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# Tokenomics
### Fair Launch and Community Build
The tokenomics of a protocol charts a course toward the decentralization and autonomy of that protocol. Given a common thread of its governance token to bind them, how does an amorphous community weave itself towards a tapestry? Tokenomics is not a series of binary “do or don’t” gates, but of incentives and self-governance as steering mechanisms to guide a community toward maximizing its utility.
A fair launch is a type of crowdfunding in the crypto space, where the project sells tokens to every participant fairly. A fair launch allows for equitable and fair distribution of tokens. The tokens are fully available to everyone for purchase at the same price.
In this article, we lay out our tokenomics framework, which builds on many good ideas that we saw over the last few years, including veCurve of Curve protocol and esGMX of GMX protocol.
No presale, no VC funding, that means there is no risk of a rug pull event occurring or community being used as exit liquidity. Tokens will be distributed through fair launch for community to participate in and encourage community members continuously contributing and holding. 
Our community is at the centre of our tokenomics and so we focus on (1) growth of value accrued to our community, (2) fair distribution of the accrued value, and (3) inclusive governance to deliver on the first two focuses.
### Platform Revenue Source
## Value accrued to our community <a href="#b486" id="b486"></a>
Platform revenue mainly consists of transaction fees. All transaction fees are paid in stablecoins, which protects the platform from the mark-to-market risk.
By value, we largely mean the monetary value accrued to our community, i.e. the revenue generated on our platform. So before we talk about its growth, let’s quickly go over what revenues we expect to generate at Uniwhale.
### Platform Revenue Distribution via Governance
Uniwhale is an oracle-based decentralized on-chain perpetual trading exchange where you can trade, with up to 200x leverage, BTC, ETH, and many mainstream crypto assets, directly from your wallet. So, much of its revenue comes from trading fees, which are:
Platform revenue will be shared among the platform users, the exact implementation of which is subject to the community vote. This helps the platform maintain deep liquidity and encourages long-term holding.
* Opening fee, that a trader pays when opening a position;
* Closing fee, that a trader pays when closing an open position; and
* Rollover fee, that a trader pays on the margin posted
### veCurve + esGMX = Uniwhale
[Opening and closing fees](https://docs.uniwhale.co/trading#fee) are 10bps at the time of writing. They are directly linked to the trading volume. For example, if the trading volume over a month was $100mn, then the platform revenue due to opening/closing fee for that month would be $100,000.
Our tokenomics builds on how the Curve protocol’s governance vote elected to distribute protocol revenues to CRV token holders and distribute rewards to different stablecoin pair pools to direct liquidity.
[Rollover fee](https://docs.uniwhale.co/trading#rollover-fee) is a fixed fee charged per block-height on the margin posted. The amount of the rollover fee a trader pays is proportional to the duration of the open position he or she maintains. The fee rate is different for each crypto asset and is updated periodically.
We also borrow from the successful escrowed emission model from GMX, where, instead of emissions being a liquid, transferable, governance token, escrowed, non-transferrable, token is used.&#x20;
So the value creation for our community hinges on our increasing the trading volume and trading revenue, and the supply distribution of our tokenomics is designed to achieve that goal. For example, 10% of our token supply is allocated to the token airdrops to early contributors of Uniwhale, [Uniwhale Genesis Pass](https://medium.com/uniwhale/g-e-n-e-s-i-s-p-a-s-s-uniwhale-f63e77344cf9) holders and targeted DeFi users. 40% of the token supply is allocated to community emission, specifically to reward those loyal traders and liquidity providers as well as our community.
### Referral and NFTs
## Fair distribution of value accrued <a href="#1da1" id="1da1"></a>
Unique ecosystem NFTs will allow any users to participate in liquidation bot and other strategy bot, as well as enjoy fee deduction and more.
Focusing on the growth of value accrued to our community is part of the story. What is equally important is a fair distribution of the value accrued. To that end, our tokenomics calls for a distribution of the value accrued to not only the long-term stakeholders but also to the liquidity providers, as well as reserving some to help the long-term stability of the platform.
By using referral code, traders will receive significant discount on trading fees, in the same time, more transaction volume and revenues benefit the LPs and holders to earn higher yield.&#x20;
## Inclusive governance <a href="#34af" id="34af"></a>
Uniwhale is a community-driven project, owned by our community. Tokenomics therefore must ensure that our value creation is directed by the wishes of our community and evolve based on that. Through community governance, our community can decide all matters relating to Uniwhale, including, but not limited to, opening/closing fee, distribution of value accrued, emission schedule, token supply and reserve fund.
## Three token system <a href="#79ee" id="79ee"></a>
To achieve such inclusive governance to drive value creation and its fair distribution, we introduce a three token system.
## UNW <a href="#427a" id="427a"></a>
UNW is our tradeable and transferrable token. Its holders can stake UNW to participate in the distribution of the value accrued as well as in the token emission. However, UNW is not the governance token. Its holders must convert UNW into esUNW in order to participate in the governance. UNW can be converted into esUNW anytime.
## esUNW <a href="#d62a" id="d62a"></a>
esUNW is our governance token. Only the holders of esUNW can participate in the governance of Uniwhale. It is a non-tradeable and non-transferrable token, that can be staked to participate in the distribution of the value accrued as well as in the token emission. Given its nature, its holders are subject to a higher percentage of the value accrued and the token emission, compared to UNW. The token emission is also in form of esUNW. esUNW holders can convert esUNW into UNW by locking up esUNW over certain period of time, over which esUNW will be converted into UNW linearly. Locked esUNW (for vesting) may be unlocked anytime. Locked esUNW also ceases to be subject to any distribution of the value accrued and the token emission.
## ULP <a href="#e3d6" id="e3d6"></a>
ULP is our liquidity pool token. It is transferrable. Liquidity providers mint ULP when they provide liquidity to Uniwhale. The number of ULP minted is proportional to the amount of liquidity you provide relative to the liquidity balance Uniwhale holds. ULP holders can stake ULP to participate in the distribution of value accrued and the token emission. ULP can be redeemed any time in stablecoins, subject to the minimum collateral requirement rule. The amount of stablecoins ULP holders receive upon redemption is proportional to the number of ULP tokens burnt relative to its outstanding supply.
## Token supply distribution <a href="#d577" id="d577"></a>
The maximum supply of UNW (and esUNW) is 100 million.
* Out of the maximum supply, 40 million (i.e. 40%) is allocated to emission in form of esUNW.
* 20 million is allocated to bootstrap the initial liquidity at the reserve fund.
* 10 million is allocated to the token airdrops to early users of Uniwhale, [Uniwhale Genesis Pass](https://medium.com/uniwhale/g-e-n-e-s-i-s-p-a-s-s-uniwhale-f63e77344cf9) holders and targeted DeFi users.
* Further 20 million is allocated to the community development (including marketing, partnership and contributors). This 30 million may be subject to milestone-based vesting.
* Finally, 10 million is allocated to provide initial liquidity of UNW as and when it is listed on other trading exchanges.
## Reserve fund <a href="#9548" id="9548"></a>
Black swan events can happen and do happen. So it is important that we as a community are well prepared for these. Reserve fund acts as a line of defence against such events and helps ensure our community grows in a sustainable manner. Reserve fund may also be used to strengthen the security of our community, for example, paying for the security audit or bug bounties. Initially, the reserve fund liquidity is bootstrapped by the 20 million allocation from the token supply. A portion of the value accrued will also be distributed to the reserve fund. Any and all creator fees from our NFTs including [Uniwhale Genesis Pass](https://medium.com/uniwhale/g-e-n-e-s-i-s-p-a-s-s-uniwhale-f63e77344cf9) will also contribute to the reserve fund.
## Closing remarks <a href="#19bb" id="19bb"></a>
Decentralization is our greatest strength, as it allows us to create an open and adaptive protocol that can evolve in entirely new ways. That decentralization begins with our tokenomics.
In this article, we laid out our tokenomics framework, focusing on (1) growth of value accrued to our community, (2) fair distribution of the accrued value, and (3) inclusive governance to deliver on the first two focuses.
Saying is cheap and doing is hard. And we have lots of doing ahead of us. And we call for all our community to participate in this evolving conversation and grow together!