What is the Token Utility?
The utility of the token is two-fold;
Governance: Token holders will be able to vote on product features, token utility, types of auctions and even decide which projects get to be featured by Polkastarter
Fees: Transaction fees will be paid in $POLS
Other forms of utility include the following:
Token pools on Polkastarter will incur a fixed fee, paid by the pool creator. If a pool creator receives 1000 DOT worth of a token and the fee is fixed at 1%, 10 DOT will be deducted from his purchase and added to the staking reward pool.
Staking rewards will also be distributed in 24-hour cycles. If a user holds 2% of the total staked POLS during that 24-hour cycle, that user will get the equivalent of 2% of all the staking rewards for that same period. If during that period Polkastarter generated 10,000 DOT, that user will get 200 DOT.
Polkastarter network users are only eligible for staking after providing liquidity to the Polkastarter pools. Contributors can lose their staking status if they stop providing liquidity to the network.
For high-demand pools, access can be limited to the top liquidity and network contributors. Password protection and whitelisting are potential features that could provide additional limits. However, to best align the interests of the entire Polkastarter community, the POLS token can be used as a coordinating mechanism.
For instance, if community members want access to certain token pools, they must stake POLS tokens. Of course, token pool creators have full autonomy over this process. For projects that use the Polkastarter platform, our goal is to craft diverse token holder communities loyal to the project and invested in its long-term success.
Pool creators can activate POLS staking to limit pool access exclusively to POLS holders. The incentive for this type of behavior from the pool creator is a reduced fee on the total swapped funds.
The Polkastarter governance framework aims to build a solid and sustainable protocol for development and usage. POLS holders will be able to vote for ecosystem initiatives, new features development, liquidity rewards distribution specs, and other applications.
POLS holders need to stake POLS in order to be able to vote and to submit proposals. Proposals will be first discussed off-chain on the Polkastarter governance platform. The idea of this pre-voting mechanism is to promote proposal discussion before on-chain submission.
Once the proposal is ready to be submitted, there will be an on-chain vote. Every winning proposal is then reviewed and applied by the Polkastarter development and management team.
To incentivize participation in the daily token pools, we are launching a liquidity mining program concurrent with the minimum viable product (MVP) launch in Q4 2020. This program will distribute a fixed amount of tokens daily.
The way this distribution will work is simple. Let’s look at the initial Ethereum-based MVP. Everyday X tokens will be distributed for all liquidity providers on a pro-rata basis. If there is a 1000 ETH swap volume for 24 hours, a user that contributed with 100 ETH in volume will receive 10% of the total daily liquidity rewards.
Liquidity providers can claim their reward after 24 hours and will have 7 days to claim their reward tokens on the Polkastarter dashboard. Unclaimed tokens will be sent back to the rewards pool for later distribution.
Tokens for liquidity mining will be taken from the Liquidity Pool. We are minting a total of 100,000,000 POLS and 22,500,000 (22.5%) will be destined for liquidity. Liquidity includes liquidity providing for secondary markets, but also the liquidity mining rewards. Total liquidity mining rewards are yet to be determined.
The exact reward structure will be revealed prior to the MVP launch and it’s going to include higher rewards in the beginning and a gradual decrease in the daily reward over time.