Emissions
3xcalibur Vs Solidly
A large majority of Solidly’s token supply was distributed in the first 8 weeks, causing too much voting power to early lockers and disincentivizing later buyers to lock. To solve this issue, we will reduce the initial distribution to about 1.7% of the total liquidity mining emissions.
Another flaw in Solidly mechanism was reaching tail emissions very quickly, because of double decay in the weekly emissions: in fact, they were subject not only to the 2% weekly decay but also to the previous week locking proportion multiplier. To prevent this issue, we set the weekly decay to 1%, only on the maximum weekly emissions, similarly to what Velodrome has proposed, but still using an adaptive algorithm to adjust the minting amount based on how much has been already distributed.
3xcalibur Vs Velodrome
Velodrome solved Solidly’s problems by changing the initial distribution and by keeping the weekly decay constant to 1%. This approach set the time length of the emissions to 4 years. However, adjusting emissions based on the locked amount incentivizes users to buy and lock more tokens to avoid being diluted. For this reason, $XCAL weekly emissions are multiplied by circulating/total supply ratio as in Solidly.
However, a consistent big amount of locked tokens (small circulating/total supply ratio) slows down emissions making the risk of being diluted (and so the incentive to lock) disappear. 3xcalibur solves this problem by adjusting the emissions algorithmically by checking the distance from certain milestones at each epoch (read below for more details).
Algorithmic Minting
In adjusting the emissions algorithmically via checking the distance from certain milestones at each epoch, we keep emissions length in the 3.5-4.5 years range by appropriately adjusting velocity.
To tune velocity, every epoch two parameters will be adjusted:
Max weekly decay: as mentioned above, the weekly decay of max weekly emissions is 1% as in Velodrome, but it will be automatically adjusted to 2% to eventually slow down emissions.
Tail emissions: if emissions have been too slow, the tail emissions get boosted.
We ran several simulations for weekly emissions, with different average circulating/total supply ratios, obtaining the following:
These simulations took into account all the vesting tokens that will be released weekly, variating the probability of locking a percentage of them. They also consider the edge cases of everything locked/nothing locked for the whole duration. On the X-axis, there are the amounts of tokens released each week, while on the Y-axis there are the weeks.
Blue lines:simulations where the average circulating/total supply ratio was between 0 and 0.5.Cyan lines:simulations where the average circulating/total supply ratio was between 0.5 and 0.6.Green lines:simulations where the average circulating/total supply ratio was between 0.6 and 0.7.Red lines:simulations where the average circulating/total supply ratio was between 0.7 and 0.8.Magenta lines:simulations where the average circulating/total supply ratio was between 0.8 and 1.
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