Tokenomics

VE(3, 3) & Deflationary Tokenomics

VE(3,3) - Vote Escrow / Protocol-owned-AMM represents one of the most advanced tokenomics approaches, effectively addressing the dilemma of maintaining the value, utility, and rewards of governance tokens. CarrotSwap designs its tokenomics based on the VE(3,3) model. This approach allows for a more sustainable and balanced economic system within the platform, ensuring that the governance tokens retain their value while providing utility and incentives to the token holders.

Liquidity Gauge

Essentially, liquidity providers receive fees in the form of LP tokens as compensation for utilizing their liquidity. CarrotSwap, in addition to this basic fee, emits additional $CARROT tokens to incentivize liquidity attraction. To receive the emitted $CARROT tokens, LP NFTs must be staked in the Liquidity Gauge. The LP NFTs staked in the Liquidity Gauge are rewarded with $CARROT tokens as additional compensation, the amount of which is determined by governance decisions. This mechanism is designed to enhance liquidity provision on the platform, making it more attractive for users to participate as liquidity providers.

Vote Escrowed $CARROT

Users can choose a duration to stake their $CARROT tokens. Depending on the staking period chosen by the user, they receive veCARROT tokens in the range of 0.01 to 1 in exchange. veCARROT serves as a voting right in the governance activities of the Carrot ecosystem.

Through veCARROT, users can decide how to allocate rewards among the LP pools staked in the Liquidity Gauge. Additionally, they can participate in governance activities such as deciding on the progression of launchpads, implementing new features, and utilizing the community treasury.

Once the duration is set and the tokens are locked, $CARROT cannot be traded or transferred in the market until the set time elapses. This mechanism continuously encourages long-term staking of $CARROT, thereby reducing downward pressure on its price. It's a strategic approach to ensure user engagement and token stability within the Carrot ecosystem.

Deflationary

Curve's inflationary tokenomics failed to maintain value, and the rebase model introduced by Solidly to improve this situation appears to protect holders' interests on the surface. However, in reality, it results in a reduction of the fee income that holders receive.

CarrotSwap recognizes these problems and designs a sustainable tokenomics model that aims to uplift value while satisfying holders, liquidity providers, and traders alike.

$CARROT will emision 1,000,000,000 tokens over a period of 4 years. During this period, 35% of the protocol's revenue will be deposited in $CARROT's liquidity pair, and an equivalent amount of $CARROT will be distributed to stakers. Additionally, 5% of the revenue will be used to repurchase and burn $CARROT from the market. This approach is geared towards creating a balanced and sustainable economic ecosystem that benefits all participants.

Fee Distribution in Initial Emission Duration (4 years)

	Ratio
Rewards for Liquidity Providers	50%
Rewards for $CARROT Stakers (as supply LP)	35%
Buyback $CARROT	3%
Buyback $CARROT and Burn	5%
Community Treasury	7%

After the initial four-year token emision period, the distribution ratio of protocol revenue will be readjusted. The rewards paid to $CARROT stakers will no longer be newly issued tokens but will instead be entirely comprised of $CARROT repurchased from the market. Additionally, the rate at which $CARROT is bought back and burned in the market will increase.

Fee Distribution after Initial Emission Duration

Category	Ratio
Rewards for Liquidity Providers	40%
Rewards for $CARROT Stakers (as supply LP)	5%
Buyback $CARROT	40%
Buyback $CARROT and Burn	10%
Community Treasury	5%

Token Info

Token Name : Carrot / $CARROT

Initial Supply : 1,000,000,000

Max Supply : 1,000,000,000

The detailed token allocation is TBD