xToken Management is the first standalone staking module in xToken’s Multi-Staking framework, set to be rolled out shortly. The xToken Management module receives the fees generated from current and future xAssets and other related products and converts them to XTK to be made available to stakers. Beyond direct fees, we propose an additional allocation of 4% of XTK supply distributed over 1 year to incentivize participation in xToken Management staking. We also propose an initial unstake penalty of 1.75% to incentivize long term staking. See our tokenomics proposal here for more details on the rationales for XTK incentives and an unstake penalty.
The core xToken team published the initial tokenomics document in April, in which we also laid out a product roadmap and proposed a novel approach to community profit sharing known as Multi-Staking.
The Multi-Staking concept reflects a long term vision for an ecosystem that spans multiple verticals and risk/reward profiles. We believe XTK holders should have optionality with respect to how they activate their protocol ownership and participate in the profits of the system.
The core value proposition of the xToken ecosystem revolves around offering highly simplified wrappers for complicated staking and liquidity strategies. xTokens are tax efficient (jurisdiction dependent), auto-compounding yield machines with active governance participation and seamless composability with the rest of DeFi. Protocol revenue is generated on mint and burn events as well as reward and fee collections. This is the source of value for the first Multi-Staking module: xToken Management.
The staking module – to be released in the coming weeks – will allow community members to stake their XTK, in turn entitling them to the revenue generated in the operation of xToken Management.
While the pace of development for xToken has been quite brisk, we are still very much in the bootstrapping part of the growth curve. In order to support active, long term, mission aligned participation in the xToken Management staking module, we propose allocating 4% of XTK supply to community incentive reward programs over one year. This will allow us to strike a balance of distributing more XTK to the core supporters of the protocol at a high enough rate over a long enough period to bootstrap the protocol in its nascent stage.
We’ve received several suggestions from our community to explore a token model similar to Curve, which uses incentivized lockups to absorb circulating token supply. While we agree with the design objective, we discussed a simpler alternative in our tokenomics proposal - an “unstake penalty” - designed to incentivize and advantage long term holding
By setting a small fee on exit – a fee that is redistributed to the rest of the stakers in the pool – long term holders can accumulate a greater share of the network, without the high complexity of incentivized lockups. We propose that this fee be set at 1.75% initially, with an expectation to lower it over time based on community input and discussion.
We’ve provided an exhibit below with expected APR based on XTK circulating supply and share of supply staked in the Management module.
In the coming weeks, we will be actively updating the community as we roll out the first XTK staking module, release the next wave of xU3LP products, re-architect our LP model, continue exploring partnerships with other communities, and finalize xToken Lending. While there are many exciting developments in each of these areas, things do tend to change fast (this is DeFi!) so we will also work on a more formal update and roadmap as well.
We sincerely appreciate the incredible outpouring of support from our community, but we also want to emphasize just how impressed we are with the constant creativity and dedication of our collective too. Engaging holistically with the community on initiatives like the Xavier NFT contest will continue to be central to our DNA as a protocol that along with the vision of a comprehensively simple, integrated platform are what set us apart as the xToken Collective. We are increasingly excited to roll out the very first of what will be many opportunities to participate in the xToken ecosystem and look forward to engaging on more active developments soon.