Solid World
Search…
Tokenomics, Staking, Minting
The structure of Solid World is inspired by Olympus DAO. Solid World is planning on using staking and bonding mechanics introduced by Olympus. We call our bonding mechanics 'minting.' You can read more about Olympus here.
The Olympus model is suitable for Solid World because it fixes the typical issues of common protocols. Common protocols deepen their liquidity by having community members deposit their funds into decentralized exchanges. In return for this liquidity, the protocol rewards the liquidity providers with the project's tokens. This is effectively renting community-owned liquidity. Liquidity providers can easily move their funds elsewhere once the rewards for participating are reduced, which can be a death blow for early crypto projects. The bonding mechanic is the preference of buying instead of renting.
Solid World plans to initially own almost all of its liquidity, with carefully thought out minting, staking and rewards mechanisms.
Initially, Solid World plans to distribute up to about 200,000 tokens to circulation in pre-launch programs to early contributors who help to bootstrap the protocol. This enables Solid World to build the platform, fund the work, add liquidity to DEX-es and kick-start the liquidity program. The liquidity will be used to buy enough $SCT so every $SOLID token will be backed by at least 1 $SCT.

Initial Contributions

Solid World DAO will get initial contributions from anybody interested in bootstrapping the project. Anybody can contribute, assuming they believe in the project. Earlier contributors have a vesting period to incentivize those who have long-term belief in the project.
  • Bootstrapping will be closed by the end of January.
  • IDOs/Liquidity bootstrapping will be done after bootstrapping
These funding contributions ensure we can bootstrap the project, pre-purchase the credits, fund the contributors and release the protocol.
At every funding contribution campaign, if Solid World DAO sells less than the maximum amount of tokens it will be fine, as we don't need to generate the maximum amount of supply to bootstrap the protocol.

Team and Solid World Foundation

The Solid World Foundation and the team do not plan to receive any of the initial supply of SOLID tokens. They will receive pSOLID tokens which they can redeem 1-1 by minting against SCT. Team and foundation will vest more SOLID as the SOLID supply grows, up until 550m SOLID supply is minted. This method will guarantee that the team will only be rewarded if the protocol is successful and the supply grows. It perfectly aligns with the team, foundation, contributors and DAO long-term incentives.
The team, advisors, and partners who receive pSOLID are constrained by a supply share factor. The supply share factor indicates the rate at which pSOLID can be redeemed. For example, the Team supply share is vested at 5%, meaning when the protocol has a supply of 1 million SOLID, 50,000 pSOLID can be redeemed by the team.
The supply share factors are also disaggregated down to the individual level, meaning that any individual can only redeem based on their supply share factor within a given group. This removes the risk of individuals within the various groups competing against one another and redeeming an allocation at a given period in time at the expense of others within their group.
This model is inspired by Klima pKLIMA and Olympus pOHM.
The Team is going to get 5% of the supply share up to 550m.
The Solid World Foundation is going to get 15% of the supply share up to 550m.

Bootstrapping

The contributors can buy up to 25,000 tokens with a price of $100/$SOLID in the bootstrapping. There will be 24 month vesting, 6-month lockup and fair conversion. The maximum raised will be $2.5M with a valuation of $3.125M.
Bootstrapping, launchpad and IDO contributors will get aSOLID tokens. They have a vesting and cliff period which will start after the public sale is done. Vesting means that they can claim aSOLID monthly in equal instalments. Cliff means that the first tokens can be redeemed after the cliff period is over. The aSOLID tokens will be index-adjusted, which means the contributors won't lose out on rewards as the protocol inflates. This approach incentives early contributors who have long-term beliefs in the project.
Example:
  • Contributor purchases 1000 aSolid tokens in Bootstrapping
  • 1 month after going public, the contributor can claim 0 $SOLID tokens, because the cliff is not done
  • 6 months after we go public, they can claim 25% of the $SOLID tokens, since the cliff is over. Let's say that the $SOLID index is 3.0, which means that the protocol has inflated 3x through the minting of $SOLID to staked contributors. The contributor can now change 250 aSOLID in exchange for 750 $SOLID
  • In 24 months after going public, the contributor can claim 100% of index adjusted SOLID tokens.
50% of the contributions will go to buying up future carbon credits(SCT) as reserve assets and 50% will go to fund the treasury. The team will be entitled to a small percentage from the treasury for their continued work on the protocol.

IDOs/Liquidity bootstrapping

During the IDOs/liquidity bootstrapping Solid World will mint up to 175 000 new tokens. This means that at launch we will have 200 000 tokens available. The liquidity bootstrapping event will likely be at a Copper Launch, but we are actively exploring alternatives, as the space moves fast. Note that it's impossible to predict the price and the number of tokens sold in Copper Launch, as such it will be impossible to give a precise valuation at this stage.
On top of purchasing credits and funding the team, the contributions will be used to build liquidity of the USDC/SCT and SCT/SOLID. The protocol benefits from having deep liquidity which it collect fees on. The deeper the liquidity, the more stable the price. As more liquidity is accumulated - it takes higher transaction volumes to cause significant price changes.

Notes about supply

At every stage in the contributions, it's fine if we raise less than the maximum possible amount. We are conservative with our estimations, and the protocol can start functioning with a lot less. The plan has been built in a way that we will have at least 2x the reserve assets to SOLID ratio to pay out rewards from the treasury.
The protocol is an Olympus fork, which means it's an inflationary protocol. The supply is constantly increasing through minting and staking. Contributors can largely prevent dilution through staking. aSOLID tokens earned by initial contributors are also considered staked during the vesting period when converting to SOLID to mitigate dilution.

Backed, not pegged

Every Solid token will be backed by at least 1 $SCT. The initial state of the $SCT and $SOLID token is at its intrinsic value. Carbon prices are rising fast globally due to rapidly growing demand and it's difficult to say what the intrinsic value of future $SCT will be. At the time of the writing, Solid World believes it can sell quality carbon credits on the market with the price of 20-40$/CO2t, but by 2030, many predictions price them higher than 100$/CO2t. Nobody knows for certain, since quality carbon credits have not been commoditized at the time of writing.
The SOLID token price can be volatile as with all token assets. In the periods of contractions, the protocol is built in a way that the price of the SOLID token will return back above its intrinsic value. This means that only sellers who need to have a short-term exit should sell the SOLID token when the price is below the intrinsic value.
In the case that demand stagnates, the protocol's reserves can step in to catch the market when velocity turns too far to the downside. It does so through forward guidance (the fact that the protocol will buy lowers risk the lower we go, which can mean we don't have to buy) and by buying perpetually below intrinsic value. The treasury ensures that, although bear markets and contractions can and will occur, the protocol can never die.

Supply

There is no supply cap to the SOLID token, as new tokens will be minted when:
  • Stakers get new $SOLID during a rebase after every 8 hours.
  • Minters and Solid World Foundation get new $SOLID through minting. This happens whenever someone mints $SOLID from $SCT or USDC/SCT LP or SCT/SOLID LP. The Solid World Foundation gets the same number of $SOLID as the minter.
  • Contributors, team or Solid World foundation get $SOLID whenever the aforementioned party exercises their aSOLID or pSOLID.

Minting

Carbon projects can mint their $SCT in return for discounted $SOLID tokens. This directly provides financing to the projects. For example, a carbon project could sell their $SCT in DEX-s, or it could instead provide $10000 worth of $SCT to $SOLID for a 5% discount rate, which would give them $10500 worth of $SOLID. The project owner can then stake or sell the $SOLID token to receive financing. It is long-term more beneficial for the project owner to stake the token, to maximize the value it captures from the carbon credits - as they accrue staking rewards, and put the $SOLID token on their balance sheet so they can use it as collateral for banks.
In theory, the incentive for minters who recently secured their discounted $SOLID would be to sell their $SOLID for more USDC/SCT LPs leading to selling pressure on $SOLID. This risk is managed by offering staking incentives.

Staking

$SOLID is inflationary, as new $SOLID is constantly being minted to pay minters and give out staking rewards. However, with staking, the $SOLID owner gives liquidity to the protocol, and in return, the protocol provides yields from the activity of the marketplace. This mitigates the dilution. The protocol’s staking APY indicates how much $SOLID balance will increase based on the minting schedule of the protocol. By staking you ensure that your share of $SOLID supply will remain consistent as the protocol grows. It does not indicate that your overall position will necessarily increase -- although your position would increase if other stakers unstake and forfeit their exposure to supply growth.
Market participants will typically receive a better return by staking than minting. This means that the incentive to stake is greater than the incentive to mint. However, when discounts are positive, the incentive to mint is still greater than the incentive to secure $SOLID via a market-buy on SushiSwap.
Hence, the optimal strategy to get exposure to Solid World DAO growth is to:
  1. 1.
    mint $SOLID to secure a discounted position;
  2. 2.
    stake this position in perpetuity.
In the case that market dynamics dictate that minting discounts increase to be greater than the staking 5-day ROI, the incentive would be to sell $SOLID (or indeed another asset) in order to secure LP tokens in the SushiSwap pools to secure discounted $SOLID via minting. This increased position of $SOLID should then immediately be staked to maintain the new position.

The Game Theory (3, 3)

Given what we have learned above, we understand that the minting-staking mechanisms are a win-win for the protocol and the market participants. For the protocol, they deepen liquidity, grow the treasury and reduce volatility. They also enable the market participant to secure $SOLID at a discount and get exposure to the protocol's growth by staking on the dApp. Selling is detrimental to the protocol.
The idea behind (3,3) is that if everyone cooperated in Solid World DAO, it would generate the greatest gain for everyone. Currently, there are three actions a user can take:
  • Staking (+2)
  • Minting (+1)
  • Selling (-2)
Staking has the effect of pushing the price up +2. Selling has the effect of pushing the price down -2. The player who moves the price gets half of the benefit. Minting has no price effect but provides a discount of 1.
Hence, the mechanics in the play demonstrate how large-scale cooperation and alignment between market participants can be used to grow the long-term success of the protocol with maximum benefit for all.
The actions in play between two market participants can be illustrated as follows:
The system exemplified here, which was pioneered by OlympusDAO, delivers clarity, fairness, and ensures the long-term viability of the protocol. You can learn more about OlympusDAO in their docs.
This system enables SOLID to build out a long-term sustainable protocol that incentivizes the growth of the on-chain carbon market and underpins the growth of this new carbon-backed economic paradigm. Ultimately, this is achieved through information sharing and aligning incentives between all participants.
We believe that this incentive structure, and the wide-scale coordination it enables, can be a paradigm shift in the fight against climate change.
Join our community: Discord · Telegram · Twitter · Linkedin
Last modified 19h ago