The ArtSect tokenomics design enables team projects and ideas from across the ecosystem to fund initiatives, foster growth and ideational diversity by removing barriers to entry.
ArtSect’s tokenomics and monetary policies are built on the foundation of the DAO’s Governance Mining framework: team budgets can now be bootstrapped by a supporting community in a transparent, equitable, and inclusive partnership.
We believe this is how the future of community growth will happen and ArtSect is here to make this a reality. Using our reserve coin backed by stablecoins, IRL assets, Metaverse value and the vested community of governing members. Our Governance pods can have full autonomy of the Decentralized Arts and Cultural Organisation, within the framework of our Governance and Tokenomics policy.
Ecosystems vs Extraction
The Web3 Sustainability Loop
A dedicated and passionate community is key to our DAO movement gaining true stability. Finding robust methods for DAO-to-DAO Meta-Governance, sharing of Governance Mining and staked resources will be key to achieving holistic efficiency within our ecosystem.
The Yield Farmer Problem
Users focused solely on the economic incentives tend to fall into and cause this cycle on projects. For long term health and sustainability of a projects goals, DAOs must seek the Utility driven user with genuine passion, interest and engagement with the community.
Each $ArtSect is backed by 1 DAI in the treasury plus RWA and Metaverse assets owned by the DAO.
$ArtSect tokens can only be minted or burned by the DAO.
Because the DAO must hold 1 DAI and only 1 DAI for each $ArtSect, every time it buys or sells it makes a profit: when $ArtSect trades below 1 DAI, the protocol buys back and burns $ArtSect; when $ArtSect trades above 1 DAI, the protocol mints and sells new $ArtSect.
Since ArtSect will own most of its liquidity thanks to its minting mechanism, this means that it will be the largest LP (liquidity provider) for $ArtSect and therefore it will earn most of the LP fees which represent another source of income for the DAO.
$ARTSECT is a reserve coin always backed by 1 DAI in the treasury plus RWA and Metaverse assets. Monetary Policy decisions are made by the DAO, execution of policies is made with open source software and can always be publicly verified on the blockchain.
$ARTSECT is not a stablecoin and price stability is not the ultimate goal.
In the same sense that ArtSect's Governance mining framework constitutes a “social contract”, then ArtSect's tokenomics is the “monetary policy contract” insuring that the DAO captures the value it creates, generates cash flow, and then shares the value created back into the real and virtual worlds.
How does it work?
$ARTSECT tokenomics consists of a DAO managed treasury, DAO owned liquidity, and a discount mechanism. All these variables are managed by ArtSect’s monetary policy:
DAO makes a commitment regarding how its cashflows and tokens will be distributed even before it accepts any funds.
The community gets to know how the money will be spent, ahead of time.
Treasury becomes a programmable payment terminal that automatically rewards the DAO as it becomes successful.
At any moment, following appropriate research led by the Monetary policy team, Governance can vote about the introduction of staking rewards designed to further tighten supply expansion.
The DAO sets a funding target and a funding period in accordance with the community-approved team’s budget proposals. This happens before any contributions are accepted. If the funding target is exceeded, the overflow can then be redeemed by the supporters and the DAO in exchange for burning $ARTSECT. If left unclaimed, the overflow will serve as a runway for projects.
The DAO is able to configure:
A discount rate (to incentivise early adopters)
A bonding curve (to incentivise commitment from community members)
A reserved rate so that the DAO can receive some of its own tokens every time someone buys $Artsect for themselves.
$ARTSECT payouts allow for a lock date which prevents them from being changed or removed until a specific date and can also be distributed automatically (including to a burn address) whenever a withdraw is made from the DAO.
How $ARTSECT tokenomics incentivise community participation
Two parameters are included in each funding cycle to reward early supports and token holders who take longer to redeem their tokens:
Discount rate. This is how quickly $ARTSECT depreciates per amount of DAI supplied.
Bonding curve. This is how much DAI from the overflow the token holders will be getting if they redeem (burn) their tokens.
Staking (not now, to be decided by Governance).
$ARTSECT is the end and DAO Governance is the mean to accumulate assets and revenues to bootstrap new founding cycles.