The Aladdin core contributors propose a major overhaul to the Aladdin tokenomics and vault system, aiming to connect the tremendous value created by the Boule Council to our native token, $ALD, by optimizing the tokenomics system for building protocol-controlled value (PCV) and managing the treasury such that ALD’s value trades in relation to the growth potential of the DAO’s diverse treasury assets and the Boule-developed yield strategies that utilize them.
Under this proposal, Aladdin will no longer mint ALD tokens on a fixed schedule, but will instead acquire assets for its treasury via a bonding mechanism and then only mint ALD tokens against protocol profit from these bond sales. Assets received into the treasury will be deployed in a transparent way to turn the treasury into a portfolio of Aladdin-selected protocol tokens and LP positions, balanced with a healthy stablecoin/ETH/BTC component. ALD tokens minted against profit from bond sales will be distributed to stakers, with a portion being diverted to the DAO.
Once a user obtains ALD tokens, they can be staked in the Aladdin staking contract to enjoy great returns in ALD terms, and to prevent dilution during Aladdin’s high growth phase when more new ALD tokens are minted from bond sales. The net result: ALD becomes a token which represents the value created by the Boule Council, and also becomes a low-gas low-complexity way for the Aladdin community to gain exposure to Aladdin’s portfolio of amazing DeFi protocols and strategies. The community can play along with Aladdin on Easy Mode with the ALD token!
There will be three ways for users to get ALD token, designed to appeal to participants with different risk profiles:
- Users with a high risk tolerance can directly bond assets like stables, BTC, and ETH
- Users with a neutral risk tolerance can market buy ALD and stake it
- Users with a lower risk tolerance can gain ALD token via Aladdin vaults which will continue to be offered for compatible Aladdin-selected projects, but will automatically bond 100% of the underlying reward for ALD
A staking mechanism that uses rebasing to distribute rewards in a gasless way will be implemented, with the protocol initially targeting 0.3% staking ROI per 24h epoch, for an APY of about 300%. This will provide a very strong incentive for users to buy and stake as early as possible, and will reward our earliest community members well, while still incentivizing new participants in an ongoing way. Very high community staking participation will be crucial to supporting ALD price especially during the growth phase. Staking ROI targets will be reduced over time as the treasury backing the ALD token grows, and as the Aladdin model is proven, with the plan to eventually target a consistent premium for ALD price over treasury backing.
It is useful to put this proposal in the context of Aladdin’s overarching goals. The ALD token is crucial to fuel the Aladdin ecosystem, however it is not the whole point of the project. A well functioning ALD tokenomic system aligns participants as we work toward our mission of providing all users, but especially retail participants, education about and access to the best DeFi opportunities. Achieving this mission also supports the DeFi ecosystem as more of the community’s capital is directed to these worthy projects, minimizing the amount of capital lost to low quality or otherwise scammy projects.
The new model produces a number of powerfully beneficial outcomes that support the Aladdin mission that have not already been mentioned:
- Boule Council Freedom
Under the previous approach, only very specific types of farms were compatible with the Aladdin vault system; under the new one the Boule Council can now suggest any arbitrary opportunity. Assets will be deployed directly on the back end, and public announcement of the selection will still occur on the front end.
- Aladdin is a diamond-hand hodler
Capital will now be deployed to selected farm tokens or LPs directly by the DAO, allowing Aladdin to be a highly valuable partner and better supporting selected protocols. Gaining community trust in this respect may create opportunities for future partnerships with listed protocols.
- Education via Open Source Treasury Management
Being truly open and transparent throughout the process of proposing, debating, and selecting DeFi opportunities, but then also about sizing exposure and being diversified with stable options, creates an unprecedented behind-the-scenes view to help new investors understand considerations in managing a portfolio, end-to-end. This is much more valuable than simply highlighting individual farm opportunities
When Aladdin was first launched, the initial focus was in assembling a powerhouse team of DeFi Big Brains to form the Boule Council, which is the main engine that generates value for the Aladdin community. Aladdin issued its ALD governance/utility token that was to be used to vote for the initial Boule Council as well as incentivize users of the platform (both Boule Council as well as farmers). A highly aggressive liquidity mining program was launched to distribute ALD widely to the community in preparation for the initial Boule Council voting period, but unfortunately the result of this program, as with many similar programs, was a serious drop in token price. It is clear that a stronger value narrative and capture mechanism is needed to support the token price so that the token in turn can support the Aladdin incentive mechanisms.
Despite token price headwinds, the Boule Council research meetings have been an incredible success, and have really proven the value of the core Aladdin model. Through the course of these public calls, members of the council have proposed and debated, then ultimately voted on amazing DeFi opportunities for inclusion into the Aladdin ecosystem. Tremendous value has been created and shared freely through which the community has gained not only great guidance as to which farms they might consider investing in, but also insight into how the big brains select farms and what kinds of questions they ask.
The team is incredibly excited about this new mechanism because we think it will create excellent alignment in economic incentives between all participants in the system, while still allowing Aladdin to freely share valuable information and incredible opportunities with the community. No secret handshake required! ALD token holding/staking additionally provides a tangible value and allows participation from users who might be otherwise priced out by the multiple mainnet transactions required for farming. There are many aspects of this model that have yet to be explored and a few details to be worked out, but we would be very grateful for feedback from the community!
Please vote below to give a preliminary indication of whether you like this or not, and as always jump in with any questions or comments you have!
- Love it! Let’s do it!
- Don’t Love It… See my comments below