PRIME token 🤖

PRIME functions as a utility and reward token in Prime, alternatively referred to as a work token.

Token Sink Strategy

Schematic adopted from the Web3 Sustainability Loop, first introduced by Token Engineering community leader Trent McConaghy.

PRIME functions as a utility and reward token in Prime, alternatively referred to as a work token. It borrows from the Web3 Sustainability Loop model in Token Engineering, where a mission-aligned and decentralized builder collective creates value for the ecosystem. The center of this model is that of a loop, where the collective creates value for the token, and the voters of Prime act as curators, either passing or dismissing work proposals submitted to the DAO. Through a recently submitted proposal, PrimeDAO has agreed that in its Growth phase, proposals that increase the utility of the PRIME token will be prioritized. Overall, the Growth phase strategy is oriented around stacking token sinks, where tokens are removed from the circulating supply through either:

  1. Permanent removal — also known as token burning, where tokens are purchased and removed from the supply forever.

  2. Temporary removal — many mechanisms fit into this category. Tokens can be locked, or staked, or purchased by and returned to the DAO’s treasury for further use (referred to as “buyback and make”), and by doing so, are removed from the circulating supply

Prime is starting with two token sinks with Lock and LP Manager. But in the future, we can imagine more sinks, such as an embedded fee in the Prime Aggregator that automatically buys and burns PRIME, or common DeFi mechanics like collateralization, where PRIME is locked to mint a stablecoin or other synthetic assets. If PrimeDAO becomes revenue-positive, there’s always the possibility of engaging in open market operations as well to directly increase PRIME’s value — but this depends entirely on the appetite of its decentralized governance body.

Distribution Breakdown

A pie chart of the PRIME token distribution.

PRIME distribution can be understood in two ways:

  1. As a circulating supply and release schedule — how many tokens are expected to be part of the circulating supply, and when?

  2. As a budget breakdown — for what purposes and which groups are PRIME tokens being allocated?

The above pie chart contains the budget breakdown by stakeholder group. The below table details the release schedule, from which the circulating supply over time can be inferred. Further down is a table with detailed descriptions of each token allocation group:

Token Allocation Groups

PRIME, PrimeDAO’s utility token, will initially be limited to a total supply of 90M distributed over multiple stakeholder groups. This initial allocation is anticipated to provide sufficient resource coordination capacity for PrimeDAO to reach the Maturity phase.

Group

Vest

Description

Incubators

22,350,000 PRIME (24.8%)

Three month cliff, one year linear vest.

Early-contributors and launching partners who have invested time, work and/or funds during the Incubation phase and are expected to have an active role during the Growth phase of Prime. These earliest contributors of Prime have received higher token allocations compared to the newcomers, to fairly represent their historical contributions to bootstrapping the DAO.

Prime Development Foundation

1,500,000 PRIME (1.7%)

500,000 of the Foundation's tokens are unlocked, while the other 1,000,000 are subject to a three month cliff, one year linear vest.

The Prime Development Foundation, based in Curaçao, provides PrimeDAO with a legal anchor into the traditional legal world. The Foundation is mandated to support the initiation and development of the network, but does not own PrimeDAO or any of its products.

Token Sale Participants

24,000,000 PRIME (26.7%)

No lock, no vest.

These tokens are not vested and can freely be transferred after the launch. Alternatively, they can be locked to acquire voting power in Prime, or be used to co-farm Prime’s first governed liquidity pool to earn more PRIME.

Contributor Rewards

Up to 14,500,000 PRIME (16.1%)

Held by the DAO. Contributor Reward tokens issued by the DAO may or may not include vesting schedules—this is up to PrimeDAO’s voters to decide.

Awarded to contributors that provide valuable commitment to the development of Prime during the Growth phase. Contributions could include developing Prime products and tools, technical audits, evangelism, research, good governance or any other contribution deemed valuable.

Incentives

Up to 17,150,000 PRIME (19%)

Held and issued by the DAO.

These tokens are reserved for product users as incentives for protocol usage and community engagement.

Following the token launch, a Balancer pool will be created to incentivize market makers for providing liquidity and supporting the price discovery of PRIME. Up to 500,000 PRIME tokens will be distributed via this initial liquidity reward scheme.

Further incentive mechanisms have been conceptualized—such as liquidity rewards for Prime Aggregator users. It’s up to Prime to ultimately decide which mechanisms are most valuable for and should be implemented.

Products

Up to 10,500,000 PRIME (11.7%)

Six month cliff, two year linear vest.

Reserved to providers of early Prime products and licences acquired by Prime. This includes the purchase of an indefinite license of Totle’s liquidity routing engine.

Treasury

PRIME tokens are held in a Gnosis Safe multi-signature wallet by the Prime Development Foundation, as delegated by the PrimeDAO in this proposal. Note that the PRIME can be requested at any time by PrimeDAO, and the Foundation is mandated to transfer them at the earliest convenience. This guardianship has been agreed upon as an extra security measure — while there is every technical reason to believe that DAOstack is a safe and reliable framework for Prime to use, it’s important at the early stages of the DAO’s development to take extra precautions, as we cannot expect that the full range of DAO social exploits has been discovered yet. Additionally, if Prime were to move away from DAOstack as its DAO framework of use, or split itself across multiple DAO instances on different frameworks, this guardianship permits more flexibility overall towards effective treasury management.