of becoming the leading DEX.
To sum it up, there is a recurring theme in our tokenomics, the drive to empower both token holders and traders, all while upholding a balance between them. We will be detailing the progression of our token phases in our upcoming blogs.
If you have any more questions regarding our tokenomics, please reach out to our team on Discord.
