Every DeFi protocol has its own protocol token, and the ApeX protocol is no exception. Its native token, $APEX, is built upon Ethereum. The contract address is:
0x52A8845DF664D76C69d2EEa607CD793565aF42B8
Tokenomics is a key concept that describes the math and incentives governing each crypto token, covering topics such as distribution, issuance and circulation. A well-designed tokenomics effectively incentivizes all parties within the ecosystem to participate in the construction and development of the protocol by consolidating economic interests. In this article, we will dive into the tokenomics behind the ApeX protocol.
The ApeX team is well aware that many community members are interested in learning more about ways to claim $APEX. In a nutshell, all holders of ApeX Predators NFT can get $APEX by burning their NFTs once the ApeX NFT game starts. Otherwise, ApeX NFTs can be purchased directly on OpenSea.
We‘ve also launched the first $APEX airdrop campaign with a total amount of 200,000 $APEX up for grabs. All ApeX NFT holders also are eligible for the campaign.
Once the Token Generation Event (TGE) starts, users may directly trade and buy $APEX on CEX and/or DEX. Users can also participate in our bonding and staking events to claim $APEX. We’ll dive into these two topics later.
Tokenomics
The total supply of $APEX stands at 1,000,000,000, allocated as follows:
15% of the supply is reserved for the ApeX team, or 150,000,000 $APEX, with a 12-month cliff and a vesting period of 24 months. In other words, it will take a total of three years to unlock $APEX. No $APEX can be unlocked in the first year, and $APEX can be unlocked linearly starting at the beginning of the second year.
The amount of $APEX reserved for the team is similar to equity in a company. As such, the vesting period for team members who join late will be extended accordingly. For instance, member A joins the team at the very beginning, and his cliff period will start from the time when TGE starts. His $APEX will start to be unlocked linearly one year thereafter, and fully released within three years. Assume that member B joins the team one year after the TGE starts, his cliff period will therefore start one year after the TGE starts.
Given this, it’s likely that it would take more than three years to fully unlock the 15% of $APEX tokens reserved for the team. With a certain proportion of $APEX reserved for the future team, talents will be continuously attracted to participate in the development of the ApeX protocol.
Early Investors refer to investors in the seed round. In other words, 8% of the total supply of $APEX is allocated to Dragonfly, Jump Trading, Tiger Global, Mirana, CyberX, Kronos and M77 Ventures. These tokens will also have a one-year cliff and a vesting period of two years. That is, their $APEX will start to be unlocked linearly after one year, and can be fully redeemed after two years.
The strategic DAO allocation, which accounts for the largest portion of 77%, is used for the development of the DAO ecosystem. Within this sphere, tokens will be allocated to holders of OG NFTs and Predator NFTs.
- $APEX allocated to Predators NFT holders: 4,560 X 4,500 = 20,520,000 $APEX
- $APEX allocated to OG NFT holders: 20 X 1,041,666 = 20,833,320 $APEX
A total of 20,520,000 $APEX will be distributed to holders of Predators NFTs. These tokens will be released gradually as users continue to burn their NFTs after the ApeX NFT Game starts. Because the game lasts for a total of six months, these tokens will be released within six months. If some NFTs are not yet burned after the game ends, the release period of these tokens may be extended.
A total of 20,833,320 $APEX will be distributed to holders of OG NFTs, which will be released in one year. The cliff period will last for half a year, with no $APEX unlocked. After the cliff period ends, $APEX will start to be released linearly within half a year.
In addition, there are three key modules: mining, bonding and staking with a total vesting period of 48 months, or four full years. Mining means that users can get $APEX via derivatives trading on the ApeX protocol. We’ll focus on the mechanism of bonding and staking in the next few chapters.
Bonding
Bonding allows users to purchase $APEX at a discount rate. Assume that the market price of $APEX is 1 USDT, and the discount rate for bonding is 5%. In this case, users who participate in bonding can purchase the $APEX for 0.95 USDT.
The $APEX purchased, however, will not be immediately credited to the user. There will be a lock-up period of 15 days, and the $APEX purchased will be linearly released to the user over this 15-day period.
The basic token offered by the user to purchase $APEX will be invested into the eAMM pool directly for liquidity provision. As a liquidity provider, the user now acts as the PCV treasury of the ApeX protocol.
The bonding mechanism is as follows:
Each bond pool has its own corresponding eAMM. While eAMM pool is permissionless and can be created by the user, the bond pool must undergo an audit process before it can be created. The $APEX used for bonding will be pre-invested into the PCV treasury.
For users who participate in bonding, the type of token they need to offer depends on the eAMM pool. For instance, if the bond pool is bound to the WETH-USDC eAMM pool, the token users offer must be WETH or ETH. If the bond pool is bound to the WBTC-USDC eAMM pool instead, the user must offer WBTC instead.
The $APEX price for bonding is derived from the bond price oracle, which is in turn determined by Uniswap V3. To avoid price manipulation via flash loans, however, the market price on Uniswap V3 will not be used directly by the bond price oracle. Instead, it will calculate the 24-hour time-weighted average price (TWAP) as the reference price for bonding. The amount of $APEX issued to each user who participates in bonding depends on the time-weighted $APEX price, the amount of token offered by the user, and the discount rate.
Once the tokens offered by the user are successfully invested into the bond pool, they will be added to the eAMM for liquidity provision. The bond pool will mint LP tokens, which will then be transferred to the PCV treasury. The user will earn $APEX that can be unlocked linearly. All $APEX tokens that’ve been successfully unlocked can be withdrawn to the user’s account.
Let’s run a quick example to help you better understand the process. Assume that there’s a bond pool that’s bound to the WETH-USDC eAMM pool, and the discount rate for bonding is 5%. In this case, the user who participates in bonding can offer either ETH or WETH.
The time-weighted $APEX price is now 1 USDT, and the time-weighted ETH price is 3,000 USDT. The user, in this case, can purchase 3,157 $APEX (3,000 / 0.95) using 1 ETH instead of the standard 3,000 $APEX (3,000 / 1). The 3,157 $APEX will be locked for 15 days, or 360 hours (15 X 24). As such, about 9 $APEX (3,157 / 360) can be unlocked linearly per hour. If the user claims his/her $APEX after two hours, he/she can claim up to 18 $APEX (9 X 2). If the user decides to claim the $APEX after 15 full days, he/she can claim all 3,157 $APEX all at once.
Bonding is the main mechanism adopted by the ApeX protocol to implement Protocol Controlled Value (PCV). These eAMM pools, which support bonding, help ensure stable liquidity. For the user who participates in bonding, he/she can buy $APEX at a low price, despite a short lock-up period.
Staking
ApeX’s staking mechanism is as follows:
The following tokens are supported for staking:
- ApeX-ETH slp: token earned by providing APEX-ETH liquidity in other DEX (i.e Uniswap, SushiSwap, etc.)
- ETH-alp: token earned by providing liquidity in the eAMM
- esApeX: token earned by participating in ApeX staking
- ApeX: native token of the ApeX protocol
The first token that supports staking is the NFT LP token that provides liquidity in UniswapV3, and staking must be done via izumi.finance. The second token is APEX-LP that users can get via liquidity provision in eAMM pools, and staking can be done directly on the ApeX website.
$APEX cannot be claimed immediately if the user stakes the first two types of tokens. Instead, the user will get esApeX, which must be vested again to claim $APEX. In addition, the user can also stake his/her esApeX or directly stake $APEX. Once done, the user will also receive esApeX as the staking reward.
The staking pool that supports the first two types of tokens is referred to as the core pool, while that for the last two types of tokens is called the fee pool. By staking in the fee pool, the user can get both esApeX and veApeX.
Holders of veApeX are entitled to two rights. First, the user can earn a share of the trading fees incurred in the protocol. Second, the user holds voting rights and can participate in the governance of the DAO.
On the ApeX protocol, the user will pay a fee of 0.1% when trading derivatives contracts, and 90% of these fees will be collected as the protocol fee and auto settled on a weekly basis into ETH equivalent. One-third of the ETH will be distributed evenly to holders of veApeX.
For the security of the ApeX protocol, the user will only be entitled to the ETH fee reward if he/she has esApeX and/or $APEX staked. Once unstaked, the veApeX will also be recycled.
Similar to a traditional bank’s savings rate, staking on the ApeX protocol has flexible and fixed terms. Fixed rates will be slightly higher than floating rates. The longer the term, the higher the floating rate. Assume that the user stakes the same amount of tokens. If he/she chooses a flexible term, the rate will be lower. If he/she chooses a fixed term of one year, the rate will be the highest and the user can claim more staking rewards.
Please note that esApeX is a token within the protocol. If you want to use it outside of the ApeX protocol, esApeX must be converted into $APEX first at a ratio of 1:1. To ensure stability, however, the exchange will have a vesting period and the converted $APEX can only be retrieved after the vesting period ends. If the user chooses to force withdraw $APEX ahead of time, loss and penalty shall be imposed. The further the end of the vesting period, the larger the loss. For instance, if the user chooses to force withdraw his/her $APEX right before the vesting period ends, he/she may be able to claim 0.9 $APEX with 1 esApeX. Alternatively, if the user chooses to withdraw his/her $APEX way before the vesting period ends, he/she may be able to claim 0.5 $APEX only with 1 esApeX.
Conclusion
The tokenomics of the ApeX protocol is fully audited and well-established. As can be seen from the allocation ratio, the strategic DAO allocation has the highest proportion and it aims to bring more value propositions to our community members. The vesting period lasts for a total of four years, which can incentivize long-term and continued involvement of all parties. The three core modules — mining, staking, and bonding — aim to further facilitate the growth of the ApeX protocol. In other words, the $APEX token serves to empower its own protocol, essentially differentiating itself from other protocol tokens that focus predominantly on voting rights.
