boxFEE tokenomics
Introduction
Staking the Cat-in-a-Box fee token, called boxFEE, is an opportunity to gain exposure to fee income from user deposits by earning a portion of their staking yield.
Pre-sale and tokenomics
In order to bootstrap the Cat-in-a-Box protocol, boxFEE tokens are being sold on Uniswap at a 90% discount compared to the post-launch buying price and the ultimate maximum backing of the token in boxETH.
All the ETH from this sale will go towards creating a liquidity market for the like-kind synthetic that the Cat-in-a-Box protocol creates, called boxETH. This is the token which people can borrow against their collateralized debt position (CDP).
When boxFEE is staked, the fee token users accrue rewards in the form of the boxETH. Platform fees are taken from the yield generated by staking income of deposited funds and start at 1% + up to 25% depending on the global CDP system debt. The higher the global system debt the more the fees will trend towards 26%.
Value backing
Whilst boxFEE can be sold in the secondary market they can also be burned for boxETH directly within the protocol, post-launch, to guarantee a minimum value for holders who require exit liquidity. The minimum value backing accrues over time as boxFEE are bought through the protocol.
Users known as Resolvers also contribute to the backing by paying fees using boxETH. These fees are used to buy boxFEE tokens which are sent to the protocol treasury multisig. Users who burn their boxFEE will be able to exchange their boxETH for stETH upon exiting. BoxETH will always have a minimum stETH value through the self-balancing protocol design. It can always be used to buy stETH that is securing the CDP’s debts at a minimum price of 0.9 stETH per boxETH and a max price of 1 stETH per boxETH depending upon that CDP’s health rate.
Advantage for pre-launch boxFEE holders
BoxFEE will be available to purchase at a 90% discount pre-launch via the Uniswap V3 concentrated liquidity pool.
Fee token holders can exit via burning at any time. There is no vesting or minimum lock-up period. For those who cannot wait for the full 10x potential backing to accrue they can simply exit early accepting whatever backing is available at the time.
The benefits for boxFEE holders who do not exit early are two fold:
- The more holders that exit, the less participants remain to share protocol fees
- The less holders there are in the system the quicker the backing will accumulate for those remaining.
Post-launch
After the presale the entire liquidity for ETH/boxFEE is removed from the Uniswap LP. The ETH will go towards creating concentrated liquidity for boxETH within a Uniswap V3 ETH/boxETH pool. The unsold boxFEE (if any) will be kept in the treasury and eventually burned if no protocol swaps are made at the initial sale price through partnerships with other protocols to raise additional liquidity.
boxFEE tokens can be minted at any time after the initial sale at the price of 1 boxETH per 1 boxFEE. The boxETH tokens are used to mint boxFEE tokens which are sent to the treasury. This benefits pre-launch holders since it contributes directly to the backing and exit liquidity of boxFEE when burned through the protocol. It also creates upwards price pressure on boxETH, creating scarcity for it as these tokens are not tradeable on the liquid market in order to back boxFEE.
Conclusion
Cat-in-a-Box boxFEE tokens accrue value in 2 ways.
- Stake boxFEE to earn boxETH from stETH protocol fees.
- By the minting of new boxFEE, increasing their backed value in relation to the pool’s exit liquidity.