OTOCO Issuance

Our proposed token inflation model is based on continuous minting to meet user demand rather than artificially creating scarcity.

Genesis token creation

As a recap, an initial 8 million OTOCO ERC-20 tokens have been created by OtoCo Labs, the special purpose vehicle that acts as the legal skin for the OtoCo token issuance smart contract.

The balance of the genesis token mint will then be pledged to the OtoCo Foundation, together with the pre-order proceeds.

From that point on, new tokens will be automatically minted by the Foundation’s token treasury smart contract.

In this post, we detail how we propose to mint new tokens and why we chose a continuous uncapped token issuance mechanism vs. a capped release with artificial scarcity.

Keeping things simple

We learned a lot about Otonomos clients’ token inflation models and from the various projects we follow.

There is no right or wrong however, for our purposes we wanted to simplify how rewards work by using the airmiles proxy: the more you spend, the more miles you get. Miles then become spendable with the airline or its partners, with certain restrictions.

The more you spend the more you (+ dApp devs + the community) earn…

OTOCO will be minted based on an issuance factor that can be changed at any time if the DAO votes to do so (default being 10%). All spending on OtoCo will be multiplied by that factor. The formula is simple and elegant:

Spending on OtoCo * Issuance factor = New OTOCOs minted

E.g. Alice spends US$ 1,000 in the OtoCo platform purchasing a vesting smart contract bolt-on for her LLC. 100 new OTOCOs are minted and distributed.

Minting for the whole ecosystem

How are those newly minted tokens to be shared?

We propose Alice receives a quarter, the developers whose dApp Alice purchased also receive a quarter, the OtoCo DAO Foundation receives a quarter, and holders of OTOCO receive a quarter.

Developers are the suppliers of product in the OtoCo platform: they stock the shelves and need incentives to build add-ons that cater to user demand.

On this basis, in addition to their share of revenue from the add-ons they sell in OtoCo’s dAppstore, developers are initially set to receive the same amount of token reward as the user who buys their product.

The idea is to help kick-start an entire ecosystem of third-party dApp developers similar to Apple’s Appstore, but with developers receiving a fairer share of their sales revenue + additional OTOCO tokens.

A quarter of the newly minted tokens would go to the OtoCo Foundation’s treasury wallet, from where grants and token allocations can be made to anybody who contributes to the growth of the OtoCo project, subject to an onchain vote.

The last 25% of these newly minted tokens will go to the holders of OTOCO as an incentive for HODLing and governing the project!

Spend, swap, or hold

Any recipient of OTOCO tokens can then either spend OTOCO in the platform, create or participate in a liquidity pool on a decentralized exchange to swap it for any other digital asset, or just hold it.

Spending OTOCO will be according to a ratio of tokens towards paid-for services, similar to a loyalty scheme.

As with the loyalty bonus above and the initial 25% sharing itself, this ratio will be subject to an onchain vote.

Win-win-win-win!

In summary, users, developers and the broader token community all get rewarded equally when the volume of transactions in the OtoCo platform increases.

The number of newly minted tokens is a direct function of how much users spend.

In addition, developers will be able to build and sell their solutions in the OtoCo dAppstore and receive token rewards linked to their sales volume.

Finally, all token holders have voting rights over how the project’s parameters are set and how community tokens are allocated out of the OtoCo Foundation.

As a result, everybody should benefit as OtoCo grows.