Update around OM Tokenomics moving into MANTRA Chain Mainnet

Dear Sherpa community,

In recent months, there has been a notable shift in market sentiment surrounding projects that have permitted early token unlocks to venture capital investors, raising concerns about their potential risks. This trend can lead to unhealthy volatility and unsustainable growth, which ultimately jeopardizes the long-term stability of projects and their communities. Recognizing these challenges, the MANTRA team has been diligently engaging with our community to explore a more robust and thoughtful approach to our governance and tokenomics.

Reasons for Proposal:

Our primary goal is to create lasting value for the future, focusing on sustainable growth rather than short-term spikes. This commitment reflects our long-term vision for MANTRA and the OM token, aiming to position us as the key player in the realms of Real World Assets (RWA) and the global crypto market. Together, we can build a foundation that not only withstands the test of time but also paves the way for meaningful advancements in the industry.

In response to these developments, this proposal will present detailed insights into our new tokenomics, inviting the Sherpa community to participate in a vote. We believe that fostering broad acceptance before the launch of the MANTRA Chain mainnet is essential to our collective success.

This proposal will cover the following key areas:

• Token Allocations, Vesting and Cliff Structures
• Simplifications in the Inflation Rate
• Emission Schedule

Additionally, we have a special surprise for all our supporters regarding the OM Upgrade Rewards, so we encourage you to read through to the end. This will ensure you are well-informed before casting your vote.

Proposal Summary:

Token Allocations, Vesting and Cliff Structures

In the original Tokenomics Update proposal (https://snapshot.org/#/mantra-dao.eth/proposal/0x46c0b602c7ca8e3d06f07fa70e54ab8bc6a9de0611568c1a5dbb4a8c8ef30626) we shared basic information around the Genesis token allocation of each category. Within this proposal, we are now revealing further details.

As you can see, it is crucial for us to strike the right balance between aligning long-term investors with MANTRA and rewarding our early community supporters for their trust and commitment.

The longest cliff and vesting schedule is dedicated to the Team and Core Contributors, signaling our commitment to long-term thinking and building. We firmly believe in the immense value and growth potential that MANTRA's RWA-focused blockchain will bring to the crypto industry.

To establish robust network security from the outset, these tokens will be staked. However, the rewards generated from staking will not be distributed to the team or its contributors; instead, they will be either burned or distributed to the community through a future governance vote. As the network achieves organic network security growth, the amount of staked tokens will be gradually reduced and ultimately phased out, with the community playing a crucial role in determining the methodology.

The second longest vesting period is reserved for our early investors who participated in the Pre-Seed and Seed Rounds. Our focus is not on achieving quick wins for venture capitalists; rather, we seek strategic partners eager to revolutionize Real World Asset tokenization alongside us for the long haul. At genesis, the investors' tokens will be staked, with all accrued rewards subject to the same vesting schedule as their principal investments.

Additionally, the unvested portion of the MANTRA Chain Association Ecosystem (37.7 million OM) is intentionally kept small at TGE, designed to support future OM liquidity provision, builder incentives, and community initiatives from Day 1. A prime example is the recent launch of the Chakra Pool, which has seeded initial liquidity for the MANTRA Chain mainnet, incentivized through OM. As the ecosystem matures, more tokens will become available through inflation.

The MANTRA Mainnet Airdrop, known as the “GenDrop,” will distribute 50 million OM tokens to those who have engaged with us. For further details about the GenDrop, please refer to our Medium article (https://mantrachain.medium.com/mantra-50m-om-gendrop-explained-e6109f73ad2f).

As noted, we propose that the airdrop allocation will begin vesting three months after the Mainnet launch. To provide immediate benefits to participants, 20% of the allocation will be liquid as soon as the cliff period ends. This is to boost our community and to give tangible benefits to our supporters. The three-month cliff is designed to encourage users and newcomers to engage with the MANTRA Chain mainnet while also allowing them to earn or increase their GenDrop allocation, for example by earning KARMA through onchain quests during that period.

Simplifications in the Inflation Rate

After extensive discussions with community members and experts regarding our proposed inflation model, we are today proposing a modification to our initial plan. Instead of implementing a variable inflation rate, we propose a fixed inflation rate of 8% during the first year. Out of this, 60% (or 4.8%) will be allocated as staking rewards to help secure the network, while the remaining 40% (or 3.2%) will be directed to the MANTRA Chain Association to support future initiatives. These initiatives will contribute towards liquidity incentives to boost TVL, ensure development of public goods for the chain as well as support RWA dApps.

Additionally, it's important to note that the inflation rate may be amended through regular review no less than once per year while ensuring users are informed of the process.

The “Special Surprise”

After careful consideration and in alignment with our long-term vision, we are excited to reward our OM stakers who have dedicated their OM tokens to our staking product over the past months. Despite not distributing any auto-accumulated OM rewards, our stakers remained steadfast, leading to a remarkable increase in staked OM, recently surpassing the 250 million staked OM milestone—a significant achievement for our company.

To celebrate this milestone, we are going to increase the maximum tokens that stakers will receive as rewards. The maximum allocation will move from 35% to 130% and your allocations will be adjusted accordingly once we distribute the rewards. The final allocation will still follow our system of regular snapshots that we recorded during this initiative, as mentioned in the original proposal.

For Sherpas who staked less than 100,000 OM in total, rewards will vest over 18 months, while those with more than 100,000 OM will see their rewards vest over 36 months. This approach not only allows everyone to benefit from the increased allocation but also helps mitigate sell pressure over a timeframe that we believe is fair, especially in light of community feedback, while ensuring that smaller OM holders are not adversely affected by the activity of larger OM holders in this incentive model.

Any unallocated portion of the OM Upgrade bucket will subsequently vest into the MANTRA Chain Association following the same 36 months vesting schedule, to provide ongoing support for ecosystem development and future initiatives.

Please note that with this proposal being published, the snapshots for OM Staking have ended. There will be further announcements on the continuation of OM staking on EVM soon - please check our channels.

Emission Schedule

Following all considerations mentioned above, we would like to show and add the Emission Schedule within this proposal that will reflect the future emissions of OM.

It is important to highlight that, at the time of the Mainnet launch, over 90% of the legacy OM will already be in circulation. When we add the liquid 37.7 million OM from the MANTRA Chain Association, we will start with a circulating supply of approximately 880 million OM, representing about 49.5% of the new total supply at TGE. This demonstrates that, despite the new tokenomics, OM maintains a substantial float and is not merely focused on achieving a high fully diluted valuation (FDV).

Conclusion

As we move towards the launch of the MANTRA Chain mainnet, we stand at a pivotal moment in our journey. This proposal reflects our commitment to creating a sustainable and thriving ecosystem that benefits all stakeholders. Your participation is crucial in shaping the future of MANTRA and ensuring that our vision for long-term growth becomes a reality.

By voting in favor of these new tokenomics, you help us lay a strong foundation for MANTRA Chain, fostering stability, engagement, and innovation. Together, we can build a platform that not only withstands the test of time but also revolutionizes the way we engage with Real World Assets in the crypto space.

We invite each of you to review the details, consider the benefits for our community, and cast your vote. Your voice matters, and together, we can drive MANTRA towards a prosperous future. Thank you for being an essential part of our journey!

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We will run this proposal for 7 days (168 hours) commencing at 3 PM UTC on Thursday October 3rd 2024 and ending at 3 PM UTC on Thursday October 10th 2024.