The coin will be launched in an Osmosis pool of 50m tokens + ATOM. Before this can happen, the protocol needs to acquire ATOM tokens of equal free market value. Over a 2-4 week period, the community can make bids, supplying ATOM tokens and specifying the amount of tokens they are willing to trade for (setting their token price). This “price” can be updated as much as desired. The network will take the top bids until 50m tokens are “sold” for ATOM. Any bids that don’t make into this top 50m and cannot be satisfied, will be refunded to the user.
The treasury becomes the owner of the ATOM tokens (selling token to bidding investors). The treasury holds both the ATOM and locked 50m tokens, and will provide them into the osmosis pool creating token liquidity and establishing a free market price for the asset. The treasury can keeps any interest made and can withdraw as needed to pay salaries/bills/etc. A schedule should be made to withdraw and give the locked tokens to the bidding/seed investors (TBD).
During this phase (and phase 2), all validators are run by the team and earn no yield (treasury pays for operational costs).
Once the Osmosis pool is live, the token is now a freely traded asset. To draw interest and a wider coin distribution, early adopters can earn a yield on holding the token (pre-service launch).
Community members can lock up their tokens for a yield in return. Their yield, as a percentage, is determined by how long the user chooses to lock up their tokens. Opting for a longer period of time, results in a higher result yield for their locked tokens. This drives buy pressure of the token, while also reducing sell pressure. This should help the price, and therefore, help to grow the treasury during the early phase and fund the building of the project.
The math of the calculated yield as follows
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📏 yield - user yield from locking tokens
lockPeriod - number of blocks the user is locking their tokens up
maxPeriod - max number of blocks allowed to be locked up.
</aside>
$$ yield = (lockPeriod / maxPeriod)^2 $$
The yield generated should be paid out to users routinely (every lockPeriod/10) instead at the end of the locking period. This is so there isn’t as much of a supply shock.
The network should have an “end block” where this feature is no longer available and marks the end of this phase. In addition, the lockPeriod + currentHeight, should not exceed this end block height. This expires the feature, and ensures that there is no longer minting new tokens beyond this block height, changing he monetary policy to no longer be an inflationary asset.
After phase 2 is over, the network should be officially launched and coin distribution payouts are no longer occurring.