βοΈDeflationary flywheel
Our tokenomic model is designed to be deflationary
Last updated
Our tokenomic model is designed to be deflationary
Last updated
All ABRA tokens are minted only once, at the initial Distribution (TGE). After that most of the tokens are distributed to the free market and available for trading. The specifics of the model described below imply that Cadabra protocol yearns from external protocols and accumulates value, putting the buying pressure on the ABRA price.
We tried to create such tokenomics that will have a self-reinforcing positive feedback loop, causing ABRA to increase in value.
In Cadabra, we have created a revolutionary tokenomics model, without the problem specific to most of DeFi projects: inflation. We can say with confidence that if the Cadabra protocol is in demand on the market, this will have a positive effect on the price of the ABRA token in the long term.
Our strategies reward their users with ABRA tokens, this pattern is common and seen everywhere in DeFi. But the crucial difference is that these ABRA tokens are bought from the open market and only then distributed to the users. Therefore, no new ABRA tokens are ever created.
The most important is how these ABRA tokens are bought: each strategy token has a corresponding Uniswap V3 pool with ABRA token. Initially, all ABRA tokens in these pools belong solely to the Cadabra protocol. When a strategy generates profit, more tokens of that strategy are minted and exchanged for ABRA using the corresponding pool. As a result, , while more ABRA tokens belong to users.
This means each ABRA token given to users can be swapped at any time for any other token, because all ABRA tokens held by users are backed by real liquidity.
The liquidity in the strategy pools generates yield from the underlying strategies. This yield is used to buy back more ABRA, adding even more liquidity and putting a pushing force on ABRA price. These pools also generate swap fees which are then locked contributing to the increase of protocol-owned liquidity that continues to generate rewards.
The yield generated by liquidity of the Uniswap V3 pools is distributed as rewards to ABRA lockers. This incentivizes locking up ABRA to get veABRA, further locking up liquidity.
Read more about how ABRA liquidity works in the next section Liquidity Pools
In summary, ABRA implements deflationary flywheel by design. The ABRA tokenomics incorporate the most battle-tested and powerful mechanics. While still a volatile token with price determined by supply and demand, the mechanics and Cadabra's liquidity work constantly towards appreciating the token:
One moment emission and no inflation.
Backed by integrated protocols' assets.
Buyback mechanics on:
Strategy profit.
Collected Performance fee.
Profit on Platform owned liquidity.
Sustainability, pump and dump protection by:
Deposit fee.
Using of Uniswap V3 pools.
Lock and vesting mechanics.
