Marginly economics

Description of protocol cashflows and future plans for the tokenomics

Marginly v1 does not have an ecosystem token. Sound tokenomics requires a sound design with initial data and statistics backing it. This is why we aim to launch Marginly v1 as-is, gauge user interest, and obtain trading/liquidity statistics before making further architecture decisions.

Revenues and expenses

In Marginly, we have the following revenue streams and required expenses:

Revenue streamsExpenses
  1. Borrower interest

  2. Liquidation penalties

  3. Swap fees

  1. Bootstrap insurance pool

  2. Reward integration partners

  3. Reward the team

  4. Reward long-term liquidity providers

Marginly v1 is designed in such a way that both borrower interest and liquidation penalties are interchanged between system longs (borrowers of USDC pay USDC liquidity providers) and system shorts (borrowers of ETH pay ETH liquidity providers).

We have put together the revenues spreadsheet to gauge the APR percentage each revenue stream offers the system. The most probable initial working ranges are highlighted in the document.

The bottom table of the revenues spreadsheet shows how the swap fee scales with the greater protocol adoption, which is measured by the annualized trading volume to TVL ratio. The higher this indicator, the more effective APR Marginly earns.

Initially, Marginly will bootstrap the insurance pool with fees applied on revenue streams, as it is crucial for the system's solvency and safety. With later protocol releases, fees will be split among different expenses to allow for protocol expansion.

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