THALES tokenomics v2.0
A comprehensive and updated guide to the THALES token
Since the last article covering THALES tokenomics there have been some significant improvements and redistribution of the different buckets, so we decided to address the current THALES token distribution in as much detail as we can.
Ready? Let’s dive in!
THALES is a standard ERC-20 token deployed on Optimism (where its deepest liquidity resides), Polygon, and Ethereum mainnet with a maximum total supply of 100 million tokens, used by the community as the governance token of Thales DAO.
The current ongoing distribution looks like this (if you scroll down you can read how this evolved from its original form):
- 8.75% to SNX stakers [Already distributed]
1.1) 2.25% Ongoing SNX staking distribution (Until TIP-37 was implemented)
1.2) 4.5% Retroactive distribution for SNX staking (L1 and OP)
1.3) 2% Airdropped to every SNX staker (L1 and OP)
2. 18% Thales Core Contributors (Vesting for 3 years starting Q2 2022)
3. 15% THALES stakers (Ongoing 3-year-long distribution that started Q4 2021)
4. 58.25% Growth Fund
4.1) 9% to Strategic Partners (Ongoing 2-year-long distribution that started Q4 2021)
4.2) 2% Crowdpooling event on DODO [Already distributed]
4.3) 1% Initial DODO LP rewards [Already distributed]
4.4) 46.25% ThalesDAO treasury:
a) 18% (Initially distributed to Treasury on TGE to be used as ad-hoc Growth incentives)
b) 2% (TIP-9) back to Treasury from disengaged Thales Core Contributor on 2021
c) 26.25% reallocated to Treasury from termination of SNX rewards (TIP-37)
As you can see there’s a lot to unpack, but first, let’s go back in time to check the original tokenomics.
The THALES token was launched on L1 Ethereum in September 2021 via DODO Crowdpooling Event (with an oversubscription that exceeded the hard cap by 500%!). The TGE (or token generation event) minted 100,000,000 THALES tokens as capped total supply.
The original distribution plan back in 2021 was as follows:
The initial distribution plan from 2021 has since been modified by the Thales governance structure to improve its distribution among individuals and collectives aligned with the Thales protocol and DAO.
This original distribution has gone through 4 major improvements and modifications:
- Changing Synthetix-related distribution
- Introduction of Gamified THALES staking
- Introduction of buyback-and-burn
- Thales Core Contributors allocation reduction
As Thales was originally spun out from the Synthetix community, and inherited the codebase for binary options product as the starting point of its journey, it made sense to have a dedicated THALES token distribution towards the Synthetix community.
As part of the initial tokenomics plan, 35% of the THALES total supply was to be distributed to past, present, and future SNX stakers over a long period of time, to ensure a long-term alignment between Thales and Synthetix communities.
After a while, it was evident that these emissions were not distributing the THALES token fairly and that the concentration of tokens was suboptimal. To alleviate this issue, Kain Warwick (Synthetix Co-founder) proposed a Thales Improvement Proposal that had the goal to terminate these emissions completely and return the undistributed funds to the Thales treasury.
Here are the subsequent TIPs (abbreviation for Thales Improvement Proposal, representing a formal procedure to introduce changes to the protocol) that amended this distribution:
- TIP-18 paused the retroactive distribution to SNX stakers as part of the introduction of gamified staking by TIP-17 (more on this below).
- TIP-32 gave a deadline for claiming the one-off airdrop, unclaimed THALES designated for this airdrop were returned to the treasury of ThalesDAO.
- TIP-37, championed by Kain (Synthetix Co-founder) effectively stopped the vesting of the retroactive distribution for SNX stakers. With this he forfeited his own allocation as the largest SNX staker for the greater good of Thales protocol 👏
When TIP-37 was approved by Thales governance, the THALES token ended up being effectively distributed to SNX stakers as follows:
- 4,500,000 THALES to retroactive SNX stakers
- 2,250,000 THALES to ongoing SNX stakers
- 2,000,000 THALES to any SNX staker via one-off airdrop
Totalling 8,750,000 THALES (or 8.75% of the total supply) in hands of SNX stakers.
To fulfill this new distribution plan a token migration to Optimism was needed, which was done flawlessly in April 2022. Every THALES token unlocked in any of these vested distributions was airdropped on Optimism and the claiming window for this was set to 1 month, as suggested by Kain in TIP-37.
After TIP-37 was implemented approx. 26,250,000 THALES tokens were returned to the ThalesDAO treasury.
Introduction of gamified staking
According to the initial tokenomics, the THALES staking emissions were planned to be a fixed 100,000 THALES tokens weekly distributed to all THALES token stakers. However, Thales has always wanted its products to be not only easy to use but fun!
With this concept in mind is that the THALES gamified staking initiative was championed and it changed the staking distribution to be split into two categories:
- Base rewards (currently at 60,000 THALES weekly)
- Bonus rewards (currently at 30,000 THALES weekly)
This gamified staking was initially introduced on TIP-17 and, on the first draft, had 70,000 THALES as base rewards, plus 21,000 THALES as bonus rewards split among SNX stakers, Thales’ AMM users, and Thales Royale participants.
After some time with this implementation, TIP-48 was proposed (and approved by the Thales Council), changing the amounts to 60,000 THALES weekly as a base, and 30,000 THALES per week as a bonus, distributed among SNX stakers and protocol users (Thales’ AMM -including ranged markets AMM-, Exotic Markets or Overtime’ AMM) that are also staking THALES at the same time.
With the concept of Gamified Staking, a higher level of alignment was achieved where THALES stakers are additionally incentivized to use the various Thales products and are rewarded for it. There wasn’t any change in the amount of THALES tokens dedicated to this bucket.
Introduction of buyback and burn mechanism
In May 2022, the idea of utilizing SafeBox funds (a safeguard smart contract that takes a fee from AMM buys and sells) to start a buyback and burn program for THALES tokens was specified on TIP-50.
This program was subsequently modified by TIP-59, TIP-71, and TIP-78 increasing the buyback frequency, and it continues running as of today.
The current buyback frequency is set up to approximately 1200 sUSD per day.
You can check how many THALES tokens have been bought back and burned on THALES token page.
Thales Core Contributors allocation reduced
As explained in TIP-9, after a Thales Core Contributor stopped contributing and communicating with the rest of the team, the situation was shared with the community-at-large. It was decided by governance to re-allocate his future THALES tokens, send back 2% to ThalesDAO treasury, and reduce the Thales Core Contributor part of the distribution from 20% to 18%.
Thales Core contributors are subject to a 3-year linear vesting that started on Q2 2022, after 1-year cliff starting on Q1 2021.
With the current tokenomics design Thales is ready to tackle the next years of development.
There is alignment with SNX stakers through the THALES staking bonus bucket because we acknowledge our Spartan roots and highly value the Synthetix community.
There is alignment with Thales protocol users of any product (Thales markets -including ranged-, Overtime or Exotic markets) as they qualify for the bonus bucket if they are also THALES stakers.
There is alignment with THALES stakers as they have a way to get base rewards and also an incentive to maximize the protocol volume bonus bucket, enhancing usage of the Thales products. The Treasury holds enough THALES to secure emissions for years to come, if Thales governance decides to do so.
As of today, more than 10,000,000 THALES are staked.
There is also alignment with THALES liquidity providers, as the Treasury holds enough THALES to continue incentivizing those who provide liquidity for a long time.
All in all, we are pretty satisfied with how the community has helped shape the THALES tokenomics and how effective has been having a decentralized governance process in place to debate, iterate, and improve together.
If you have any questions we’ll be happy to answer those in our Discord channel.
Thanks for your attention.