# Dynamic Full Float Tokenomics ### **1. Introduction** Gone are the days of low-float, high fully diluted valuation (FDV) token launches, where teams must play games to constrain supply as mercenary capital, airdroppers, and other opportunists flood the market and rapidly sell off tokens. Canopy was built to address this fundamental challenge, recognizing the critical utility of tokens in attracting liquidity in a sustainable and effective way. The design of Canopy centers on three key tenets: incentivizing long-term participation, building sustainable liquidity incentives, and creating a self-sustaining liquidity model. By rewarding committed participants, discouraging speculative behaviors, and ensuring that ecosystem growth naturally reinforces the liquidity base, Canopy sets a new standard for token utility. The Canopy token model introduces a synergistic system designed to balance liquidity provision with sustainable long-term value growth. At its core, **$LEAF** serves as the governance and liquidity token, capturing value from trading fees while empowering holders to participate in key protocol decisions. Complementing this is **$OAK**, a token representing a growing claim on liquidity shares that transition over time from $LEAF to stablecoins or bluechip assets, under the management of the Aegis contract. By accruing value linearly until a fixed maturity date, $OAK incentivizes long-term holding and discourages early redemptions, with forfeited future accruals redistributed to remaining holders. Additionally, $OAK distributions empower new projects with spending power for revenue-generating activities, creating a feedback loop that fuels ecosystem growth and sustains a high, stable price for $LEAF. Together, $LEAF and $OAK establish a robust foundation for governance, liquidity management, and ecosystem expansion. ### **2. Token Model Overview** The Canopy token model features $LEAF, a governance and liquidity token that accrues liquidity over time, supported by a fully on-chain, protocol-owned liquidity system managed by $OAK holders. $OAK, a redemption token, can be exchanged for underlying collateral at any time, while the model is designed to incentivize long-term participation and ecosystem sustainability. **Diagram 2.1 - Principles of $LEAF** * Fully on chain in a pool priced 1x - 1000x * Protocol owned liquidity starts at 100% $LEAF but will be converted to Blue **Chip Assets over time**
#### **2.1 $LEAF Token** * **Function** * Governance and liquidity token. * **Purpose** * Captures trading fees and facilitates governance decisions. * Supports liquidity provision within the Canopy ecosystem. **Diagram 2.2 - Principles of $OAK**
#### **2.2 $OAK Token** * **Function** * Liquidity share and accrual token. * **Purpose** * Represents a growing claim on liquidity shares. Over time, these shares transition from $LEAF to stablecoins or bluechip. * Encourages long-term holding by rewarding patient participants. ### **2.3 Token Dynamics** **Incentives and Benefits for Holders** * **Framing the Ecosystem**: $OAK and $LEAF work in tandem to ensure a symbiotic relationship between liquidity and governance within the Canopy ecosystem. * **Long-term Focus**: Both tokens incentivize patient holders, ensuring sustainable growth and stability. ### **3. Core Token Functions** #### **3.1 Governance and Increased Liquidity ($LEAF)** * Token holders use $LEAF to vote on key protocol decisions, such as: * Adjusting $OAK distribution rates. * Liquidity strategies. * Treasury management and protocol upgrades. * Trading fees generated by the ecosystem accrue to $LEAF, increasing liquidity. #### **3.2 Liquidity Shares and Accrual ($OAK)** * $OAK accrues value linearly from its issuance date until a fixed maturity date. * The Aegis contract manages the gradual transition of liquidity shares from $LEAF to stablecoins or bluechip assets. * At maturity, $OAK holders claim accrued shares in $LEAF, stablecoins, or bluechip assets. * Early redemptions are disincentivized, as forfeited future accruals are redistributed to remaining $OAK holders. #### **3.3 Spending Power for Growth** * Distributed $OAK tokens empower new projects to fund revenue-generating activities without significantly diluting $LEAF’s value. * This spending power creates a feedback loop, driving ecosystem growth and maintaining a high, stable price for $LEAF. ### **4. Distribution and Emissions** The distribution of $OAK is strategically designed to attract liquidity and ensure sustainable ecosystem growth without relying on complex vesting schedules or large unlocks. By setting allocations at the onset, $OAK serves as a primary tool for incentivizing participation and aligning long-term interests across the community, partners, and key stakeholders. **4.1 Initial Allocation of $OAK** | **Category** | **Percentage** | **Details** | | -------------------------------- | -------------- | ---------------------------------------------------------------------------------------------------- | | Community and Partner Incentives | 40% | To support ecosystem growth and incentivize participation. | | Protocol Treasury | 20% | Reserved for strategic initiatives and market stabilization. | | Team, Advisors, Investors | 40% | All shares include the same linear value accrual and maturity day that incentivizes long term holds. | #### **4.2 Dynamic Emissions** * Governance adjusts $OAK distribution rates to optimize liquidity provision and ecosystem growth. * Treasury-held $OAK tokens can be burned or reinvested into bluechip liquidity to stabilize token value. ### **5. Stability and Liquidity Mechanisms** #### **5.1 Aegis Contract** The Aegis contract holds two directional liquidity positions: one in $LEAF and one in bluechip or stablecoin assets. As $LEAF accumulates bluechip assets, a portion of these are shifted into the bluechip position, gradually increasing the system’s stable asset holdings and reducing volatility. #### **5.2 Price Stability ($LEAF)** * The liquidity of $LEAF is supported by: * Accrued value locked in $OAK tokens. * Trading fees and liquidity incentives. * Controlled emissions and strategic $OAK burns. #### **5.3 Spending Power** * $OAK tokens are distributed to fund new projects, fueling ecosystem growth. * Effective spending on revenue-generating initiatives reinforces $LEAF’s price stability. ### **6. Example Scenario: Early Redemption vs. Holding to Maturity** To illustrate how the $OAK token model works, consider the following scenario: 1. The protocol owns 1,000,000 liquidity shares, composed of 25% MOVE and 75% $LEAF. 2. An entity holding 5% of the $OAK supply would have a claim to 50,000 protocol-owned liquidity shares if held to maturity. 3. If another holder with 5% of the $OAK supply redeems on day one, they would only claim 100 total liquidity shares. 4. As a result, the 49,900 unclaimed shares from the early redemption are redistributed to remaining $OAK holders. 5. This increases the value of the 5% held to maturity to **52,495 shares**, rewarding long-term holders. This mechanism not only incentivizes patience but also redistributes value to holders committed to the ecosystem’s long-term success. ### **7.Specific Token Pairings and Their Impact** Canopy’s token pairing strategy enhances liquidity and fosters ecosystem growth by incentivizing projects to pair their tokens with $LEAF to access $OAK rewards. This approach drives liquidity support for $LEAF while diversifying protocol-owned liquidity (POL), ensuring stability and scalability. #### **7.1 $MOVE-$LEAF and $USDC-$LEAF Pairs** * Liquidity Stability * Pairing with USDC and MOVE provides a reliable cornerstone for the liquidity pools. * Reduced Volatility * Helps mitigate the price fluctuations of $LEAF, making it more attractive to investors. #### **7.2 Project Token-$LEAF Pairs** By supporting new projects, Canopy fosters innovation within the Move ecosystem, leading to sustained growth. * Ecosystem Expansion * Facilitates the introduction of new tokens into the market. * Ecosystem Rewards * Project TVL is rewarded with $OAK tokens. * Mutual Growth * Projects gain liquidity and exposure, while Canopy expands its liquidity pools. ### **8. Governance Framework** Governance is conducted using $LEAF tokens, where each $LEAF represents voting power. Token holders can vote on decisions such as adjusting the rate of $OAK distribution, liquidity strategies, and other key changes within the protocol, ensuring the ecosystem evolves in a community-driven way. * **Voting Power**: $LEAF tokens grant governance rights, with proposals and voting conducted via on-chain mechanisms. ### **9. Benefits to Participants** * Liquidity Providers * Earn trading fees and $OAK rewards, with shares accruing over time. * Long-Term $OAK Holders * Accrue increasing value in stablecoins and bluechip assets. * Benefit from reduced supply due to early redemptions. * New Projects * By distributing $OAK tokens, new token projects can access spending power to fuel growth. This model enables projects to invest in revenue-generating activities, which, in turn, can help sustain the overall value of the ecosystem, including maintaining $LEAF’s stable price. * $LEAF Holders * Capture trading fees and influence governance decisions, benefiting from ecosystem growth. ### **Frequently Asked Questions** #### **1. What are the core functions of $LEAF and $OAK tokens?** * **$LEAF**: Functions as both the liquidity and governance token. It captures value through trading fees and allows participation in governance decisions, enabling token holders to vote on key issues. * **$OAK**: Represents a claim on liquidity shares that accrue over time. These shares shift from being primarily $LEAF to a mix of stablecoins or bluechip assets, rewarding long-term holders. #### **2. How does $OAK accrue value over time?** $OAK tokens accrue liquidity shares in a **linear fashion** from the start date to a fixed maturity date. As time progresses, these shares increasingly consist of stablecoins or bluechip assets, managed by the Aegis contract, which gradually shifts liquidity away from $LEAF. #### **3. What happens if someone redeems $OAK early?** If $OAK is redeemed before its maturity date, the holder claims only the liquidity shares accumulated up to that point (in $LEAF and bluechip assets). Future accruals are forfeited and redistributed to remaining $OAK holders, effectively making early redemptions less attractive over time. #### **4. Why is long-term holding of $OAK beneficial?** Long-term holders benefit as their $OAK tokens accrue more liquidity shares, including valuable bluechip assets. Early redemptions reduce the overall supply of $OAK, increasing the share of future rewards for those who continue to hold. The system incentivizes patience, rewarding those who believe in the long-term success of the ecosystem. #### **5. What makes early redemptions less attractive?** Early redemptions lower the redemption value of $OAK for others and cause future liquidity shares to be redistributed to remaining $OAK holders. This naturally discourages early withdrawals, as holders who wait until maturity will receive more liquidity value. #### **6. What is the spending power associated with this model?** The **spending power** in this model comes from distributing $OAK tokens to fund new projects or initiatives. This allows the system to allocate resources toward revenue-generating activities without significantly diluting $LEAF's price. If this spending is done effectively, it can help fuel the ecosystem and maintain the high, stable price of $LEAF. #### **7. How does $LEAF's price remain stable and high?** The price of $LEAF remains stable because the value locked in $OAK tokens reflects future liquidity accruals. As new projects use distributed $OAK tokens to drive revenue, the system captures value, helping maintain the high price of $LEAF through trading fees and liquidity growth. #### **8. How does the system discourage excessive redemptions?** Aside from the natural disincentive to redeem early, the protocol can slow $OAK distribution, reducing redemptions. Additionally, burning treasury-held $OAK tokens and reinvesting bluechip liquidity into the system can further reduce the appeal of early redemptions by increasing the value of remaining $OAK holders. #### **9. What would trigger the burning of treasury-held $OAK tokens?** A **faster-than-expected decline in the price of $LEAF** could prompt the burning of treasury-held $OAK tokens. This would reduce the supply of $OAK, increase the income for remaining holders, and stabilize the ecosystem by supporting the value of $LEAF and remaining $OAK tokens. #### **10. How does the Aegis contract shift liquidity shares from $LEAF to bluechip assets?** The Aegis contract holds two directional liquidity positions: one in $LEAF and one in bluechip or stablecoin assets. As $LEAF accumulates bluechip assets, a portion of these are shifted into the bluechip position, gradually increasing the system’s stable asset holdings and reducing volatility. #### **11. How does this model benefit new token projects?** By distributing $OAK tokens, new token projects can access spending power to fuel growth. This model enables projects to invest in revenue-generating activities, which, in turn, can help sustain the overall value of the ecosystem, including maintaining $LEAF’s stable price. #### **12. What role does governance play in this ecosystem?** Governance is conducted using $LEAF tokens, where each $LEAF represents voting power. Token holders can vote on decisions such as adjusting the rate of $OAK distribution, liquidity strategies, and other key changes within the protocol, ensuring the ecosystem evolves in a community-driven way. **13. How will participants learn about the value of holding $OAK to maturity?** To educate participants, diagrams, videos, app features, and explainers will be created to clearly demonstrate the long-term benefits of holding $OAK tokens, as well as the mechanisms that support liquidity, governance, and price stability within the ecosystem. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. 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