ICX Tokenomics

Purpose and Logic

The ICX Protocol's tokenomics are meticulously designed to balance long-term rewards, liquidity sustainability, and deflationary mechanisms. By carefully allocating the total token supply and employing time-based inflation schedules, the protocol ensures sufficient token availability for yields and operations while driving scarcity through deflationary forces. This structure incentivizes long-term participation and aligns with the protocol's goal of sustainable value growth.

Total Supply and Allocation

The total supply of ICX is 115 billion tokens, distributed across key categories to support the ecosystem:

Category

Allocation

Details

Yield Allocation

100 billion ICX

90% of the supply is allocated for Reflection Yields (10%) and Auction Yields (90%).

Liquidity Bootstrapping

5 billion ICX

Allocated for the CLW to establish the ICX/ETH liquidity pool.

Team Allocation

5 billion ICX

Subject to the same vesting schedule and interruption mechanisms as other tokens.

Marketing Allocation

5 billion ICX

Subject to the same vesting schedule and interruption mechanisms as other tokens.

Inflation and Disinflationary Yield Schedule

The protocol incorporates a disinflationary schedule to distribute the 100 billion ICX tokens allocated for yields over several years. This ensures a steady supply of rewards while reducing inflation rates over time to enhance token scarcity.

Year

Inflation Rate

Reflection Yield

Auction Yield

Y1

25%

2.5 billion ICX

22.5 billion ICX

Y2

20%

2.0 billion ICX

18.0 billion ICX

Y3

15%

1.5 billion ICX

13.5 billion ICX

Y4

10%

1.0 billion ICX

9.0 billion ICX

Y5

5%

0.5 billion ICX

4.5 billion ICX

  • Year 6 Onward: The inflation rate decreases annually by 10%, ensuring a consistent but diminishing reward structure.

Deflationary Mechanisms

  1. Burning Mechanism:

    • 55% of Interrupted Vesting Schedules: Permanently burned, reducing the circulating supply.

    • 55% of ICX Spent in Auctions: Permanently burned to reinforce scarcity.

    • 50% of ICX Deposits to Increase Multipliers: Burned to enhance the protocol's deflationary nature.

  2. Redistribution of Interrupted Vesting Schedules:

    • 5% added to Reflection Yields, rewarding long-term ultraLP stakers.

    • 20% swapped for DXN and compounded into the DXN Staking Vault.

    • 20% swapped for ETH and added to the ICX/ETH liquidity pool, boosting liquidity.

  3. Auction Redistribution:

    • 22.5% of Spent ICX Swapped for ETH: Added as liquidity.

    • 22.5% Added as ICX Liquidity: Directly strengthens the price floor.

Team and Marketing Allocations

Team and marketing tokens are subject to the same vesting schedules and interruption mechanisms as user tokens. This ensures alignment between the protocol's operators and its participants:

  • Vesting Schedules:

    • 5% liquid at the time of allocation.

    • 95% subject to a 12-month vesting period.

  • Redistribution Upon Interruptions:

    • Burned (55%) and redistributed (45%) as outlined, benefiting the ecosystem and liquidity.

Price Floor and Liquidity Dynamics

Through these mechanisms, ICX ensures:

  1. A Growing Price Floor: ETH liquidity pools strengthen with every interaction, providing price stability.

  2. Token Scarcity: Supply decreases continuously, creating upward price pressure.

  3. Sustainable Rewards: Incentivizing long-term participation without over-saturating the market.

The tokenomics section provides the foundation for understanding how ICX balances rewards and scarcity.

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