TIP-163: THALES tokenomics overhaul

id	Title	Status	Author	Description	Discussions to	Created
TIP-163	THALES tokenomics overhaul	Draft	@Danijel	Adapt THALES tokenomics	discord.gg/rPpPcMXSeU	2023-08-15

Abstract

This TIP proposes a number of changes regarding THALES token as well as Thales DAO products with regards to tokenomics.

Motivation

Thales has always been mainly focused on delivering decentralized, innovative, easy-to-grasp products and with that in mind we kept building with high velocity and throughput for over 2.5 years.
We delivered hundreds of smart contracts that were leveraged by tens of thousand of users driving dozens of millions of volume across our state-of-the-art dapps.

Tokenomics have also pivoted throughout the protocol lifecycle but were mostly there to support the products. I feel this is a good time to take a more holistic reflection on the tokenomics and suggest changes that would better match the current state of the DAO, treasury, products and market towards long term scalability and success.

The timing also coincides with the ending of linear vesting from the Strategic Raise round, as well with the release of Thales staking on multiple chains, which both drive the need for a general overhaul.

The TIP will address several aspects in specification section

Specification

State of treasury

Non THALES assets:
Stables: about $5.5 millions ETH: about $1 million in current value SNX: $250k in current value
Misc: A mixture of other assets and NFTs which are hard to all quantify, but aren't relevant for the topic here

Thales Treasury is being managed with a conservative projected burn of 1.5m-2m per annum. The state of the treasury above demonstrates a guaranteed runway of at least 3 years.* In that aspect, Thales has always been one of the few DeFi project in this tier with such a stable and guaranteed runway.

Treasury details can be seen using this zapper link info

Thales treasury currently holds about 50m THALES or half of the total supply which is considered non-circulating.

Treasury could proactively burn a chunk of THALES that it does not need in foreseable future as THALES treasury was not intended to have more than 20m THALES per initial tokenomics (not including THALES staking rewards inflation). This TIP proposes no immediate action.

Thales token inflation and staking

Current weekly inflation comprises of:

• Staking rewards = 120k THALES
• LP rewards = 50k THALES
• Strategic round unlock = 93k THALES
• CC unlock = 100k

For a total of 363k THALES a week or a total of ~ 18.9 million a year

I am proposing the following change:

Staking rewards:

• Optimism: 60k Total from 90k. Base rewards = 45k, bonus rewards = 15k
• Arbitrum: 25k Total from 30. Base rewards = 18k, bonus rewards = 7k
• Base chain: 20k Total. Base rewards = 15k, bonus rewards = 5k

Base chain will be rolled out iteratively, with first round being 10k (7.5+2.5) THALES, second 15k (12+3) THALES and third 20k THALES

LP rewards remain unchanged.

Strategic round is ending.

Core contributors will proactively expand their vesting from 3 years to 3.5 years, which will bring the CC related inflation down 85k. Its important to note here that no CC tokens were ever or will ever be sold on open market.

New inflation post this TIP:

• Staking rewards = 105k THALES
• LP rewards = 50k THALES
• Strategic round unlock = 0
• CC unlock = 85k

This TIP effectively adds staking to Base chain and is therefor metagovernance.

For a total of 240k THALES a week or a total of ~ 15 million a year, a reduction of ~33%

###Gamified staking changes

I am proposing the following changes to gamified staking mechanics:

• max multiplier to 2x from 3x
• LP multiplier to 0.1
• Vaults multiplier to 0.2

AMM LPing

I am proposing to change the allowance ratio to 1 sUSD/USDC per THALES staked from 5. This will serve to increase TVL and attract more liquidity providers. It is psychologically easier to grasp a 1 to 1 allowance, and will present less of a barrier for new users.

20% from profits of each positive LP round will be sent to SafeBox.

I am also proposing a increase in SB fee to 2% across all products from 1%. The added fee is not intended to affect the UX wherever possible but rather shift some of the LP fees towards SB, as without the ungating friction, we can assume higher TVLs in our AMM LP pools.

BBB

Buyback and burn will continue operating and serves as the revenue share mechanics for all token holders.

The added SB fees will be leveraged through deploying buyback and burn on Arbitrum and Base chain as well with a freqnecy of $600 a day.

Treasury might bootstrap and help Safe Box budget ad hoc.

Implementation

N/A

Copyright

Copyright and related rights waived via CC0.