Introducing: QRDO
Published Jun 30, 2021
By Brian Spector, Chief Product and Technology Officer at Qredo
NOTE: Qredo has made some important changes to its tokenomics model since this post was published in June, 2021. Read about them here.
We've proven product-market fit and demonstrated a decentralized custodial network can meet institutional needs.
Qredo now embarks on the next stage of its journey to decentralization by launching the QRDO token.
QRDO takes the ideals of decentralization—permissionless access, security, and immutability—to their logical conclusion; creating a unique user-centric tokenomics model designed to galvanize community on Qredo Network.
TL;DR
Qredo Token (QRDO) is live!
Fuses utility and governance features in a unique user-centric model
Combines fee-based and inflation-based compensation mechanisms
2 billion total supply, 1 billion allocated to community
Download the full paper: Qredo Token Paper
User-centric tokenomics
Unlike Layer 1 token models that only reward validators for securing the network, QRDO is tailor-made for a Layer 2 solution and designed to reward all network participants.
QRDO achieves this by fusing the features of “utility tokens" and “governance tokens" to create a user-centric tokenomics model that rewards network activity through multiple innovative incentive structures.
"We have built a uniquely user-centric model which incentivizes all network participants as opposed to just network validators. Layer 2 solutions must incentivize usage and reward liquidity. With QRDO, all of our users will share compensation based on their activity."
Josh Goodbody, Qredo COO
Network Participants
There are six types of user on Qredo Network:
Market Makers that continuously provide quotes for a given digital asset.
Validators that take turns validating, proposing and voting on transactions to be included in the next block.
Traders that atomically swap digital assets.
Custody Users that safely custody digital assets.
Liquidity Providers that add liquidity to Qredo’s Loan Pools
Borrowers that take out loans of varying duration.
Incentive Structures
Qredo uses a unique combination of fee-based and inflation-based compensation to drive aggressive rewards for all stakeholders and fuel an engine of rapid adoption and growth.
Fee-based compensation
Traders and Custody Users pay a fee which is deducted from the Layer 1 assets being transferred, traded or stored. The Qredo protocol then distributes these fees as rewards.Inflation-based compensation
The protocol sets a fixed number of tokens to be distributed per epoch to ecosystem participants. This per-epoch approach has a semi-variable inflation rate, which is governed by income or distribution milestones.
Fee-based compensation
Transaction and Custody Mining
Traders and (custody users) of the Qredo Network pay fees, which are calculated as a small percentage of the Layer 1 assets being transferred, traded or stored. These fees are rebated up to 99% in QRDO tokens (which must be staked with validators for a minimum period of time).
Validator Mining
Validators are compensated via a small charge of 0.5 basis points that is taken out of the Trader User’s principal when they are trading with a Market Maker or another Trader User. They are also compensated via an inflationary rewards scheme.
Market Maker Mining
Market Makers are incentivized to provide liquidity through 1) earning QRDO tokens via inflation-based compensation, and 2) earning additional income in Layer 1 assets from fee-based compensation.
Inflation-based compensation
A fixed number of token rewards are distributed per epoch to the four main network participants--Trader Users, Custody Users, Market Makers and Validators—via four distribution streams:
Trader Users are compensated based on % share in fees paid
Custody Users are compensated based on % share in total assets under management
Market Makers are compensated based on % share in trading volume
Validators are compensated based on % share in total staked & delegated tokens
The exact split of block rewards between these four streams can be adjusted based on the network needs and DAO preferences.
QRDO Distribution
There is a hard cap of 2 billion on the total supply of QRDO tokens, which will be introduced into circulation via two methods: a vesting schedule and inflationary emissions.
Vesting schedule
Qredo owes much of its success to the community that has joined its journey over the past two years. As such, one billion tokens (50%) will be allocated to early stakeholders, including the Qredo core team, shareholders, contributors, along with funds for treasury management, a fund to help bootstrap initial Validators, and a fund to bootstrap the ecosystem. Also included in this billion is a portion (10%) that will be sold between a mix of private investors and the general public.
To ensure sustainable network growth, there will be an initial lockup period in which early investors have the ability to stake tokens within the platform to earn rewards, but withdrawal of QRDO from the network will be limited.
Once the lockup period is over, full flexibility will be restored and QRDO can be used within the Qredo network to earn yield, or withdrawn from the network and traded elsewhere within the Ethereum ecosystem. The vesting is scheduled over various timelines:
Inflationary emissions
The second billion tokens are set aside for when Version 2 of the protocol goes live, and will be distributed to network users as a combination of rebates on fees and inflationary rewards, as detailed above. This emissions schedule will slowly decrease until it runs out with an expected lifespan of 50 years.
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To get all the details on token emission schedules, governance and economic incentives, download the Qredo token paper.
Download Qredo Token Paper