STEP Tokenomics v2.6
The mechanics behind the STEP token
Step Finance is Solana's leading data insight platform. 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 enables people 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 are done for a fee which is collected and used to buyback and distribute tokens to STEP stakers.
Today we will discuss the tokenomics behind STEP token.
Principles:
- Value accrual to the STEP token is a key focus of the Step product.
- Maintain 90%+ coverage of Solana ecosystem in Step Dashboard
- Step will never ask for your personal data- emails, passwords etc.
- No unproductive token emissions (e.g paying for TVL).
- xSTEP staking gets its yield from protocol fees only.
Staking (xSTEP):
Anyone can Stake their STEP token and in return they will get an xSTEP token. All fees which the Step protocol earns go to a treasury wallet which is used to market buy STEP and send to the xSTEP staking contract which distributes this STEP to stakers. More information on this is available here.
xSTEP Treasury Fee Address
Here is a link to our fee address. PLEASE NOTE THIS ADDRESS WILL ALWAYS BE AROUND ZERO AS ALL REVENUE IN THIS ADDRESS IS NOW SENT TO THE xSTEP STAKING CONTRACT
All fees (100%) collected on the Step Finance platform will be directed to this address and used to buy STEP from the open market. Starting 14 October 2021, this fee address started distributing STEP that has accrued as revenue to stakers in the xSTEP contract. This means periodic transactions (daily?) of STEP will be made from this address and sent to the xSTEP address for distribution. There will also be multi-step transactions as the team unstakes and sells LP rewards into STEP too to be sent.
The fee wallet linked above started collecting fees 16 June 2021.
Fee Paying Services on Step
- Settle Balance - 20% referral of the fee on settling an order from the Serum DEX on Step.
- Compounding Yield Farms - 0.2% fee on the claimed amount.
- Solanafloor (acquired by Step 2022) revenues.
- Yield Farm Creation (deprecated) - Requires 10000 xSTEP to create a farm which is locked for farm duration.
- Subscriptions (coming soon)
Step AMM (discontinued as of June 2022)
Step follows a similar model to Bancor whereby all pools on the Step AMM are mandated to have 50% of their liquidity denominated in the protocols native token, STEP. This ensures that an increasing AMM TVL also equates to more STEP being required to be locked as liquidity in the Step pools and therefore more STEP is either removed from circulation or bought to support this.
As swappers use the AMM they are rewarded with the below Reward Options which incentivise swaps, increase APYs for pool LPs, which incentivises more liquidity, which reduces slippage, which generates more fees on higher TVL and so on in a positive feedback loop.
The AMM is also the first on Solana to have an Atomic Router contract whereby swaps between pools (e.g. A to B and B to C) are done atomically in one transaction (not two) for optimal pricing, easier arbitrage and enabling any token to any token swapping.
Update: As per this article the Step AMM is being discontinued and deprecated. Only withdrawl functionality will remain for a time period.
Reward Options
Users of the Step Swap function of the Step AMM are rewarded based on the amount of fees their address has paid over a 5 day period. These users are rewarded with a Call Option on STEP with an OTM Strike.
This is a far more productive method of new emissions to enter circulation as it only happens after a fee to the protocol has been paid, new supply only enters circulation in a bull market, mercenary ‘farm and dump’ LP emissions are avoided and Treasury accrues USDC from exercised Reward Options which is used to set floor pricing on STEP and market buy STEP to be sent to xSTEP stakers.
Intangibles
Step is one of the most used platforms on Solana with one of the highest monthly active users of any Solana protocol.
This is due to Step’s product offering being very broad- portfolio management is needed regardless of bull markets, bear markets or any specific protocol a user finds themselves in. As long as Step has a lot of eyes on the product daily, a % of these users will use Step as their preferred location to undertake specific fee paying actions. With continued user growth on Defi and Solana, this will increase the number of these users paying fees to the Step protocol which is beneficial to revenue generation for xSTEP stakers.
Future Value Accruals and Utility:
There are many future value accruals and utility features yet to be built on Step. We are always adding more and have planned many more. Some of these include:
- Subscription service - Step is moving towards a new product focus on on-chain data and as such will soon be switching to a subscription service. This wil be the key driver for protocol revenue going forward.
Stay tuned to our socials and blog for important announcements on this front!
Last modified 2mo ago