A Guide to FLX Token Economics
Tokens provide a way for anyone globally to participate and control a network through governance and staking. Flux token is a utility token designed to balance flexibility with carefully architected incentives.
The $FLX token is the bedrock of our ecosystem and the heart of its value proposition as a protocol entirely governed by the DAO and secured by validators. $FLX token includes the following features:
- Maintaining a whitelist of protocols that are allowed to create new data requests. To enter the whitelist, a protocol must submit a proposal to the DAO with an $FLX token bond attached to it.
- To deploy Oracle modules for different use cases, developers must apply to the DAO to receive approval for the type of data request, the economic guarantee provided by validators via staking, and payment token and amount.
- $FLX tokens secure and strengthen the network, serving as collateral for nodes for select data requests and validation. Depending on the sensitivity of data requested, data requesters can specify the collateral amount for nodes to stake up to process their request. In addition, $FLX tokens serve as collateral for disputing data outcomes and challenging their conclusions.
- Flux Oracle is cross-chain; the Flux DAO enables token holders to vote on upgrades and design changes across the Layer Ones Flux supports.
$FLX token is capped at 1,000,000,000 max supply and distributed as follows:
A total of 1,000,000,000 (one billion) FLX tokens will be created. These tokens will be distributed to major participating groups in the Flux Protocol based on their percentage allocations set forth below:
- 28.8% (or 288,163,296 FLX) to core team and contributors for the ongoing development of the Flux Protocol. These tokens are subject to a 6-month lockup followed by a 24-month linear vesting period from Qualified Network Launch.
- 2.6% (or 26,750,000) to advisors of Flux Protocol for their ongoing support of ecosystem development, legal structuring, and economic modeling. These tokens are subject to a 6-month lockup followed by a 24-month linear vesting period from Qualified Network Launch.
- 14.96% (or 149,583,333 FLX) to founding contributors that provide resources for the operation of the Open Oracle Association, along with community and ecosystem support for Flux Protocol. These tokens are subject to a 6-month lockup followed by an 18-month linear vesting period from Qualified Network Launch.
- 8.45% (or 84,500,000 FLX) to strategic contributors instrumental in the bootstrapping of the Flux Protocol across multiple smart contract platforms, including operation as validators. These tokens are subject to a 4-month lockup followed by a 24-month linear vesting period from Qualified Network Launch.
- 19.10% (or 191,002,751 FLX) to the treasury to support the protocol into the future. The treasury is controlled by a Multisig of core-team members and active contributors from previous funding rounds. Once the token distribution is sufficiently decentralized, the treasury will be transferred to the DAO and remain under the control of the token holders.
- 15.00% (or 150,000,000 FLX) to developer mining incentives to support the development of Requesters and modules on the Flux Protocol. Each protocol that integrates into the Flux Oracle will earn tokens that go directly to their community of token holders based on the TVL secured by the oracle.
- 5.00% (or 50,000,000 FLX) to an ecosystem fund to support the developer community’s growth on leading Layer Ones/Twos, where Flux is deployed through strategic grants and incentives.
- 3.00% (or 30,000,000 FLX) to validator incentives to bootstrap liquidity to the Flux Oracle and staking over four years from the Qualified Network Launch
- 3.00% (or 30,000,000 FLX) for Public Distribution via copper launch and incentivized pools to various decentralized exchanges to bootstrap liquidity.
Token Distribution Visualization
However, not all tokens will immediately be in circulation. $FLX tokens vests as follows:
Why is the LBP starting price $2?
LBPs are a unique distribution mechanism, in which the price starts high at a premium and decays over time. If there is no buying demand then the token price will decay from $2 to ~$0.103. This allows for the community to have control over the fair market price of the token during the distribution.
What’s the cost of running a validator?
The cost of running a Flux v1 validator is currently very low, there’s no minimum stake that has to be locked in order to start validating and there’s little to no hardware requirements. Our validator could at the moment even run on a web browser.
For v2 there might be more hardware requirements since there will be peer-to-peer communication between validators to come to a more robust off-chain consensus.
Is there a minimum staking threshold?
There’s no minimum amount of stake required in order to run a validator or participate in network validation in general. The amount of stake you choose to put behind your answer will dictate your pro rata share of the reward.
Are there rewards at launch?
To bootstrap network liquidity, a percentage of the token supply will be allocated towards staking rewards for validators as well as grants for requesters for the first few years the protocol is live. Rewards will be airdropped to eligible validators and requesters until the allocated tokens run out.
How will requesters be rewarded at launch?
To incentivize only value-generating, high-quality data requests being made on the oracle, rewards will be distributed to requesters according to how much in fees each has distributed to Flux validators each epoch.
E.g. There are two requesters A and B; over an epoch A has rewarded 100 $FLX for validators while B has rewarded 200 $FLX for validators; so A gets 33% of the allocated requester grant for that epoch while B gets 66%.
Will Validators earn extra rewards?
To incentivize the correct resolution of data requests (in addition to fees earned), rewards will be distributed to validators according to the accuracy rate and amount staked each epoch.
The formula for scoring staking rewards earned by a validator v for a given epoch is calculated as:
Is there any “halfening” for emission?
Does the protocol accrue any fee?
No, the protocol does not impose or generate any additional fees from data requests.
Is there any lockup period for staking tokens?
Lockups are on a per-data request basis.
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