$LIQ

Governance & Rewards Token of the LiQ Protocol.

Introduction to $LIQ

$LIQ is the native governance and rewards token of the LiQ Protocol, serving as the backbone of the platform’s staking rewards system, governance mechanism, and long-term incentive structure. Designed to align incentives between stakers, liquidity providers, and governance participants, $LIQ ensures that the LiQ liquid staking ecosystem remains decentralized, efficient, and self-sustaining.

With a fixed total supply of 1 billion $LIQ, the token is strategically allocated to balance staker rewards, protocol incentives, ecosystem growth, and governance utility. This document provides an in-depth breakdown of $LIQ’s tokenomics, distribution, governance functionality, and reward mechanics.

Core Utility of $LIQ

a. Primary Rewards Token for stMNT Stakers

• Stakers of MNT through LiQ receive $LIQ emissions as additional rewards, supplementing their DeFi-generated yield.

• $LIQ acts as an incentive layer to ensure consistent staking participation and liquidity retention.

• Rewards are distributed proportionally to the amount of stMNT held, ensuring fair earnings based on participation.

b. Governance & Decentralized Decision-Making

• $LIQ holders govern the LiQ protocol by voting on strategy optimizations, yield allocation, protocol fees, security updates, and treasury management.

• Token-weighted voting allows active participants to shape the protocol’s evolution and sustainability.

• Proposals can include new DeFi integrations, changes to staking mechanics, and expansion of cross-chain functionality.

c. Protocol Revenue Sharing & Buybacks

• A portion of protocol-generated revenue is used for $LIQ buybacks and burns, reducing long-term inflation.

• Stakers who hold and stake $LIQ can receive a share of protocol earnings, rewarding long-term participants.

d. Liquidity Incentives & Ecosystem Expansion

• $LIQ emissions bootstrap liquidity for stMNT/MNT trading pairs, ensuring deep liquidity for seamless swaps.

• Token incentives encourage DeFi integrations, including lending, farming, and collateralization across partner protocols.

Tokenomics & Distribution (1 Billion Total Supply)

To ensure long-term sustainability, equitable distribution, and governance participation, the total supply of 1,000,000,000 $LIQ is allocated as follows:

Token Supply Breakdown

Total Supply: 1,000,000,000 $LIQ

• 50% (500M $LIQ) – Staking Rewards (stMNT Holders) Half of the total supply is dedicated to staking rewards, ensuring strong incentives for participation while gradually reducing emissions over time.

• 25% (250M $LIQ) – Development, DAO Treasury & Ecosystem Growth This allocation fuels long-term protocol growth, covering grants, governance incentives, strategic partnerships, and continuous upgrades.

• 15% (150M $LIQ) – Public Sale & Initial Distribution A portion of the supply is set aside for public sale and launch distribution, ensuring deep liquidity for DEX trading and supporting early adoption.

• 5% (50M $LIQ) – Team & Advisors Reserved for core contributors and advisors who help build and sustain the protocol, with a structured vesting schedule to align long-term incentives.

• 5% (50M $LIQ) – Private Investors A limited allocation for early backers with a 2-year vesting period and a 12-month cliff, ensuring long-term commitment.

Key Tokenomics Principles

1. Sustainable Rewards & Gradual Emission Reduction: Staking incentives start high and taper off over time to balance early participation with long-term sustainability.

2. Community-Governed Growth: A significant portion (25%) is allocated to the DAO treasury and ecosystem development, giving the community control over key initiatives.

3. Deep Liquidity & Market Stability: The public sale and ecosystem incentives ensure strong liquidity for trading pairs like stMNT/MNT and support broader DeFi integrations.

4. Long-Term Alignment: Both team and investor allocations have extended vesting schedules to keep incentives aligned with the protocol’s long-term success.

Staking Rewards Distribution

$LIQ rewards complement DeFi-generated staking yield, ensuring that stakers receive competitive returns while participating in governance.

Emission Model:

• 50% of total supply (500M $LIQ) is distributed over 5+ years, with decreasing emissions to prevent long-term inflation.

• Early adopters benefit from higher initial emissions, which gradually taper off as protocol-generated revenue replaces incentives.

Reward Calculation Formula:

$$\text{User Rewards} = \left( \frac{\text{User stMNT Holdings}}{\text{Total stMNT Supply}} \right) \times \text{Total LIQ Rewards}$$

Compounding & Auto-Staking Option:

• Users can auto-stake their earned $LIQ for additional rewards.

• $LIQ staking allows users to earn a share of protocol fees generated by DeFi strategies.

Governance & Voting Mechanism

a. Proposal & Voting System

• Token-Weighted Voting: Governance power is based on $LIQ holdings (staked tokens have greater weight).

• Proposal Submission: Any holder with a minimum threshold of $LIQ can submit proposals.

• Voting Periods: Governance decisions are subject to timelocked voting, preventing instant protocol modifications.

• On-Chain Execution: Successful proposals are automatically executed via governance smart contracts.

b. Treasury & Funding Initiatives

• The DAO Treasury (15% of total supply) funds protocol upgrades, new DeFi integrations, and grants.

• Holders can vote on funding proposals for R&D, audits, liquidity incentives, and strategic partnerships.

Revenue Sharing & Buyback Model

To sustain long-term demand for $LIQ, the protocol implements buyback and burn mechanisms, reducing supply over time:

Revenue Sources:

• Fees from lending, yield farming, and cross-chain deployments.

• Trading fees from stMNT/MNT liquidity pools.

• Governance-controlled treasury yield strategies.

• Buyback Strategy:

• A portion of protocol fees is used to buy back $LIQ from the market.

• Purchased tokens are either burned (reducing supply) or redistributed to stakers.

This model ensures that protocol growth directly benefits $LIQ holders, aligning incentives between governance participants and stakers.

$LIQ is more than just a reward token, it is the foundation of LiQ’s governance, staking incentives, and long-term sustainability. By aligning staker rewards with governance participation, revenue sharing, and liquidity incentives, $LIQ ensures that MNT stakers and DeFi participants have a stake in the protocol’s future success. Through thoughtful tokenomics, deflationary mechanisms, and decentralized governance, $LIQ is positioned as a high-utility asset within the LiQ ecosystem and the broader Mantle DeFi landscape.