Coming to the everwave ecosystem, you will probably have many questions about where the DAO tokens ($WVE) come from, where they go, how they transit from one party to another etc. This blogpost is meant to bring clarity to our tokenomics, and help you understand what the $WVE token stands for, how the DAO tokenomics are structured in a way that allows for fine tuning, and what it means to be a $WVE token holder. We will explore in detail all the ways a $WVE token goes out from the DAO controlled pools, and all the ways it goes back to DAO controlled pools.
$WVE is an SPL token. SPL is the token standard for tokens living on the Solana blockchain, just like ERC-20 is a standard for tokens living on the Ethereum blockchain. $WVE has a supply of 1,000,000,000 units, and 9 decimals.
The $WVE token is split between 6 pools:
Half of these pools will get used up over time, and never get replenished:
The other half will be involved in the DAO tokenomics. We will go over those tokenomics later in this blogpost.
There are several occurrences where a token is going to come out of a pool, into the market. Let’s go pool by pool and examine those cases.
The tokens contained in the DAO treasury will be used for 1 main purpose: compensating people performing work for the DAO. This can be achieved by giving away $WVE, or by converting $WVE token into a Solana based stablecoin (USDC/USDT). In case we give away directly $WVE token, the impact on the market will be fluctuating as some recipients might decide to hold on to their tokens while some others might decide to sell immediately. In case we convert to USDC/USDT, then the impact will be immediate, as this transfer will happen on the open market. The DAO treasury might find utility in use cases other than compensating people for performing a task for the DAO, but in all cases it’ll be subject to a vote from the community members.
The tokens contained in that pool will be used to incentivize music creation through everwave. At the start of each wave, we’ll lock an amount of $WVE tokens coming from that pool into a smart contract. Once a Wave is complete and participants decide to stop that Wave, those same participants will be able to claim an airdrop in $WVE tokens, unlocked by the smart contract. Participants rewarded this way will be able to either reuse those newly acquired tokens in the app ecosystem, sell them on the open market, or just keep them in their wallet.
The tokens contained in this pool will be gradually distributed to team members over a period of 2 years. Once team members are able to claim these tokens and receive them in their wallet, they’ll be free to sell them on the open market or hold them.
The private sale pool is similar to the Team Bonus pool. Tokens included in this pool will be distributed to accredited investors who have bought $WVE tokens through our private token sale. The tokens in this pool are vesting over an 18 months period.
We have decided to set up a Scholarship pool in order to be able to onboard musicians with limited financial means. $WVE tokens from this pool shall be distributed to selected candidates, upon approval by a community issued committee. The amount of tokens distributed to the selected candidates will allow them to participate on everwave, keeping these tokens in the app ecosystem.
$WVE tokens from this pool shall be used and distributed to selected beta testers who will help us get some early data and user feedback about the v1 of everwave and make the final tweaks, before we open up to the general public.
Now that we have established all the ways a $WVE token might end up on the market coming from the original pools, let’s see how, through our tokenomics and the app ecosystem, some pools might get replenished along the way.
$WVE tokens enter the app ecosystem through users. In the following examples you'll see how the $WVE token interacts with the app.
Our app and community are token gated. This means that in order to access the app or our community on discord, one of the prerequisites is to have a minimum amount of $WVE tokens in your wallet. The idea behind this is to build a community that has “skin in the game”. These $WVE tokens will stay in the user’s wallet - we won’t ask the user to send them to us or anything else. They won’t circulate in the app ecosystem, but they will serve as an access key to our community.
Token gating related to a token has historically brought up an obvious problem: once the token used to gate the community rises in dollar value, then the price to join the community becomes prohibitive. This is a problem that has been difficult to solve, as lowering the amount of token units needed to join the community usually leads to a dump on the market, which lowers the dollar price of the token and makes existing holders unhappy. The main reason this happens is because the token often has no clear utility besides gating the community, allowing governance and being an avatar for the value of the project. In everwave’s case, the $WVE token has a utility beyond the ones mentioned above, and there’s an incentive to keep your $WVE tokens to participate in the creation of waves, even when the token gating price is lowered. The stem upload fee explained below is one of them.
As a musician, whenever you want to upload a new stem, you’ll have to pay a small fee in $WVE token. This fee serves different purposes and is structured in a way that will be seamless to users. It serves as both an anti-spam structure & a way to have the $WVE token circulating and re-allocated according to the DAO’s desires.
We know that implementing a system like “creativity mining” could potentially attract bad faith actors trying to farm rewards by uploading tons of low quality stems in the hopes of having at least one of them included in the wave. The upload fee here is meant to deter those actors by making this behavior increasingly expensive. The other merit it has, is that the fee can be rerouted in multiple ways. For now, every time a stem upload fee is paid by a musician, it will be redistributed in the following manner:
The interesting thing here is that we see these percentages as a control board that the DAO can access, and tweak at any time. For example, if tomorrow the community decides that a special emphasis should be put on replenishing the creative reward pool, it can decide to decrease the percentage of tokens burnt from 70% to 10% for example, and change the percentage of tokens going to the creative reward pool to 70%. This brings extreme flexibility to the DAO, and it’s therefore also one of the reasons why we have this stem upload fee implemented.
Utilizing a combination of:
1/the DAO's ability to modify the amount of token necessary to upload a stem
2/the DAO's ability to modify how those fees are being used
We can really fine tune how the tokenomics of the DAO work, and help it achieve success.
We also mentioned that this fee would be seamless for users, and there’s a very simple reason for that. As a Musician, whenever you upload a stem onto the system and therefore pay an upload fee in $WVE tokens, there are two possible outcomes to that action:
1/Your stem gets used by a Producer and is included in one of the Versions that will compose the wave
2/Your stem is not used by any Producer, and you’re not part of the Wave that gets eventually minted as an NFT
In the first case, because your work is included in the Wave, you’re able to claim the Creative Reward. We have designed the stem upload fee to be very low, so that if you’re an artist who had to spend $WVE tokens to upload stems, and eventually receive a token airdrop, the token airdrop would exponentially outweigh the upload fee. This is the reason why we believe it would be neutral for users in this first case.
In the second case, you would be reimbursed all the upload fees you spent during the process. We are not trying to farm upload fees from users, so if you have uploaded a few stems but none of them have been picked by a producer, we would send your $WVE tokens back to you so you can participate in the next Wave without having to spend any more. However, if at least one of your stems get included in a Version that is part of Wave, opening you to eligibility for the creative reward, you wouldn’t be reimbursed for the stems that have not been included. Even in such a situation, the final reward should still largely exceed the upload fees, making the whole system neutral for users.
Once the creative reward is distributed, we will move to the NFT minting phase. The Wave, as well as a series of community selected Versions, will be minted as NFTs and sold through auction on our marketplace. As described in the creativity mining article, while most of the revenue generated by these sales will flow back to the creators, a portion of this value will flow back to the DAO’s control and be redistributed to some of the pools, most likely the Creative Reward pool in order to incentivize the creation of new music. Through this mechanism we will have a net inflow of $WVE tokens in the DAO.
As explained in our previous blog post describing governance processes, music created collaboratively through everwave will be managed collaboratively through the DAO’s governance. With each Wave created, we will have a series of community selected Versions that will end up being exploited on traditional Digital Service Providers (DSP) such as Spotify or Apple Music. The revenue generated by the streaming of these Versions will be sent to the everwave DAO on a monthly basis. The first thing that will need to be done is to convert these revenues from fiat dollars to $WVE tokens. Indeed, we’re not asking our users for their personal bank account information and don’t intend to redistribute this revenue through bank wires. Instead, the DAO will convert these fiat dollars to $WVE tokens. $WVE tokens acquired in this manner will serve as a basis to calculate the redistribution. A small fraction will go back to the DAO treasury, and the rest shall be redistributed to artists who’ve participated in the creation of the piece of music generating these revenues, according to the split information recorded in the corresponding NFT’s metadata.
This conversion phase is important and beneficial to the DAO & its artists for the following reasons:
-As artists keep creating music together through the DAO, the number of Versions being exploited through traditional DSPs will keep growing. This means that the amount of revenue generated off-chain should keep growing as well, leading to an increasing buying pressure for the $WVE token on the market, as the DAO converts that revenue to $WVE tokens for on-chain redistribution. Artists, who are $WVE token holders, will benefit from this market buy pressure, as well as the DAO which holds $WVE tokens in its treasury.
-Once converted tokens are distributed to artists, there will be 3 possible outcomes:
1/ The artist sells their $WVE tokens on the market right away.
2/The artist uses these $WVE tokens to keep interacting with the app and participate in the creation of new waves.
3/The artist will hold these $WVE tokens in their wallet.
Because of these different potential outcomes, we see clearly that the amount of purchased $WVE tokens on the market during the conversion phase is highly likely to be bigger than the amount of tokens sold on the market after distribution, thus creating a recurring net positive buying pressure for the $WVE token on the open market.
everwave’s tokenomics are complex, and there are many ways for a $WVE token to go in and out of the app ecosystem. It can flow through the user’s hands, go through the open market, land back into a DAO-controlled pool, etc. The everwave governance is designed in a way that allows for a granular approach to how the value-flow is controlled by the DAO. By having artists as main decision makers of the DAO and mechanics which allows fine tuning of the tokenomics, we make sure that creators, who are the ones who drive the value of the DAO-controlled-assets up, are also the ones who decide how this value is distributed. With everwave, we want to create a sustainable environment where creators are the masters of their own destiny.