[PROPOSAL] FLASH V3 Token Distribution

Proposal for FLASH V3 Token Distribution

With the upcoming release of FLASH V3 tokens, we present our proposal for the token distribution to the XIO & FLASH community. Because the XIO community financed the development of FLASH V3, all XIO holders have the right to vote on this proposal.

TL;DR

  • FLASH V3 Supply is finite and must be minted at token creation
  • We propose to mint a total supply of 150 million FLASH V3
  • The token distribution needs to account for future cost of ongoing development & growth
  • We propose the following token distribution with vesting schedules
    • Community Airdrop: 23,244,575 (15.50%)
    • Blockzero Treasury: 22,755,425 (15.17%)
    • FLASH Team Budget: 22,500,000 (15.00%)
    • FLASH Growth Budget: 58,255,425 (38.84%)
    • FlashBack Staking Budget: 23,244,575 (15.50%)

Flash V2 Token Distribution

As of July 31 2021 snapshot, the total supply of FLASH V2 was 25,555,373 tokens. This included 6,620,799 FLASH held by the Blockzero treasury. Over the months different proposals were brought to vote to distribute more of these tokens to different parts of our community. 1.5 million FLASH were distributed to XIO holders until November and 0.8 million FLASH were distributed to AQUA holders as a thank you for supporting this project which provided learning and inspiration that helped shape some aspects during the development of FLASH V3. Another approximately 2 million FLASH will be distributed by the end of April to XIO holders. It equates to 500k FLASH per month, starting Jan 1st. Lastly, the Flashstake related mental mining in March granted additional 10k FLASH to the community. In total the community will be airdropped 23,244,575 FLASH at token release.

These distributions are rewards for continued support of Blockzero´s activities, part of which is the development of FLASH V3. It is important to acknowledge the value XIO holders provide to FLASH throughout the pre-launch development of V3. Without a strong XIO holder community, there would have been no funds to hire and keep the talent we currently have to develop the current iteration of FLASH.

However, the development of a third iteration of FLASH was never planned nor foreseen. Understandably, further development, growth and marketing cannot sufficiently be financed and incentivized by a token distribution that resulted as a by-product of protocol usage.


Why is a new token supply necessary?

In the past, Blockzero projects were released into the wild and were on their own very soon after launch. Time has taught us the shortcoming of this approach and this time we’re fortunate to have a dedicated and passionate team that will continue to lead future development. The release of FLASH V3 is an opportunity to combine learning from past shortcomings, a strong team, a clear vision, a great product, and sufficient capital to operate and scale for the foreseeable future. It is not enough to just ship a product to market. As common in crypto and in the software industry in general, product innovation must be continued to not become obsolete. One may imagine Uniswap still remaining with their V1 design. Likely nobody would talk about them today with all the innovation going on in the DEX segment.

We are aware of the requirements of continuous growth, innovation, and development, hence capital needs to be dedicated so we can attract the necessary resources. It requires a reasonable token distribution to facilitate our aspiration to become the largest upfront yield platform in all DeFi.


FLASH V3 Token Supply

To close the gap between the past iteration and capital requirements for a successful future of FLASH V3, a new token supply distribution is necessary. This also accounts for the vastly changed and improved tokenomics that allow FLASH to have a fixed total supply instead of an ever-inflating supply like in V2. Further, with our most recent breakthroughs in incentive structuring, we don’t need a bonding contract anymore. This means that whatever tokens are minted at token creation is the ever-to-be finite supply of FLASH V3.

Keeping a balance between rewarding early adopters and providing capital for various project purposes, we propose to mint a finite token supply of 150,000,000 FLASH V3 at token creation.


Total Supply Distribution

On the highest level the token distribution is split between the Blockzero allocation and the Flashstake project treasury. The Blockzero allocation contains the community allocation and the Blockzero Labs treasury allocation while the Flashstake treasury contains the budgets for several project related expenses, including the Team budget.

To honour the promised one to one token drop to the community (FLASH, XIO and AQUA holders), a combined amount of 23,244,575 FLASH V3 is budgeted.

After community feedback and substantial internal and public discussions in Discord we introduce an opportunity for anyone in the community to increase their token allocation to up to double the initial amount in a way that also benefits the project. This budget is labelled as “FlashBack Staking” and is financed by the FLASH Treasury. More about this below.

We propose the following token distribution with subsequent budgeting:

  • Blockzero & Community: 46,000,000 (30.67%) of which
    • Community Airdrop: 23,244,575 (15.50%)
    • Blockzero Treasury: 22,755,425 (15.17%)
  • FLASH Treasury: 104,000,000 (69.33%) of which
    • Flash Team Budget: 22,500,000 (15.00%)
    • FlashBack Staking Budget: 23,244,575 (15.50%)
    • Flash Growth Budget: 58,255,425 (38.84%)


Token Vesting Schedule

To align interests of stakeholders and provide improved predictability of supply to market participants, vesting periods are applied. Tokens are earned as vested. Team members who leave the project during a vesting period forfeit all unvested tokens.

  • The Community Airdrop is claimable immediately with no vesting period. Unclaimed airdrops in the distribution contract will be transferred to the Blockzero Treasury after 12 months from the day of token launch.
  • 20% of the Blockzero Treasury allocation is available immediately and 80% is vested linearly over 12 months.
  • 35% of Flash Team Budget are vested as a lump sum one month after launch, 50% is vested over 12 months and 15% is vested over the second year after launch.
  • The FLASH Growth Budget is available immediately, but funding of project activities needs to be approved by governance.

Vesting Schedule Breakdown

The following breakdown presents how much of the total supply will be available to different actors over time. Important to note is that while tokens become liquid over time, it doesn’t necessarily mean they are added to the circulating supply. Especially the FLASH Treasury and Team allocation can be expected to enter circulation relatively slowly which means that 69% of total supply is mostly stationary.

  • 62.62% of total supply is liquid at launch or within 1 month from launch
    • 15.50% Community
    • 3.03% Blockzero Treasury
    • 5.25% FLASH Team Budget (vested after 1 month cliff)
    • 38.84% FLASH Growth Budget
    • 0% FlashBack Staking Budget
    • Total liquid supply = 62.62%
  • Up to additional 35.13% of total supply becomes unlocked linearly over 12 months.
    • 0% Community
    • 12.14% Blockzero Treasury
    • 7.50% FLASH Team Budget
    • 0% FLASH Growth Budget
    • Up to 15.50% FlashBack Staking Budget
    • Total liquid supply up to 97.75%
  • Up to additional 17.75% of total supply is vested linearly in month 13-24 after launch
    • 0% Community
    • 0% Blockzero Treasury
    • 2.25% FLASH Team Budget
    • 0% FLASH Growth Budget
    • Up to 15.50% FlashBack Staking Budget
    • Total liquid supply = 100%


What is FlashBack Staking and how does it work?

We wanted a mechanism which would allow all Flash holders a way to acquire additional Flash in return for locking their tokens for a given amount of time. FlashBack Staking is a way to inversely “Flashstake” FLASH tokens to acquire a high APY. This means token holders have the option to lock their Flash tokens for a predetermined amount of time (up to the user) in exchange for additional Flash once the lockup period ends. These additional tokens would be coming from the “FlashBack Staking” allocation mentioned above.

The FLashBack conditions are as follows:

  • Any regular token holder can lock their FLASH for up to 1 year into the FlashBack contract to receive more FLASH at the end of their chosen period
  • The Blockzero multi-sig/treasury and FLASH multi-sig/treasury are blacklisted to ensure funds are serving the right purpose
  • Team tokens that initially were made available immediately at launch will now be vested 1 month after launch. This is to ensure priority usage to the community members, old and new. Aside from the disadvantage of timing, there is nothing stopping team members to lock up their liquid tokens as well if they wish to participate.
  • The minimum lockup period is 10 days
  • The maximum lockup period is 1 year
  • The longer the lockup period, the higher the APR
  • An increase in lockup period by one day increases the APR by 0.274% up to 100% APR at the maximum lock period
  • Users can unlock their FLASH anytime after the minimum lock duration but doing so forfeits all accumulated rewards
  • Forfeited rewards are returned to the FLASH treasury
  • There is a budget of 23,244,575 FLASH for the FlashBack contract. This is the exact amount of the community airdrop and therefore allows everyone to double their airdrop amount if they choose to lock it up for one year.

The important distinction of this system to a vesting period is the opt-in nature. Anyone who receives FLASH through future incentives like the planned growth-mining or liquidity mining campaigns (or via buying the token from a DEX) can use the FlashBack system just as well as the recipients of the community airdrop. However, the Flashback budget is limited to the exact amount of the community airdrop. Hence, there would be no FlashBack rewards available if the whole community decides to lock their airdrop for a year.

The FlashBack system allows anyone to become an early adopter and earn additional ownership in the protocol by truly supporting the project and locking up their Flash tokens. This means even if Flash is purchased from the market by someone outside of the initial community, these tokens can be used towards the FlashBack system.

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AMENDMENT

In response to the in-depth discussion, both internally and publicly in Discord, the proposal is amended as follows.

  • 50% of the tokens earned by the Flashstake Council at launch are locked for 3 months instead of 1 month after launch.
  • The remaining 50% are locked for 1 month like stated in the original proposal.
  • Other Core contributors can join us voluntarily in our signalling effort to the community by increasing the lock time on their earned tokens accordingly.

The FlashBack incentive contract is meant to reward the existing and growing community of Flashstake, not to maximize Core contributor rewards. However, except for hard lockups of tokens we don´t see a feasible way to prevent anyone using the contract without negative second order consequences.

With this amendment we want to signal that we understand the upbrought concerns and our intention to always put the project´s success at top priority.