NIOX Token Restructuring
0rigin are partners with the Autonio Foundation and creators of the new economic model for the NIOX token. Below is a high-level description of the token and its general principles. Readers should refer to Autonio/NIOX documentation for more technical and in-depth functionality.
The Autonio platform consists of trading interfaces and functionality where traders can access various liquidity pools (CeFI and DeFi) and use Autonio built trading algorithms such as the ‘IMM’ utilities. Autonio has its own DEX and AMM on a few chains and intends to launch its hub on the UX Network using the trustless bridge protocol to aggregate multi-chain liquidity.
Transaction fees are paid by Traders depending on the various services. This starts at the ‘Execution-only’ level and is increased for premium (alpha-generating) services. Commercially, fees must be commensurate with capital returns available in an efficient system.
Fees are recycled generally to NIOX token holders by rewards for governance (DAO membership) and supporting a NIOX fund that invests in projects that drive development and expansion.
The NIOX Token
There are currently 315 Million NIOX tokens in issue which shall remain the same for the new inflation model detailed below.
The NIOX token has a single staking function which is employed by token holders who wish to become a member of the DAO. There are some minimum staking requirements that will be set formally by Autonio which do not affect the economic rationale of the model.
The amount of NIOX staked relative to total issuance is the driver of multiple system actions.
Transaction Fee Rates
Reference to the Fee Rate in this article is for the basic execution-only rate. Premium rates are set separately by the DAO either discretely or as a function of the execution-only rate.
The Fee Rate is a function of NIOX staked and reduces linearly from 5 basis points to zero. For example, if 60% of NIOX were staked, the Fee Rate would be 2 basis points.
Since volume and fee-rate are somewhat interdependent, this allows the system, through aggregate staking, to maximise absolute fee revenue (Volume x Fee-Rate).
Multi-currency fees are collected from Traders, converted on Autonio to NIOX and collected in the system Fee pool.
AMM Liquidity Fees
In the case of the AMM fees which are distributed to Liquidity Providers (‘LP’), the Fee Rate is deducted from the gross liquidity fee and this is paid to the Fee pool as above.
In the example above where the Fee Rate is 2 bps and the LP fee is 30 bps, the LPs net 28 bps with 2 bps paid over to the system Fee pool.
A proportion of the Fee pool is burnt which is a simple result of the non-staked NIOX tokens. Where there are zero NIOX staked, 100% of Fees are burnt (100% non-staked).
This provides a staking counter incentive supporting NIOX liquidity and a rational capital arbitrage to exist between liquidity and staking.
The residual Fees are added to the System Inflation.
The maximum inflation rate is 5% per annum and is determined by NIOX Staked following a log curve function:
Noting that NIOX staked mathematically and practically cannot be zero:
Total NIOX Reward Distribution
Residual Trading Fees and System Inflation are combined and distributed as follows:
20% NIOX Fund
80% DAO Members
Eligibility for DAO Members is subject to the minimum staking levels to be determined by the DAO as discussed earlier. However, a time weighting is also applied to Members’ stakes which rewards staking longevity using a square root of time factor.
A DAO member who has staked a token for twice as long as another member’s token will have approximately 1.41x the reward eligibility. The calculation caps longevity at 2 years.
Further NIOX Incentives
Various functionality is being built into the AMM including the utilisation of NIOX liquidity as a conduit pair to link LP token pools. The NIOX legs do not capture fees and in return NIOX pools receive a skewed distribution from total LP fees received on the AMM. This will be discussed in further articles.
The Staking of NIOX as the primary commercial driver allows the system to maximise returns and encourages a rational capital arbitrage decision for NIOX holders.
Staking needs to resolve the optimal Fee Rate to maintain maximum system revenue.
Liquidity return on capital should be equivalent to Staking.
The model allows Staking and Liquidity to interplay seamlessly as volumes and profitability changes.
The NIOX token capital value can now efficiently capture the explicit fee revenue and the implied profitability on liquidity.
The NIOX token fundamentals can accurately reflect the economic health of the Autonio platform.
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