Tokenomics

Unpacking PrimeDAO's token economy

On Tokenomics

Tokenomics has proven to be a powerful design tool to facilitate resource coordination, exchange of value, and stakeholder alignment in decentralized ecosystems. The myriad successes and failures of token driven projects across the Open Finance (DeFi) industry have showcased the effectiveness of good tokenomic design — as well as generated a graveyard of failed designs. Good tokenomics helps incentivize all stakeholders towards optimal outcomes by aligning their motives and actions, using such design principles as “skin in the game,” where users who have contributed most receive due attribution.

In its initial form, PrimeDAO will be deployed on the DAOstack framework and follow a dual-token design called holographic consensus. PRIME functions as a utility and reward token and REP, a non-transferable governance right, is utilized for PrimeDAO governance. By separating voting power from utility PrimeDAO is better able to reward contributors according to their appetite and promotes strong alignment between governing contributors.

Contributors to PrimeDAO are able to earn PRIME and REP according to standards that are defined collectively by PrimeDAO. The current tokenomic design aims to optimize resource effectiveness, stakeholder alignment, and optimal wealth created for all DeFi users.