Economic analysis

Performance Mining

The performance mining program aims to reward ecosystem participants who are responsible for the network's fee revenue. The program's ranking system not only incentivizes participation in the network and its user growth, but also has two related goals:

1. Incentivize investment in the best performing funds on an objective basis.

2. Promote responsible and high quality fund management.

The objective is to promote and maintain long-term capital growth and maximize fee income generated for the network.

EGG staking

Rewarding EGG Stakers provides an alternative to buy-and-burn. A buy-and-burn rewards all token holders regardless of their alignment with the long-term vision of the project and represents a transfer of value equal to the value of the burned tokens to the remaining tokens.

Rewarding EGG stakers represents a targeted redistribution of value to ecosystem participants who engage in behavior that helps the network over the long term (i.e., by securing long-term supply and participating in governance). Compared to a buy-and-burn approach, this redistribution hurts those who do not staking their EGG tokens. However, this can be seen as a beneficial outcome and should result in a greater proportion of EGG tokens being stacked, as holders seek to avoid token dilution.

Furthermore, as EGG holders show their willingness and inclination to lock their tokens, it is possible that the redistribution of additional tokens to these participants will put additional upward pressure on the number of locked EGG tokens.

Revenue, Staking Reward Ratio and the Performance Mining Redistribution Cap

There are important dynamics at play when considering the potential evolution of fee revenue and the impact on the portion of network fees attributable to the stakers or the performance mining program.

The ever-decreasing cap on tokens that can be redistributed through the performance mining program means that, over time, network fees will naturally begin to favor the EGG stakers at the expense of the performance mining program to ensure that the interests of the early investors who helped build the network are fairly rewarded.

The downside, however, is that the resources available to the performance mining program may diminish over time. This reduces the positive pressure on investors and fund managers to invest in the best funds and strategies.

Fee revenue performance is an important consideration for the network's tokenomics. High fee revenues go hand in hand with high staking and performance mining rewards. However, sufficiently high revenues will result in a larger portion of these network fees being redistributed to EGG stakers when the performance mining redistribution cap is reached, rewarding stakers at the expense of subdued network growth, which is, however, already high. When revenue is low, the opposite effect occurs and more of the rewards go to the performance mining program.

Nevertheless, this shift is limited by the Staking Reward Ratio, which ensures that the network's stakers continue to receive a minimum share of network revenue.