007 - TRAX Use Cases

Proposal Summary: The TRAX token will become transferable after 5 token uses are created. This proposal covers the high level of each one. New proposals for each one will need to be made in the future with details on exact implementation and numbers related to allocations, percentages, and anything else not explicitly confirmed in this proposal.

Details: These are the five use cases that the TRAX token will have. The first one is already implemented, and the other four are high level suggestions that the DAO can adopt with later with proposals that lay out full execution plans.

Earn TRAX token by Staking in Farms: The Contrax DAO was made to ensure that users of the Contrax app own it, and therefore, hold the token that represents ownership of the DAO. Therefore, the users of the app will receive TRAX tokens, and using the Contrax app means staking through Contrax. TRAX is a non-transferrable token, but the DAO can decide to change this later. Any token use cases that require transferability are subject to the DAO making this change. The current distribution of TRAX is a combination of three factors: The amount staked, the length staked, and the APY of the farm. At current, for every $100 deposit, the user earns 0.2 TRAX for every 1% APY, per day. This is the current formula for TRAX earned on the platform:

(0.002 * Apy_weighted_average) * (Total_Staked * Days_Staked)

The DAO can adjust emissions, variables that determine emissions, what farms to emit to, and which weights to farms based on what is most beneficial to the DAO.

Example: • A user stakes $500 in a farm with 5% APY, and another $500 in a farm with 15% APY (so 10% average APY). He farms for a year with no change in APY in the farms. • We apply the formula above. (0.002 * 10) * (1000 * 365) -> 0.02 * 365,000 -> 7,300 TRAX

Governance via a vTRAX token: Although initial voting with the non-transferrable TRAX token (xTRAX) will be with directly with the token, once we upgrade to the TRAX token, any voting or staking will be done via the non-transferrable, governance version of the token: the vTRAX token. TRAX tokens are swapped for vTRAX tokens, which will have variable lock period before they can be swapped back to TRAX tokens. The user will have the option to decide how long to lock, and that will determine the amount of vTRAX obtained. Users can choose longer locks for more vTRAX, which means more voting power, more tokens to stake for rewards, and more TRAX after the lock-up period expires. Note that locking can be implemented with exceptions to a whitelist, such as the staking vTRAX for rewards (later use case)

Example: This table is an example of what lock-ups could look like. The exact timeframes and numbers are not actually part of this proposal:

Lock-up Period	vTRAX based on TRAX
1 month	1.0x
3 months	1.10x
6 months	1.25x
1 year	1.5x
1.5 years	2x
2 years	2.5x

Example: • User A buy and User b both get 10k TRAX tokens (buying or earning) • User A locks up their 10k TRAX for 2 years, and immediately gets 25k vTRAX • User B only does a 6 month lock-up, and gets 12.5k vTRAX • User A now has a lot more voting power than user B, but a much longer lock-up • At the end of their lockups, they can 1:1 redeem their vTRAX for TRAX • Therefore: User A gets 25k TRAX after 2 years, User B gets 12.5k TRAX in 6 months.

The TRAX Tax: There will be a percentage based tax on the sale of the TRAX that goes toward a decentralized liquidity pool, for example, a TRAX-USDC pool. This tax will take half the taxed TRAX amount and purchase USDC it from the TRAX-USDC central pool, and use the rest of the TRAX to combine with it to create an LP token, and deposit into this same pool. The LP will be owned by the DAO treasury.

Example: Let us assume a TRAX-USDC pool, and a 5% TRAX tax. • User has earned 10k TRAX and now wants to sell them for USDC using the TRAX-USDC pool. • The user will lose 500 TRAX to the tax. 250 of them will be sold for USDC, then combined with the other 250 to make a TRAX-USDC LP token that will then be deposited into the pool. • Some of the sell pressure has converted into permanent liquidity for future trading.

Stake to Vote, & Earn TRAX-USDC: vTRAX holders need to stake their vTRAX in order to vote with it. Once staked, they will have access to vote on proposals from within the Contrax App. By providing the service of voting, including on the weekly farm boosts (the next use case), they will receive a reward in TRAX-USDC LP, which we can ideally stake for them but give ownership to their wallet to withdraw if they wish. For every vote, the DAO can allocate an amount of USDC-TRAX LPs to create and give to the voters, distributed based on votes after the voting deadline closes. The distributions are tied to the votes, not the staking. The staking represents the vTRAX voters showing their tokens are “present” and willing to vote for proposals.

Example: User has earned 10k TRAX over a few weeks of staking. They convert TRAX into vTRAX and stake on Contrax. As proposals arrive, they vote on them. For each proposal, TRAX-USDC LP is rewarded at the end of the voting period.

Boosting Farms: Users can choose on the dashboard at the start of every week which farms they want to receive a “boost” for the week. Users will need vTRAX staked to vote on the farm they want to boost. The farm that receives the most votes will be “boosted” to higher APYs. The DAO can decide if single or multiple farms are boosted. The boost can come in the form of reduced fees on the farm, increased vTRAX, or a mix of both.

Example: User logs on and sees the option to vote with his vTRAX on the dashboard User selects the farm he wants to vote toward The votes are treated like a proposal with multiple options. By the end of week, there are 3 winners that will be boosted for the next week. We increase TRAX emissions and/or lower fees to those farms

Example: Winning Farms	Example: Boosts
GMX	APY increases by 10% & 200% TRAX emission
ETH-Magic	APY increases by 5% & 150% TRAX emissions
ETH-USDC	150% TRAX emissions

Note: This contents of this proposal was turned into an article with graphics: https://contraxfi.medium.com/contrax-initial-tokenomics-837d062596a4