🪙Tokenomics
The math and incentives governing Lo-fi assets.
LOW token is designed to be used as a medium of exchange. The built-in stability mechanism in the protocol deterministically expands and contracts the LOW supply to maintain LOW's peg to 1 CRO in the long run.
LOW is an algorithmic token with a peg actively maintained by a smart contract. It does not mean it will be valued at 1 CRO at all times as it is not collateralized and will be subject to certain level of volatility.
LOW Distribution (Boardroom)
Distribution of LOW during Epoch Expansion is as follows:
65% as Reward for SLOW Stakers in Boardroom
30% goes to DAO Treasury
5% goes to Dev Allocation
If there are bonds to be redeemed, 65% of minted LOW goes to Treasury until it's sufficiently full to meet bond redemption. If there is no debt (BLOW), it will follow maximum capped expansion %.
How the Algorithmic Peg works?
When LOW is below peg
When LOW price is below CRO's Current Market Price (peg), Token Holders can purchase Lo-fi Bond (BLOW) and LOW will be burnt to reduce the total circulating supply when Bond Holders redeem LOW token with a 1:1 ratio.
When LOW is above peg
When LOW price is above CRO’s Current Market Price (peg), the token supply will have to expand to push it back down to peg and the contract will allow the redemption of the Lo-fi Bond (BLOW).
When the price of LOW continues trading above the CRO’s Current Market Price (peg) after bond redemption, the contract mints an appropriate amount of new LOW and this will be distributed to the SLOW Stakeholders in Boardroom.
SLOW is one of the ways to measure the value of the LOW Protocol and Shareholder Trust in its ability to maintain LOW close to peg. During epoch expansions the protocol mints SLOW and distributes it proportionally to all SLOW stakers in the Boardroom.
SLOW Holders have voting rights (governance) on proposals to improve the protocol and future use cases within the LOW finance ecosystem.
SLOW Distribution (Farms)
SLOW has a maximum total supply of 70,001 tokens distributed as follows:
| Allocation (3-month Vesting Period) | Distribution % | SLOW |
|---|---|---|
85 | 59,500 | |
15 | 10,500 | |
Dev Allocation | 5 | 3,500 |
Initial Mint (Upon Contract Creation) | 0 | 1 |
| Pool | LP Farm Reward Ratio (SLOW) |
|---|---|
LOW-CRO LP | 1,000 |
SLOW-CRO LP | 500 |
The LP Farm Reward Ratio will be revised after launch as we will be introducing other SLOW Reward Pools in the future.
DAO Treasury (Lo-fi Reserve) acts as the second line of defense on top of the Bond Mechanism controlled by Lo-fi Core Team to conduct the following actions:
Investment (Growing Treasury)
Strategic Buybacks (Stabilize Protocol)
Marketing
Building Protocol Utility
Protocol Expansion
In a later stage, DAO Treasury will move to a governance system to vote on using funds in certain areas of the project including investment, marketing etc.
BLOW's main job is to help incentivize the changes in LOW supply during an epoch contraction period. When the TWAP (Time Weighted Average Price) of LOW falls below 1 CRO, BLOW will be issued and can be bought with current LOW price.
Purpose of buying BLOW (exchanging LOW for BLOW):
Burns LOW tokens
Takes LOW out of circulation (deflation)
Helps to get the LOW price back up to the peg (above 1 CRO).
Rationale:
Buying BLOW addresses LOW inflation issue and LOW sell pressure to help to push LOW back above the peg.
These BLOW can be redeemed for LOW when the price is above peg in the future. Investors who are here for long-term and are bullish on LOW and CRO can choose to hold BLOW longer as the premium gets higher when LOW's TWAP increases over time.
Contrary to early algorithmic protocols, BLOW does not have expiration dates on redemption LOW.
All BLOW Holders are able to redeem their BLOW for LOW as long as the Treasury has a positive LOW balance which typically happens when the protocol is in epoch expansion periods.
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