STEP Tokenomics v1.2

The mechanics behind the STEP token

Overview

Step Finance is a transaction aggregation and portfolio management platform enabling new users and DeFi veterans alike to transact, monitor and identify opportunities across the entire Solana ecosystem in one easy to use location. Step aims to be the page which DeFi users have open all day with all the functions and information they need to make informed decisions.

Step will also enable users to interact directly with their favourite protocols from within the dashboard which can include claiming farming rewards, compounding yield, entering/exiting pools, executing swaps and automated strategies. Many of these value added services will be done for a fee which will be collected and used to buyback and distribute tokens to STEP tokenholders. Today we will discuss the tokenomics behind STEP token.

Base Functionality

Step has a steady and growing set of core functions described below:

Live today:

  • Wallet Balances

  • LP token support (staked, unstaked, yield farms)

  • Yield farm claims and compounding

  • Serum CLOB DEX open/settle positions

  • NFT Gallery (AR, Pricing)

  • DEX Swap Aggregation (routing to provide best price for swaps across multiple liquidity pools)

  • FTX Pay (fiat credit cards)

  • more monitoring and project specific data

Proposed Future Additions:

  • Automated investment strategies

  • Historical information

  • Bridges

  • Fiat On/Off ramps

  • STEP AMMs

  • Charity donations

  • More TBD...

Design

Design is crucial to STEP being the front page of the Solana ecosystem. The STEP team aims for Step.finance to be a page which is used everyday by everyone in the Solana ecosystem. Step will be something which will have coverage of all other projects on the Step dashboard, providing an easy to use ‘Wallet view’ for all the coins, LPs, farms and positions a user may have associated with their wallet.

Design Principles:

  • Dashboard should be high level view immediately for NET worth of users account

  • User should be able to interrogate the information to view the underlying values associated with their wallet.

  • Users first, interactions should be natural and mirror how users already interact with DeFi.

Token Metrics

The STEP token ensures there is a clear alignment of incentives between users, tokenholders and the team so that Step can continue to grow in a sustainable and productive manner for the benefit of all DeFi users. It is therefore crucial that the $STEP token have strong fundamental value accrual structures in place which build value over time.

Overview:

Max Supply 1 000 000 000

Emission Period: 2 years

Weekly Emission Reduction: -4%

Airdrops % of Supply: 1%

Founders % of Supply: 20%

Founder Lockup: Lockup over 2 years vested in 25% increments every 6 months.

Treasury % of Supply: 12.219%

Presale Investors: 11.780%

Presale Lockup: 2 years vesting. 50% available after 1 year, 50% available year 2.

Community & Ecosystem % of Supply: 55% (LPs and Trade executors)

Token Type: SPL (Solana Native)

Principles:

  • Value accrual to the STEP token is key focus

  • 2 year emission schedule with 4% weekly reduction. Early risk takers rewarded and new supply entering circulation reduces over time and helps build long term value given static or growing buyback demand. Mirrors similar tokenomics of other yield aggregators (Harvest, Pickle, Yearn, etc).

  • No new emissions go to STEP native staking pool. This dilutes supply away from value productive TVL accruing activities.

  • ‘Trade Executors’ are defined as users who execute transactions on the Step platform which incur a fee. We may choose to incentivise this in future.

  • Community reward emissions % is split between LPs vs Exchange Executors weekly. The % split may change over time. Current split at launch is 60% to Trade Executors 40% to LP Stakers

  • The Treasury should be sustainable and have enough supply to pay for top talent.

  • 80% of fees on Step go to STEP stakers and 20% to the Treasury.

Staking and Buybacks:

  1. Step.finance will eventually have a single asset pool for the STEP token once more value accruals are in place.

  2. This pool will receive NO emissions. It only receives income from revenue generated by step.finance

  3. Step charges fees for services on step.finance with 100% going to buybacks.

  4. STEP also has incentivised liquidity pools which will receive new emissions. At launch this will be STEP/USDC.

Value Accrual

It is essential to the success of the project that STEP actually generates revenue and adds value to the token. Therefore there are several value accrual mechanisms for the token itself which will further generate positive interest and incentives in a positive feedback loop. The below is a list of value accrual mechanics that the team intend to implement on the Step platform:

Transaction fees: The most basic and simple value accrual is STEP taking a fee on certain interactions on the STEP platform (swaps, yield farms, automated strategies, bridges etc). 100% of transaction fee revenue will go to buybacks of STEP from the open market.

Buyback and distribute: The core value accrual mechanic of STEP is buyback of STEP tokens from revenue generated by transaction fees in the protocol which are then distributed to stakers. This gives a native APY for staking the STEP token and aligns incentives of tokenholders and the team with the success of the STEP platform. This is awarded proportionally to the liquidity an LP stakes in this pool.

Reducing supply emission rate: Supply emissions should reduce over time without any large cliffs (like evident with SWRV which did a 90% cliff in emissions that made their TVL fall from $700m to $3m and cause people to forget/leave the project). The optimal scenario is a gradual reduction in new emissions over time at a set rate. For STEP this emission reduction will be 4% weekly of the community and ecosystem reserve. With a steady or increasing demand and a falling emission rate there reaches an inflection point where buybacks volume is greater than new emissions creating NET positive buy pressure on the STEP token.

Aggregation: Step has integrated the first transaction router on Solana for the Serum DEX in addition to our smart price matching for Swaps. Step users always get the best price and most liquidity for their swaps on Solana as the router includes liquidity and pricing from Serum DEX (and Raydium liquidity by proxy as it is deployed to dex orderbooks), Serum AMM and Orca AMM. 100% of the 0.5% swap fee goes to buybacks.

Liquidity Sinks: Providing productive liquidity sinks for tokenholders enables new potential capital efficient strategies and takes supply off orderbooks, locks coins for longer time periods and helps reduce sell pressure. Step is currently discussing with 3rd party protocols in addition to developing in house liquidity sinks that can enable users to make productive use of their STEP when staked for a long time period or as collateral for lending protocols.

Automated Trading Strategies: Step started as an automated strategy platform and our intent has always been to build out this functionality. There are various automated vaults and trading strategy contracts on Solana which Step will be developing in house or integrating with third parties, these may include indicator based trading pools, copy trading, yield farm vaults and more.

Stake for Access: There are a number of investment indicators, analytics, portfolio insights which Step plans to make available to users who are stakers of STEP. We believe Stake-for-access is a superior model to subscriptions or paid plans and adds additional value to STEP token holders.

Fiat-Defi integrations: Step intends to implement arms length widgets which can handle fiat on/off ramps into Solana via Step. The first of which we have implemented via FTX Pay with more ramps due to arrive soon.

Referrals: Referrals are a growing value additive mechanism in the crypto world with DeFi projects such as 1INCH utilising it effectively. One user may refer others via a weblink and earn a share of the fees. Step intends to implement this system for Swaps and potentially other automated strategies.

Bridges: Being multi-chain capable is a core principle at STEP finance, there are several bridges under development on Solana, Step is currently in the process of integration of superior bridges with partners.

Governance:

Step.finance has a team of 5 who initially will guide the direction of the project. There will be no governance functions initially but the team is open to exploring further tokenholder involvement in future.

It is important in the beginning of a project's life that the founding team has control over the direction and development of the project. Only after reaching a phase in the project's life where the direct day to day input of the founders are not necessary to the continued development of STEP would a governance DAO be considered.

Conclusion:

This is the initial token mechanics for the STEP token and may be subject to change at any time. The Step team is focused on value accrual for the Step platform with our core principle being that Step Finance should be the platform everyone has open everyday. Given this, with user attention there are many ways we can add value to users which in turn will benefit STEP tokenholders and our team are constantly evaluating the best options here going forward.