Openfund Tokenomics
Last updated
Last updated
Like most projects in crypto, Openfund has a token, called $openfund, which trades directly on Openfund itself (with a novel order-book AMM to provide ample liquidity). However, unlike most tokens in crypto, the Openfund platform uses 100% of trading fees to buy and burn $openfund, providing a fundamental floor on its market value. In this section, we describe the exact economics of the $openfund token, how it was initially distributed, and how its governance works.
Openfund’s fundamental value proposition is simple: Charge a fee on DEX trades, and use 100% of the fees to buy & burn $openfund tokens. An on-chain vote already activated the fee switch, and set the initial trading fees to 10 basis points, competitive with other spot exchanges. By the time these docs go live, the fees should be active on all markets, and the buy & burn should be started. In addition, note that DEX fees for Openfund trades accrue to $openfund irrespective of whether tokens were launched on Focus or some other launchpad, thanks to the fact that all trading is fully on-chain.
How much in fees could Openfund earn? It is useful to consider how meaningful this can be, and what this could mean for the floor value of the $openfund token (noting that tokens in crypto typically trade at a significant premium to their fundamental floor value).
Importantly, people tend to under-estimate how much bigger the market for a decentralized order-book spot exchange can be when compared to a centralized one. Until today, all decentralized spot exchanges have operated by the vastly inferior liquidity-pool model, on chains with high gas fees and legacy infrastructure like Ethereum and Solana, thus making it difficult for them to take market share from centralized exchanges like Binance. Meanwhile, while they have invested in special-purpose blockchains, perpetuals exchanges like DYDX and Hyperliquid don’t even support cashout to anything other than USDC, have high funding rates, and will never support long-tail tokens or instant permission-less listing. Openfund is truly the first platform that matches centralized and decentralized exchanges feature-for-feature, creating the first truly global order-book that all of the world’s liquidity can easily and seamlessly access. If Openfund is successful, it is quite possible that all tokenized assets, including real-world assets, will eventually transition to being traded on Openfund, expanding the market for trading tokens far beyond what it is today.
Nobody was ever given $openfund tokens for free, including the team. There was no team allocation. Every single initial holder of $openfund had to purchase their tokens for DESO during a pre-sale event in 2022 that was completely open to the public. In that public pre-sale event, the price of $openfund was approximately 0.001 DESO per token, and thousands of people participated, resulting in approximately ~90k DESO being committed, and ~95M $openfund tokens in circulation (the same as is in circulation today).
Of the DESO committed during the $openfund public pre-sale event, none was kept by the team or even used to develop the project. Instead, 100% of the DESO raised was committed to support a “floor bid” of 0.001 DESO per $openfund token. This floor bid commitment is still in place today, and can be partially seen on the order-book on the $openfund market if you scroll down far enough. However, the order placed on the DEX is only a portion of the total committed. The remainder was allocated to be staked via an on-chain vote (on-chain voting is discussed in the governance section). Regardless, the DESO committed during the initial pre-sale event is fully committed to the holders of $openfund tokens. Later on, it can even be allocated to a buy-and-burn by an on-chain vote if desired.
There are no plans to increase the supply of $openfund, and doing so would require passing an on-chain vote, with a plurality of token-holders voting yes, and explicitly approving the usage of the new tokens (on-chain voting is discussed in the governance section). What’s more, there is no $openfund in circulation other than the amount that was initially purchased, and all tokens have been fully unlocked from day one. There are no lockup schedules, and therefore no major holders waiting to dump as soon as their tokens become liquid. The circulating supply is equal to the fully-diluted supply.
The total supply and current distribution of tokens can be seen on Openfund itself (scroll to “Holders”) or on any DeSo node. We note that every holder has an on-chain social profile, with the ability to message them on-chain as well, thanks to DeSo. No other token that we’re aware of lists so much social metadata with each of its holders, let alone gives you the ability to message them and get to know them. Just from looking at the on-chain holders list, it should be clear that no individual wallet owns more than ~20% of the total supply, and that the top holder is Nader Al-Naji, the creator of the DeSo blockchain, who purchased his tokens on the exact same terms as everyone else.
All this raises an important question: If the team has no allocation, and if the team receives none of the committed DESO, then what motivates the team to continue developing the Openfund platform? There are two reasons: First, although the team was not given an initial allocation, they were allowed to purchase tokens from the public pre-sale event at the same price as everyone else. This resulted in a decent ownership percentage for the team, noting that the vast majority is owned by non-team individuals. In addition, however, the team developing the Openfund platform is the same team that is developing the DeSo blockchain, which powers Openfund. The success of Openfund will almost certainly result in the success of the DeSo blockchain, and the team holds a significant percentage of DESO as well (though again noting that no individual owns more than 20% of DESO). As such, while the team has some exposure to Openfund through token ownership, the team is further aligned by the fact that Openfund is a positive externality for the DeSo ecosystem. This motivation has clearly resulted in vast improvements to the platform since its initial launch.
