📑ZEX Token Whitepaper
Last updated
Last updated
Disclaimer: The $ZEX token went live on June 27, 2024 (TGE date). The ideas presented below are for the purposes of creating transparency and collecting feedback from the community. Please follow our Twitter & Discord for all official updates and communications.
[Last Update: August 21st, 2024]
Perpetual futures (perps) are a crypto native invention that have accelerated into a multi trillion dollar industry driving the market dynamics behind cryptocurrency, they are now engrained as a key piece of our financial infrastructure. Concurrently DeFi has matured into an ecosystem where significant volume and price discovery now occurs. With increased throughput and performance brought forward by technologies such as Solana we are now seeing the formation of a viable and robust DeFi ecosystem in which perps products can flourish and compete with centralised exchanges.
Zeta Markets is positioned as an alternative to centralized, black-box financial systems. To date, our trading platform has facilitated over $11B in trading volume while serving more than 100k monthly active users on Solana. We aim to scale upon this foundation by pioneering a first-of-its-kind Solana DEX Layer 2 which will compete with the performance of CEX’s whilst not compromising on security and transparency.
The $ZEX token will power the growth of the fastest, smoothest, and most secure perps DEX on Solana. Staking mechanisms will allow users to stake $ZEX, unlocking governance rights and additional incentives. Our tokenomics mechanisms and token utility have been designed to strategically align the interests of multiple stakeholders with the protocol’s overarching goals. This alignment not only empowers but also incentivises our community to actively participate in guiding the protocol's direction, as we strive to deliver the ultimate trading experience.
Token Ticker: ZEX
Total Token Supply: 1,000,000,000
The largest portion of the $ZEX token supply (62.5%) is reserved for our community:
10% is distributed via airdrop.
30% is reserved for platform incentives, dedicated to traders.
22.5% forms the Community Treasury, funding different initiatives including Zeta’s multi-year creator & ambassador programs.
The remaining 37.5% of the $ZEX token supply is set aside for contributors and investors, subject to a multi-year unlock and vesting schedule.
At TGE and in the subsequent weeks, the following unlocks will occur:
Airdrop: the airdrop of $ZEX will be distributed in 2 rounds. 8% of the supply will be airdropped to traders at TGE, based on Z-Score. After launch, initial stakers of $ZEX will qualify for an additional airdrop (2% of the supply), issued in the form of staked $ZEX. Full details under Airdrop Mechanics.
Incentives: immediately after the airdrop snapshot, platform incentives for traders (30% over 90 months) will commence with the Genesis Epoch. Full details under Incentives.
Treasury: simultaneously, the Community Treasury (22.5% unlocked over 24 months) will back multi-year growth initiatives, including liquidity provisioning, and Zeta’s creator and ambassador programs.
Core protocol contributors and investors will have extended lock-up periods.
Investors: subject to a 1-year cliff and 2 years of vesting.
Contributors: subject to a 1-year cliff and 3 years of vesting.
This structure ensures that both the contributors and the investors are aligned with the long-term success of Zeta.
A strategic allocation of 10% of the total $ZEX token supply will be distributed via airdrop in order to establish a broad base of stakeholders and bootstrap a healthy ecosystem for governance. This will be achieved by rewarding Zeta’s users for their past engagement while encouraging long-term commitment by reserving an extra allocation for $ZEX stakers.
The airdrop will take place over two rounds.
At launch, 8% of $ZEX’s total supply will be distributed to early users for their contribution towards bootstrapping the platform:
7% of $ZEX’s total supply is dedicated to traders based on Z-Score; no market makers included in this distribution.
1% of $ZEX’s total supply is set aside as a bonus for traders who also belong to key community partners within the Solana ecosystem, based on Z-Score. Detailed information regarding our ecosystem partners, eligibility requirements, and necessary steps will be shared in our official channels.
This means that no one is receiving $ZEX without active trading on Zeta.
Recognizing the critical role of our earliest supporters in the success of Zeta, OGs (i.e., pre-Season 1) and Season 1 traders will be rewarded with loyalty boosts, with OGs benefiting from the larger boost. More information.
Following the token generation event, $ZEX token holders will have the opportunity to stake their tokens for a flexible period, earning gZEX in return (for further information, please see the staking section below).
In addition to earning staking rewards, early stakers will be eligible for a second airdrop, equal to 2% of the total $ZEX supply and distributed proportionally based on their share of gZEX. The staking airdrop will come in the form of staked $ZEX, issued one epoch (i.e., 28 days) after TGE.
This approach is designed to reward and incentivize community members who signal long-term alignment with the project and are committed to helping guide the protocol and its growth.
Staking: Staking will be a key function of the token from launch. Users will be able to stake $ZEX for up to 4 years, unlocking governance rights and additional incentives.
Governance: $ZEX governs the Zeta protocol and pioneers vote escrow tokenomics on Solana. Over time, it will empower community members to propose, discuss and vote on the future developments of the protocol.
Incentives: A substantial portion of the $ZEX token’s supply is set aside as a reward mechanism for traders to incentivise liquidity and trading activity.
$ZEX’s staking framework establishes a foundation for governance through a vote-escrow model. Staking also rewards those users that are most committed to the protocol's governance and long-term growth through boosting mechanisms.
Zeta's governance framework builds on the innovative vote-escrow model pioneered by Curve on Ethereum by introducing 2 new concepts. Firstly stakers are exponentially rewarded for the duration of their lock - therefore more heavily allocating power to those who are committed for longer. Secondly we introduce the ability for stakers to vest and unlock their tokens gradually - providing users more liquidity and limiting the supply shock on the ecosystem caused by mass unlocks.
To enable this, our tokenomics will feature 2 components:
$ZEX: This is the governance token of Zeta. It is a transferable SPL token (Solana Program Library, i.e., Solana’s standard for fungible tokens), which is distributed to users via airdrops and incentives for using the protocol.
gZEX: The governance score gained from staking $ZEX based on duration and amount of stake. This is a non-transferrable score across accounts. gZEX represents the long-term commitment of a user and, as such, provides proportional governance rights and boosted incentives.
Users will be able to stake $ZEX for a predefined period of time (up to 4 years) to receive gZEX. The amount of gZEX received for staking $ZEX will be determined by the amount of $ZEX token locked and the staking duration, according to the following formula:
Staked $ZEX has two distinct states - locked and vesting - allowing users to manage their governance score (gZEX) and their benefits:
Locked state: In this state, your gZEX and the associated governance benefits remain constant.
Vesting state: Vesting unlocks staked $ZEX into liquid $ZEX over a linear unlock period. Your gZEX score also linearly decays.
Boosting represents another critical benefit of staking $ZEX. By holding gZEX traders will be able to access additional incentives, amplifying their rewards based on their total gZEX. The objective of boosting is to distribute greater incentives to users who are also signalling long term commitment to the protocol and participating in governance via staking.
A user’s share of these additional incentives will be determined based on a user boost score, calculated as follows:
Where score above refers to the users score in the incentive program at large - for example their Z-Score.
The platform incentive program will be launched immediately after the airdrop snapshot and will serve two key objectives. Firstly it will be a mechanism through which the token supply and governance power is progressively distributed to users. Secondly it will play a pivotal role in the growth strategy, motivating traders and market makers to achieve optimal trading conditions on the exchange.
This approach rewards those who directly enhance the protocol’s liquidity and activity, and ensures alignment between token holders and the success of the protocol.
The proposed allocation for incentives is 30% of the total $ZEX supply, with the rate of emissions designed to decrease gradually. This gradual reduction is aimed to align with the protocol's transition towards self-sufficiency and a broader distribution of its supply.
Traders will receive rewards in proportion to the Z-Score they achieve in each epoch. The Z-Score program will run in a similar fashion to the Season 1 and Season 2 implementation, except that Z-Score will no longer accumulate across seasons. Instead Z-Score will reset at the start of each new epoch.
The allocation of $ZEX tokens to a user at the epoch's conclusion will be calculated based on their individual Z-Score relative to the aggregate Z-Score earned by all epoch participants. The main driver of Z-Score is trading activity. In addition, gZEX holders will benefit from additional incentives in the form of boosting.
Refer to the latest Z-Score docs for more details: https://docs.zeta.markets/rewards-programs/trading-rewards-program
For each epoch, professional market makers will be rewarded for their role in creating optimal trading conditions on the exchange. The market maker program is designed to incentivize various liquidity metrics which enhance users’ trading experience. For more details refer to: Maker Incentives Program.
