How Does DEXTF Tokenomics Work? (post DIP-3)

Apr 05, 2021

For those that started following the project since the beginning you’ll be familiar with the tens of different metrics used to reward both investors and portfolio managers.

This changed with the approval of DIP-3 on February 15, 2021.

The proposal effectively revamped the $DEXTF’s tokenomics and simplified a big chunk of the rewards system by prioritising investors’ incentives over portfolio managers and liquidity providers.

A platform requires users. You can’t have portfolio managers who create funds that nobody invests in. Or provide liquidity on funds that nobody finds the interest to trade.

It’s true that often times gas fees are too high to justify the investment in an XTF fund token, but that’s exactly what we took to heart and so we designed the rewards to be at least compensating in part these gas fees (eventually it will be the token price that decides whether to under or overcompensate).

DIP-3 simplified the incentives by introducing a novel tokenomics for $DEXTF Protocol.

Here are the biggest changes:

Investors, the bread and butter of an asset management protocol, are earning the most rewards now as 450,000 $DEXTF per month (amount decreases to account for inflation) are being accrued by this category of users.
Each investor can expect to earn an amount of rewards proportional to how much the individual investor put in over the total amount of investments done by all investors. In other words, it’s proportional to how much one puts in compared to the total that others have put in.
Portfolio Managers were overly compensated so now this category will be evaluated based on 2 criteria.
1. By amount received as investment in their XTF fund tokens (AUM) over the total amount received as investments across all funds. To this 100,000 $DEXTF per month are allocated.
2. By fund performance versus other funds. To this 1,200,000 $DEXTF per year are allocated.
Liquidity Providers should also be finding it easier to navigate and strategize the highest yielding arrangement.
LP position exiting used to be penalised if more than 10% was removed, but now you can freely remove it at any time.
To LPs 37,000 $DEXTF per day are allocated, but not all pools are rewarded the same.
In fact, 55% of the daily $DEXTF allocation is reserved for XTF fund token/DEXTF pools, then 30% goes to pool2 (DEXTF/ETH) and lastly the remaining 15% to XTF fund token/any tokens pools.
Clearly the incentive is stronger where DEXTF is utilised as a pair whether against an XTF fund token or ETH.
Another very important point to note are the reward vesting periods, which will take effect only when escrow contracts are being launched in April (see April 2021 Roadmap). Until then, rewards will still accrue daily and streamed over 2 months with Sablier.

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