Tokenomics

Two token model

D-Squared makes use of two tokens to encourage holders to stake and earn platform rewards and a share of fees:

• DSQ

• esDSQ

DSQ

The DSQ token is the utility and governance token of the platform. It also provides holders with claims on platform rewards, as 50% of the platform fees generated by the protocol are redistributed to token stakers at the end of every epoch.

Total Supply of this token will be 500,000 (500k). 200k were minted during the Private Sale in December 2022 and the remainder will be minted as required by the protocol over time.

Prior to the public sale, the following amounts of tokens have already been allocated:

• Pre Seed total DSQ tokens ==> 10687.499999999998

• Pre Seed total esDSQ tokens ==> 2137.4999999999995

• Private Sale total DSQ tokens ==> 6837.26000674216

• Private Sale total esDSQ tokens ==> 819.0266762403368

esDSQ

esDSQ is a non-sellable and non-transferable receipt given in exchange for locking DSQ, and also as platform rewards. It remains locked for twelve months, after which it can be redeemed for an equal number of DSQ tokens.

esDSQ has been used in special promotions during the Private and (upcoming) Public Sale as a way to incentive investment into the protocol.

DSQ Bonds

DSQ Bonds are a mechanism to raise money for D-Squared’s ongoing development and marketing costs without impacting the token’s market price. For presale backers, they offer an opportunity to unlock some liquidity by selling a portion of their vested tokens back to the protocol.

In DSQ Bonds, investors commit stablecoins upfront and receive vested DSQ from the treasury at a discount on market price. Proceeds support D-Squared operations and offer a constrained OTC buffer liquidity to the pre-sale participants..

Over 80% of vested tokens bought during the presale do not unlock until one year after launch. This means that, at most, 20% of pre-sale tokens are eligible for an allocation of DSQ bonds. The team allocation of tokens has the same lock conditions as the presale tokens.

Staking Leaderboard

Participants who consistently increase their token holdings (and stake them) will be rewarded with an increase in their “level” on our staking leaderboard. The leaderboard consists of 5 levels. Those at the highest levels are rewarded for their commitment by receiving fee reductions on our vaults and first access to the liquidity weeks (see Liquidity Weeks below).

Snapshots are taken periodically. A user’s staked token amount must be higher than the previous snapshot to ascend in level. This system incentivizes consistent long-term backing of the protocol.

Our staking contracts have been audited by Paladin Blockchain Security and can be viewed in the Audits section at the end of this document..

Liquidity weeks

Liquidity weeks are created to facilitate a viable exit strategy for the most loyal (level 5) investors who want to reduce their position before the one-year lock has expired. Liquidity weeks offer esDSQ holders the opportunity to swap their esDSQ for ETH OTC / ETH-based structured product (over the counter) to prevent large swaps from having any market impact.

Liquidity weeks will take place on average once every quarter and are managed by the team acting as a market maker on a discretionary basis.