Issuance & Redemption Mechanics

This page documents the protocol mechanics for token distribution and redemption parameters.

Split %

Each time someone pays into the curve, the protocol mints new tokens and splits them:

• A fraction routes to a predefined list of recipients (team, partners, other contracts).
• The remainder routes to the payer.

Properties:

• Splits do not change the treasury—they only affect who receives the new tokens.
• From the payer's perspective, a higher split is equivalent to a higher effective price.
• Splits do not affect whether the price floor rises from an issuance—that depends on whether the issuance price exceeds the current backing ratio.

Split Ranges

• Most new tokens route to payers → broad distribution.
• Common in Launchpad-style or community-first configurations.

• Payers and existing stakeholders both receive significant shares on each payment.
• Typical for periodic funding configurations where each round both funds the treasury and allocates to incumbents.

• Nearly all new tokens route to the operator.
• Payers receive small cashback-style amounts; suitable for loyalty programs and commerce.

Design considerations:

• Splits fund ongoing work (salaries, development, operations).
• Predictable splits ("team receives 30% of all new tokens, forever") are easier to model.

Auto-issuance

Auto-issuance (automint) schedules one-off token mints at stage start. These mints:

• Increase supply without adding to the treasury.
• Therefore always reduce the price floor, because floor ≈ treasury ÷ supply and only the denominator changes.

Use Cases

• Compensate pre-launch contributors who took early risk.
• Allocate to strategic partners or infrastructure providers.

• Keep auto-issuance minimal relative to expected future supply.
• Earlier issuance (before significant participation) reduces floor impact on existing holders.
• In multi-stage configurations, scheduling auto-issuance after periods of activity gives the floor headroom to absorb dilution.

Framing: splits for ongoing work; auto-issuance for prior contributions.

Cash-out Tax

When someone redeems tokens, the curve calculates a payout based on treasury ÷ supply, then applies a cash-out tax. A fraction stays in the treasury; the rest goes to the redeemer.

Key property: Every redemption raises the price floor as long as the tax is > 0. Treasury decreases, but supply decreases faster, because some of the payout remains inside.

Higher tax = stronger floor lift per redemption, but higher cost to redeem.

Low (0–8%)

• Redemptions are inexpensive; tokens function more like a currency.
• Suitable for Stable Commerce configurations where participants need to move in and out freely.
• The floor still increases over time through activity, but more gradually.

Medium (8–20%)

• Each redemption meaningfully benefits remaining holders.
• Loans remain viable for many configurations.
• Suitable for Periodic Fundraising systems—participants can remain between rounds but retain the ability to leave.

High (20–40%+)

• Redemptions become costly; the mechanism favors longer-term holding.
• In Launchpad simulations, tax ≥20% improved capital preservation and floor growth.
• Above ~40%, an interesting property emerges: for large holders, loans can provide more immediate liquidity than redemption. The system remains solvent (defaults actually strengthen the floor), but loans become an alternative liquidity path.

Tax and Loan Interactions

Loans are not configured directly, but their properties depend on tax and ceiling parameters:

• Higher tax accelerates floor growth for remaining holders, but raises the appreciation threshold needed for loans to be preferable over redemption.
• Growing ceiling gives holders reason to borrow instead of redeem, as future price increases may outpace the loan's cost.