$GRAIL has interesting tokenomics as well as distributions. $GRAIL and $xGRAIL provides interesting tokenomics that blend well with each other, working together instead of various other dual token models that I have seen, generating real yield as well as rewards for using CamelotDEX and holding on to the spot for Arbitrum's #1 DEX for now.
The primary token, $GRAIL, has a low maximum supply of only 100,000 tokens. It is used primarily as staking, and generated yield rewards from farming incentives, as well as $xGRAIL, which is a non-transferrable, escrowed governance token. $xGRAIL can be earned from yield-generating staking positions, or through direct $GRAIL conversions. However, conversion of $xGRAIL back to $GRAIL requires vesting, so as to not create unnecessary sell pressure when rewards are generated in $xGRAIL.
Using $xGRAIL is interesting, as it interacts with the CamelotDEX ecosystem as a whole - it can be used to generate dividends from the protocol's fees, provides a yield booster for Farming Incentives, provides holders with exclusive access or discounts for project launches on Launchpads, as well as serves as a governance and voting token for proposals for CamelotDEX.
Camelot also introduces deflationary mechanisms such as buybacks and burns, in which a share of the protocol's earnings are dedicated to buyback and burn $GRAIL, applying continuous buying pressure. $xGRAIL redeems with a lower vesting duration apart from the maximum burns excess $GRAIL, instead of returning it to the treasury or into supply. It may feel as a form of forced inflation, however with the limited supply and burning, as well as conversion of $xGRAIL to $GRAIL, it incentives the user to actively use the protocol instead, which I believe is beneficial.
Token distributions also look healthy, reducing sell pressure with vesting periods, with the following (graph attached):
- Genesis: 30% (Linear Vesting over 6 months)
- LP: 22.5% (Vested over 3 years)
- Contributors: 20% (Linear Vesting over 3 years)
- Partnerships: 10% (Vesting over 2 years)
- Reserves: 8%
- Ecosystem: 5%
- Development Fund: 2.5% (Linear Vesting over 3 years)
- Advisors: 2% (Linear Vesting over 3 years)
Overall, I give the tokenomics 4 stars, as I believe there can be more to be improved on the usage of $GRAIL instead of only as a staking and vesting token. Rewards could be provided in both $GRAIL and $xGRAIL, however with $GRAIL escrowed over a period (such as 3 months, similar to Kwenta) so that it limits selling pressure during unlocks. Show Less
