Apollo DAO Tokenomics

The Apollo token is designed to benefit from the success of Apollo DAO, our DeFi products, as well as the success and growth of the wider Terra ecosystem and other L1 chains such as Solana, Cosmos and Ethereum. This is just an introduction to our tokenomics and we will continue to release more information in this area ahead of launch.

The Apollo token will have a total supply of 100 million tokens, which will be distributed over roughly 3 years. The aims of the Apollo token distribution are:

1. Fund the long term development on Apollo DAO
2. Distribute Apollo tokens to a large and diverse group of holders, decentralising Apollo DAO’s decision making
3. Attract users and TVL to the Apollo DAO DeFi platforms
4. Incentivise Apollo LPs
5. Bootstrap the Apollo DAO Warchest

The Luna stakers will receive 25% of their airdrop at the TGE, with the remaining 75% of the airdrop distributed monthly over 3 years. For the OG’s they will again receive 25% at the TGE and then 25% distributed monthly over 3 years. The remaining 50% of the OGs airdrop will be distributed to OGs through our NFT boosters (once they have been released).

The Community Farming Event will distribute 3 million tokens at a fixed price of $0.25, with 50% of these released at TGE and the remaining 50% distributed monthly over 1 year.

The Team and private sale investors will receive their tokens monthly over 18 months, starting 1 month after the TGE. The private sale round was at a token price of $0.15 and included Venture Capital firms, advisors, and angel investors. A total of 50 million Apollo tokens (50% of the total supply) will be distributed to the users of the Apollo platform over 3 years through our yield farming incentives.

In order to seed the initial liquidity; the Development Fund will send 2 million Apollo tokens to the Warchest, which will be combined with $500k UST raised through the Community Farming Event, to create $1 million worth of liquidity at a $0.25 starting price. We will decide where best to deploy this liquidity nearer the time, based on the different options that are available.

The circulating supply at the TGE will be 5 million Apollo tokens, with a further 1 million Apollo tokens reserved for the Bug Bounty program.

Apollo DAO benefits for holding Apollo tokens

Now the important questions, why would you want to hold Apollo tokens and what will you be able to do with them?

The first protocol that Apollo will be releasing is our auto compounder, which will be used to distribute Apollo tokens, bootstrap the Warchest and provide staking vaults for Apollo token holders. The benefits to the Apollo token from our yield optimisation platform include:

1. Governance:

Token holders will have the ability to choose which vaults to “Terraform” (increased rewards for a specific vault) and at what level to set the fixed rate distribution at, as well as the performance fee.

2. Apollo LP Vaults and zApollo:

The aim of the Apollo token design is to align incentives between Apollo protocol, our community, our users, our token holders and our LPs.

In order to best accomplish this, Apollo token holders and Apollo LPs will be able to stake and lock their Apollo tokens for zApollo tokens, utilising a similar tokenomics model to projects such as Curve’s veCRV and Pickle’s DILL token, while also providing the same benefits to LPs.

To acquire zApollo tokens, token holders would stake their Apollo or Apollo LP tokens in their respective vaults, with the longer they choose to lock their Apollo or Apollo LP tokens for, the more zApollo tokens they will receive. Rewards to stakers and voting power will be proportionally based on the number of zApollo tokens that users hold, providing the most benefit to our long term stakers.

Our zApollo and Apollo LP vaults will be released with our yield aggregator and will add immediate utility to the Apollo token, incentivising deep liquidity and locking of supply, while facilitating the creation of our governance token zApollo. We will also be adding additional functionality to the zApollo token at a later date, such as “Vault boosting gauges” to increase Apollo rewards.

Beyond our Yield Optimiser, Apollo DAO will provide a number of additional benefits to the Apollo token:

Apollo DAO’s aim is to drive value to the Apollo token, not just from the success of Apollo and our products, but also from the wider crypto ecosystem. One of the key ways we will do this is through the Apollo DAO Warchest.

The Apollo Warchest

There are a number of direct benefits of the Warchest on the Apollo token price, such as:

1. The value of the Warchest will be used to back the value of the Apollo token, creating a “soft floor” (where the value of the Warchest exceeds the marketcap of Apollo) and a “hard floor” (where the value of the Warchest exceeds the FDV of Apollo). However, as the Warchest is only one feature of Apollo, we expect Apollo tokens to maintain a healthy premium over the value of the funds held.
2. Initially all the funds directed to the Warchest will be used to purchase Luna, bEth and aUST. However, token holders can decide to change allocations to other Terra based assets (and in the future non-Terra assets). This could also include the decision to accumulate Apollo or Apollo LP tokens, providing constant buy pressure for Apollo and increasing liquidity.
3. The Warchest will invest in assets that we believe in the long term value of, so that DAO profits will continue to increase in value. We believe that Luna currently has some of the strongest tokenomics in the crypto space and therefore believe it would be beneficial for the long term value of Apollo tokens to have exposure to Luna as well as other Terra assets. We will also focus on accumulating other L1 tokens, such as Ethereum and Solana.
4. Similar to how Yearn has been able to benefit from their large holdings of Curve tokens to boost their vault yield, the Apollo DAO Warchest will be able to accumulate beneficial Governance tokens; for example Astroport tokens, in order to boost the yields for our vaults, or Mars tokens in order to vote for the listing of collaterals. With the huge variety of projects launching on Terra, we believe there will be increasing opportunities to accumulate these beneficial Governance tokens for the Warchest.
5. Yield farming opportunities with these assets means that the Warchest will have its own revenue stream independent of Apollo DAO and our DeFi Suite. The trend of releasing tokens through some form of “initial farming event” is becoming increasingly popular on Terra (Mine, Orion and Loop being the early examples). Apollo DAO will be well placed to take advantage of this trend.

As demonstrated by Apollo DAO’s recent inclusion in the Orion Money private farming, we have some great connections within Terra and the wider crypto ecosystem and we want to bring the benefits of these connections to our users. Therefore, the Apollo team and our advisors will strive to find the best farming opportunities for the Warchest, democratising and decentralising them for our community.

6. We believe this is just the beginning for the Terra ecosystem and while more complex and potentially risky than using capital to farm, the Warchest can be used to fund new projects, collaborations and investments, with the profits being returned to the Warchest.

The long term aim of the Apollo DAO community will be to increase the value of the Warchest, leveraging the community’s knowledge, connections and decision making power to uncover and make use of the best farming and investment opportunities across the whole crypto ecosystem.

Apollo DAO Governance

While there will be a number of Governance decisions to make specifically in regards to our yield optimisation platform, the Apollo team will also focus on increasingly decentralising the decision making of Apollo DAO. We will focus on enabling community members to create proposals and vote on things that are financially beneficial to both Apollo DAO and our community, with much of the early focus on the management and deployment of the Warchest.

Apollo DAO Metagovernance.

As Apollo DAO will hold Luna and potentially other Terra based Governance tokens in its Warchest, this will provide Apollo DAO voting influence over these protocols. The Apollo token will enable metagovernance by allowing holders to decide how to use the DAO’s voting power. Apollo will also be able to use this voting power strategically, helping to shape the Terra ecosystem, before expanding to other ecosystems. This voting power would be another reason that Apollo DAO could become a valuable partner to other protocols looking to launch on Terra.

Performance Fee:

The performance fee is how Apollo DAO will bootstrap the Warchest. The way this will work is Apollo will take a performance fee when auto compounding, compensating this fee with Apollo tokens and sending 99% of revenue to the Warchest. The base performance fee (with no Apollo tokens) is set at 2%. With the launch of Apollo tokens, this will be increased to between 10%-20%. To keep things simple the performance fee will initially be fixed, but in the future it will be decided on by token holders. The way that the Apollo distribution is designed is that users will never receive less value in Apollo tokens than is taken in the performance fee.

For example, if $100 is taking in performance fees, then at the very minimum $100 will be distributed in Apollo tokens, and potentially higher, depending on the parameters that have been set. If the performance fee is ever higher than the value of the max amount of Apollo tokens to be distributed, then the excess performance fee will be used to buy back Apollo tokens and provide these to the users, to ensure they are always compensated.

Tactical Apollo token Buybacks

The basic premise is that a percentage of the warchest profit can be used to buy and hold Apollo tokens, based on the “soft” and “hard” floor price. These buybacks will be set by the token holders, however I have included some examples of how this could work below.

The “Soft Floor” price is where the value of the Warchest is greater than the marketcap of Apollo. This could (for example) initiate token buy backs of 1% of the Warchest value per week (spread over time, to avoid people gaming this). The “Hard Floor’’ price is where the value of the Warchest is greater than the FDV of Apollo. All tokens below this price could be purchased by Apollo.

There is two fold reasoning behind this:

1. A low MC to WC and FDV to WC ratios signify the Apollo token is fundamentally undervalued
2. The amount of revenue being generated will be able to have a big impact on token price, boosting the price of the reserves it has already purchased.

Once Apollo tokens have been accumulated at these prices, Apollo holders will be able to vote on what to do with these tokens. The three options are:

1. Lock as zApollo tokens
2. Use as LP for Apollo and lock LP tokens for zApollo
3. Return tokens to distribution, in order to generate more value for the Apollo Warchest

Warchest Vs Profit Sharing:

Liquidity incentives can’t last forever and therefore in the long run Apollo DAO’s revenues will be required to sustain incentives. This is why Apollo DAO will build a Warchest early on (roughly over 3 years), which will be actively managed by token holders to maximise returns and earn yield on these holdings. As Apollo token rewards decrease over time, there will be an increased percentage of the generated revenue that goes to Apollo LP providers and Apollo Vault users over going to the Warchest.

This will depend on the Apollo token price performance. A strong token performance and more profit can go to the Warchest, or a slower Apollo token price growth and profits can be used to increase liquidity and price. For example:

• Year 1: 100% to warchest
• Year 2: 90% to warchest, 10% to reward zApollo stakers
• Year 3: 80% to warchest, 20% to reward zApollo stakers
• Year 4: 60% to Vaults, 30% to reward zApollo stakers and 10% to Warchest

Conclusion

The Apollo token is the core of Apollo DAO everything that we do is designed to drive long term value to the Apollo token.The Apollo token is designed to benefit both from the overall success of Apollo DAO, as well as gain value and benefit from each of the DeFi protocols that we release, beginning with out Yield Aggregator, but we will also soon be releasing our MultiSig wallet and in the future, Apollo Flows, while we continue to develop these and other exciting Apollo protocols. The long-term aim of Apollo DAO is to become fully decentralised and owned by the Terra community.

We will be releasing more information on our distribution plans soon, as well as a number of other benefits, such as the yApollo token and the NFT boosters we plan to release.

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