Tokenomics
This section outlines the economics of SWX
tokens and their dynamic interactions within the protocol.
The tokenomics design is open to community suggestions and input. If you have any ideas or feedback, feel free to Edit this pages, and open a Pull Request on the swaptoshi-docs repository.
Initial Price
The initial price of the SWX token is set at 3.5 KLY/SWX. This pricing strategy is carefully designed to balance validator incentives with the overall market cap. Here’s a more detailed explanation:
-
Validator Incentive: The KLY network rewards
2 KLY
per block with a7-second
block time, resulting in approximately24,685 KLY
mined daily by 53 validators. For Swaptoshi,0.25 SWX
per block with a3-second
block time yields about7,200 SWX
per day. At a price of3.5 KLY/SWX
, validators could earn around25,200 KLY
daily (before distribution among 23 validators), closely matching the KLY daily reward. -
Reasonable Initial Market Cap: In the first year, with
0.25 SWX
per block, a3-second
block time, and1,193.64 SWX
pre-minted, the total supply will reach2,629,193.64 SWX
. At a price of3.5 KLY/SWX
, this results in a value of9,202,177.74 KLY
, which is approximately5%
of the KLY market cap. -
Encourage Growth: Setting the price at
3.5 KLY/SWX
makes it accessible for newcomers to join the network. Increased participation can drive up sustainable demand, which in turn can boost the token’s value.
Again, if you have any ideas or feedback about the initial price, feel free to Edit this pages.
Allocation & Distribution
SWX
token is introduced as a fair-launched token, designed as a deflationary token with a fixed total supply of 21,000,000
coins.
At launch, 119,364,000,000 Nakamoto
, equivalent to 1,193.64 SWX
or 0.0056% of the total supply, will be minted for network setup purposes. The remaining 20,998,806.36 SWX
, or 99.9944% of the total supply, will be mined over a period of 100 years.
The pre-minted 740.64 SWX
tokens will be held at the address klyof58j7a5fvs55utdnv6xmkv3b6swjmjaotbt85
. Meanwhile, at genesis block, 143 SWX
will be distributed to 13 genesis validator, and 310 SWX
will be distributed to 10 VIP Validators.
Below is the table showing the SWX
block reward over time.
Year | Block Reward | Total Supply |
---|---|---|
Preminted | 0 | 1,193.64 |
0-4 | 0.25 | 10,501,193.64 |
4-8 | 0.125 | 15,751,193.64 |
8-12 | 0.0625 | 18,376,193.64 |
12-16 | 0.03124 | 19,688,273.64 |
16-20 | 0.01562 | 20,344,313.64 |
20-24 | 0.00781 | 20,672,333.64 |
24-28 | 0.0039 | 20,836,133.64 |
28-32 | 0.00195 | 20,918,033.64 |
32-36 | 0.000975 | 20,958,983.64 |
36-40 | 0.000488 | 20,979,479.64 |
40-44 | 0.000244 | 20,989,727.64 |
44-48 | 0.000122 | 20,994,851.64 |
48-52 | 0.000061 | 20,997,413.64 |
52-56 | 0.0000305 | 20,998,694.64 |
56-60 | 0.000016 | 20,999,366.64 |
60-64 | 0.0000076 | 20,999,685.84 |
64-68 | 0.0000038 | 20,999,845.44 |
68-72 | 0.0000019 | 20,999,925.24 |
72-76 | 0.00000095 | 20,999,965.14 |
76-80 | 0.00000045 | 20,999,984.04 |
80-84 | 0.0000002 | 20,999,992.44 |
84-88 | 0.0000001 | 20,999,996.64 |
88-92 | 0.00000005 | 20,999,998.74 |
92-96 | 0.00000002 | 20,999,999.58 |
96-100 | 0.00000001 | 21,000,000.00 |
>100 | 0 | 21,000,000.00 |
The table above can be visualized in the graph chart below.
With current chain configuration, after the block reward reaches 0 (at year 100), validators can still be incentivized by setting minFeePerByte
to 0, which means transaction fees will be paid to validators. This can be achieved through on-chain configuration modification proposals, if the fee
module on the Klayr SDK implements the governance
module; otherwise, it would require a hard fork. For more details, visit the Governance Section.
Consensus
SWX
is used to secure the Swaptoshi protocol network through staking on a Proof-of-Stake (PoS) consensus mechanism.
Swaptoshi network will adopt the Klayr SDK PoS consensus configuration with certain modifications, including a block time of 3 seconds and a minWeightStandby
configuration of 10 SWX.
Rewards will start at 0.25 SWX
per block and will be halved every 42,000,000 blocks
(approximately every 4 years). The reward distribution will commence after a 201559
block (approximately 7-day) initialization phase, and the final reward will be issued 100 years thereafter.
Liquid Staking
For every SWX
that is staked, users will receive a 1:1 equivalent in liquid SWL
, which can be utilised within the Swaptoshi protocol. This ensures the network remains secure while maintaining liquidity.
To unstake, users must hold a 1:1 equivalent of SWL
in their wallet.
Swap Fee & NFT Positions
Every liquidity provider that supplies liquidity will earn a fee from each swap transaction.
Liquidity positions will be represented by NFTs (LIP-0052). Since liquidity positions are represented in NFT form, they can be traded and ownership can be transferred. Only the owners of these NFTs can claim rewards from swap fees for each NFT position.
Fee Conversion
SWX
is used to pay transaction fees within the network.
However, Swaptoshi implements the feeConversion
module, which allows users to pay transaction fees without needing to hold SWX
initially, enhancing the overall user experience for starting swaps.
The activation condition for the feeConversion
module is that, the token being swapped must have a liquidity pool against either SWX
or SWL
, and liquidity must be available.
For example, if a user wants to swap KLY
for PEPX
, and there exists a KLY/SWX
or KLY/SWL
liquidity pool, the user does not need to hold SWX
tokens. In this case, KLY
will be automatically converted into SWX
when the swap command is executed on-chain.
This incentivizes token creators to establish liquidity pools for SWX
or SWL
, which is expected to enhance the value of both SWX
and SWL
.
Governance
SWX
is also used for voting on the DAO treasury.
Treasury Address is klyr49epb3jdyqmnfyrz7jdc5ws3rmyuqzje4c4jb
, which obtained by SHA256(b"GovernanceTreasuryAccount")[:20]
, as outlined on LIP-0074
The treasury will acquire SWX as well as other tokens from the following activities:
10%
of each block reward will be transferred to the treasury address.- Fees from each transaction will not be burned, but will be sent to the treasury. This also ensuring that the total supply of 21 million remains constant.
- Every swap fee received by liquidity providers will be subject to a
10%
deduction, which will be transferred to the treasury
As outlined in Governance Section, these behaviours are expected to be configurable and can be decided through on-chain DAO proposals, which are voted on by SWX
holders.