Tokenomics

At launch, BTRFLY had an initial supply of 100,000 which was distributed through a triple Dutch Auction where OHM, CRV and CVX were raised. At launch, BTRFLY was a rebasing token whose total token supply was consistently increasing due to staking rebase emissions, bond emissions and DAO fee emissions.

In Redacted v2, Redacted has transitioned from rebase tokenomics towards a fixed supply cap of 650,000 tokens, more commensurate with its focus on products such as Hidden Hand and Pirex. Both of which generate organic yield for the protocol.

This shift towards more sustainable tokenomics is revolves around rlBTRFLY’s distribution of rewards to active users (from treasury farming and yield from Redacted products).

Figure 1: Cumulative Supply - Estimated BTRFLY token supply schedule

Figure 2: Estimated BTRFLY token share

Figure 3: Detailed emissions breakdown

The supply schedule includes a “high growth” period for 4 years to continue bootstrapping the protocol during this critical time in the protocol’s development. After this high growth period, there is a shift to a period of “low growth” of 6 years where tail emissions will continue supporting Redacted projects but protocol yield will drive protocol growth.

Founding Team, Olympus and Seed Purchaser Allocations

Founding team and seed purchaser have the same supply share as agreed upon in the v1 tokenomics.

Note: Olympus' share was cancelled per RIP-47 and is now included with the Pulse emissions.

Following a 6 month cliff from the adoption of the new tokenomics, the founding team is vested quarterly for 3 years based on the following back weighted vest schedule:

• Year 1: 15%

• Year 2: 35%

• Year 3: 50%

Seed purchasers have the same quarterly 3 year vest schedule but have no cliff.

Back weighted vesting promotes better long term holding than simple linear vesting. The delayed incentives ensure that the founding team continues to focus their efforts on protocol growth and development.

Pulse Token Supply

The pulse token supply represents BTRFLY allocated for strategic treasury initiatives:

• Incentivize current and future Redacted products, such as rlBTRFLY, Hidden Hand, and Pirex;

• Fund liquidity pools;

• Build our non-BTRFLY treasury, through mechanisms such as bonds, DAO swaps and other PCV building mechanisms; and

• Participate in seed rounds.

The pulse token supply is critical in helping the protocol to continue growing in the next few years from both a treasury, product, and user adoption perspective.

BTRFLY distributions that are allocated to the pulse token supply are not used immediately, but will be used as efficiently and effectively as possible as they are meant to incentivize adoption and grow the protocol until Redacted becomes fully funded by protocol yield.

DAO Reserves

DAO Reserves are funded by 15% of BTRFLY supply and 15% of protocol yield. These funds are used to fund all operational costs to the DAO, including:

• Team Compensation

• Audits / Bug Bounties

• Marketing Materials / Conferences

• Other: Any other operational expense to the DAO or any other cost that is not tied to acquiring an asset for the treasury. This includes dao-to-dao swaps, treasury raises, and derisking strategies to ensure that DAO reserves will have sufficient funds to continue operating the protocol after DAO reserves emissions end.