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Balance Token economics
Balance Tokens represent ownership in the Balanced DAO. They're entitled to governance and network fees, and are mined by providing liquidity on the Balanced exchange and/or having an open position on Balanced with at least a 333% collateral ratio.
There will be no pre-mine of Balance Tokens, and there is no maximum supply. 100,000 tokens will be mined per day for the first 60 days of operation. On the 61st day, the amount mined per day will begin to decrease by .50% each day until reaching 1,250 tokens per day to perpetuity. This results in a sub 2% inflation rate and continued incentivization to use Balanced.
Distribution of Balance Tokens
- 47% to liquidity providers
- 3% to the sICX/ICX pool
- 12% to the sICX/bnUSD pool
- 12% to the BALN/bnUSD pool
- 15% to the BALN/sICX pool
- 1.5% to the IUSDC/bnUSD pool
- 3% to the IUSDT/bnUSD pool
- 0.5% to the USDS/bnUSD pool
- 12.5% to borrowers
- 20% to Balanced worker tokens
- 20% to the DAO fund
- 0.5% to the emergency reserve fund
Balanced worker tokens (BALW) provide continued incentives to develop the platform and are explained in more detail in the Governance section. The DAO fund will hold BALN tokens, which BALN holders can vote on how to spend (i.e. promotions, airdrops, bug bounties, security audits, fundraising, etc.).
Mining Balance Tokens by borrowing
To mine BALN through borrowing, you must meet the following qualifications:
- Deposit collateral into Balanced
- Borrow pegged assets from Balanced
- Be at or above the minimum collateralization ratio of 333%
After meeting the above qualifications, the formula to calculate an individual’s mining rewards on any given day is a function of the amount of debt they have in Balanced relative to the total debt. Here is the precise formula:
Mining rewards = (your debt / total debt on Balanced) x BALN allocation to borrowers
Liquidity mining on the decentralized exchange
The Balanced DEX is an automated market maker, a style of decentralized exchange made popular by Uniswap. To qualify for liquidity mining rewards, users must provide liquidity into the incentivized liquidity pools on the Balanced exchange, as detailed in the Distribution of Balance Tokens section. The liquidity provided by users is utilized to have an offer price available on both sides of the trading pair.
For example, liquidity provided to the sICX/bnUSD pair is used to buy and sell both sICX and bnUSD as trades are executed against the pool. The price offered by the pool is based on the ratio of assets within the pool. This is different from traditional order books, where traders place a specific limit order at a specific price.
To calculate the amount of mining rewards earned by a liquidity provider:
Liquidity rewards = (your liquidity / total liquidity) x BALN allocation for that pool
Entitlements of Balance Tokens
In order to receive any of the entitlements associated with holding Balance Tokens, one must first stake BALN or deposit them into a liquidity pool. With this policy in place, only users of Balanced will be entitled to the benefits associated with Balance Tokens.
Network fees
These are the fees associated with Balanced. All fees are adjustable via a vote by BALN holders:
- 0.30% decentralized exchange fee. Charged to users when trading on the Balanced decentralized exchange.
- 0.75% origination fee. Charged each time a borrower mints new pegged assets.
Network fee distribution can be activated by BALN holders after launch. At launch, fees will be collected in a contract awaiting instructions from BALN holders. As an example, here's what the future distribution of fees could look like:
- 60% to qualified Balance Token holders
- 40% to the DAO fund, managed by Balance Token holders
Governance
The governance powers of Balance Token holders include, but are not limited to:
- Adjusting fees
- Adjusting fee distributions
- Adjusting inflation allocations
- Adjusting the unstaking period of Balance Tokens
- Adjusting Loan to Value (collateral ratio) requirements
- Adjusting the Balanced governance process
- Transferring Balanced worker tokens (BALW)
- Spending assets held in the DAO fund
- Adding new pegged assets
- Delegation of the sICX held in Balanced
Last modified 5d ago
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