Token incentive explained

Encourage Holding, Discourage Selling.

Show me the incentive, and I’ll show you the outcome.— Charlie Munger

It’s ironic that Charlie Munger, a well-known crypto bear, understands so viscerally that good incentives are the driving force of economics, yet doesn’t get that tokenomics unlock incentive structures that traditional finance can only dream of.

In this article, we cover the incentive structure of our new $IONs token in detail.

Here's our thinking. Before diving into specifics, let’s have a look at the behaviour we are trying to incentivise.

Hodling — Obviously, good incentives must make holding a token more appealing than selling it.

Rewarding Early Adopters — Lithium are fortunate to have numerous early adopters who helped us bootstrap our business. We need to make sure these early adopters are rewarded for their patience and investments.

Encouraging New User Adoption — While delivering value to our early adopters, we also need to encourage new users to join our ecosystem. Growing our user base will allow bigger raises, affect more change, and grow the Lithium brand.

Aligning Utility with Financial Rewards — We absolutely don't want ponzi tokenomics associated with Lithium. Incentives must be funded via real revenue. If Lithium does well, token holders should benefit.

Fee Structure

The only sustainable way to deliver incentive rewards is by charging fees that generate revenue. Some ecosystems try and avoid this by creating massive VC-backed reward pools at inception and then paying adopters from this reward pool. This approach is not sustainable — rewards that not being generated from real business revenue are no more than ponzis.

Trading Fees explained. A reliable way to generate rewards is via trading fees. Tokens, if not staked, are constantly bought and sold and therefore can represent a reliable mechanism to reward those who hold, while disincentivising selling.

Our $IONs token will charge variable buying and selling fees (more details in below Epochs section). All revenue generated from trading will then be distributed as follows:

• Supercharge Rewards: 15%

• Tricklecharge Rewards: 30%

• Burn: 15%

• Development: 40%

We will dive into the difference between Supercharge and Tricklecharge Rewards in the Incentive Distribution section.

Platform Fees explained. Currently, the $IONs token also generates revenue through instant staking fees on our platform: If someone wishes to participate in raises held by Lithium without staking their tokens, they may use the “instant” staking option at a 5% fee.

We will be generating revenue through a different mechanism later in Q2. We believe what we have in mind will be a game-changer, and will reveal it in due course.

Revenue Fees will be split up as follows:

• 80% distributed to eligible stakers (EVP90)

• 20% used to buy back $IONs token

Epochs (Charging Cycles)

In v2, we are introducing Epochs: These are certain periods of time, that reward whoever is staked for the entire duration of the period. The idea behind epochs is—once again—encouraging holding and rewarding those who most positively engage with the ecosystem.

In the spirit of the Lithium branding, we are referring to Epochs as ‘Charging Cycles’

• The duration of Charging Cycles will be based on $IONs transaction volume. At the start of each cycle, 3% of Lithium’s Marketcap will be set as the trading volume required to reach the end of the cycle.

• At the end of a cycle, Supercharge Rewards will be distributed.

• The sell tax is highest at the beginning of a Charging Cycle and will gradually reduce throughout the cycle, from 12% to 8%.

• At the beginning of every Charging Cycle, there will be a 24 hour ‘Battery Change’ period. In this period there will be 0% buy tax.

• After 24 hours, buy tax will remain constant at 8% throughout the Charging Cycle.

Incentive Distribution

Now that we understand how fees are generated, and how Charging Cycles are set up, let’s take a look at how rewards are distributed.

Tricklecharge Rewards

• Tricklecharge rewards will be funded from trading fees.

• Tricklecharge Rewards will be delivered every 8 hours, to locked and instant staked investors.

• For all tiers, 30-day locks receive a 1x multiple, 60-day receive 1.5x, and 90-day receive 3x.

• Rewards are then distributed according to total amount of tokens staked (depends on tier) and your lock multiple (depends on duration).

Supercharge Rewards

• Supercharge rewards will also be funded from trading fees.

• They will be delivered at the end of every Charging Cycle to locked and instant staked investors, who have locked their tokens for the entire charging cycle.

• Rewards are distributed according to tokens staked.

How you’ll see trickle and supercharge rewards on the dashboard

USDC Rewards

• USDC Rewards will be funded from platform fees (5% instant staking fee)

• They will be delivered only to the Evangelist Pro 90 tier

• They will be delivered on a weekly basis

• Rewards are distributed according to amount of tokens stake

Project Rewards

• Project rewards will be delivered in the form of native tokens of projects we launch.

• These native tokens will be taken as a fee from projects we launch.

• They will be delivered to all staked users.

• 30-day locks will receive a 1x multiple, 60-day receive 1.5x and 90-day receive 3x.

• Rewards are distributed according to tokens staked (depends on tier) and your lock multiple (depends on duration).

Burn

The purpose of burning tokens is to deflate supply, causing positive price action. As more people adopt the ecosystem, the supply will reduce, causing a healthy-looking chart, which will attract new investors.

Buyback

The purpose of the buyback is to reward long-term holders. As we generate revenue through instant staking fees (and other fees in the near future), we will buy back tokens. These tokens can then be burned, distributed in competitions or sold by the team to pay for marketing or development activities.

Development

Lithium pays for development in two ways. First, we charge projects a fee to launch their projects on Lithium and for all additional services we provide. Second, through the development pool in the $IONs token. A larger development pool means that we can improve the product, assign a budget to marketing, and find new and improved ways to add more utility to our ecosystem. This is beneficial to new adopters and long-term holders alike.