ZERO Tokenomics

3 min readMar 14, 2023

The ZERO Token

ZERO is the governance token of the ZeroLiquid protocol. It will also allow stakers of the token to claim a share of protocol fees.

Initially, the total supply of ZERO was set to be 100m. However, the community has since voted to burn 69.420% of this, thus reducing total supply to 30.6m. The supply will be reduced over time as most of the tokens are vested and cannot be accessed immediately so cannot be burned yet.

To clarify, ZeroLiquid did not raise any funds publicly or privately. The project has been entirely self-funded up to this point.

Token Distribution

The 30.6m ZERO tokens will be distributed as follows:

Launch Event (Liquidity on Uniswap): 6m tokens

6m ZERO tokens have been used to provide ZERO/ETH liqidity on Uniswap v3 in order to facilitate low-slippage trading. For the purpose of increasing trust, this liquidity is locked for one year.

Development / Marketing: 7.8m tokens

These tokens are reserved for covering costs such as development and marketing in order to boost and maintain the health of the protocol. 3% of tokens from this reserve will be unlocked at launch, with the majority following a 3-month lock followed by a 30-month vesting period.

Governance/Community Pool: 10m tokens

These tokens will be used to fund things voted on by the community.

These tokens have a 6 month lock followed by a 30-month vesting period.

Staking/LP incentives/Liquidity: 5.9m tokens

These tokens can be used to bootstrap the protocol by incentivising the provision of liquidity in the early days when protocol fees will likely not be enough to cover liquidity rewards.

These tokens have a 1-month lock followed by a 30-month vesting period.

Core Contributors: 0.7m tokens

The team behind ZeroLiquid is self-funded as we have chosen not to conduct any private funding rounds prior to our launch.

All tokens of this reserve will be locked at launch, with a 6-month lock and vesting of 30 months.

Note:
To establish trust with the community, 99.1% of the total supply will be locked, including the liquidity tokens. Only 0.9% of the supply will be unlocked at the token launch to cover costs related to development and marketing.
It is important to note that upon the tokens being unlocked from the vesting contracts, they will not enter circulation right away. Rather, they will only be claimed if necessary. Our primary objective is to establish a protocol that is self-sufficient, generates tangible returns for token holders and maintains a minimal to non-existent token emission rate.

Protocol Fees

The protocol will charge a fee of 5% each time yield is harvested from the vault. Distribution of these fees will be controlled by governance, with the following initial distribution:

ZERO stakers

55% of protocol fees will go to ZERO stakers.

zETH liquidity

35% of fees will be used to incentivize zETH/ETH liquidity.

Zero Fund

10% of fees will go to the Zero Fund, which will build up over time and can be deployed in an emergency eg. a depeg situation.