The QUILL Tokenomics — an In-depth Look at Ink Finance(2)

5 min readNov 15, 2022

The QUILL Tokenomics — an In-depth Look at Ink Finance

QUILL is Governance Done Right

In the governance process of the INK DAO itself, or that of those DAOs that directly use QUILL as a governance token, members gain management and voting rights by staking QUILL tokens. In this regard, all DAOs on the INK platform are not only its users but also its community members who can have a say on important governance issues.

QUILL Staking Rewards

25% (25 million) of all QUILL tokens will be initialized as the governance staking rewards for the entire INK DAO and any other DAOs that use QUILL as a governance token. The annual emission figure is dynamically calculated based on the usage indicators of the INK platform for every year. The initial emission period is set to 20 years, and the period follows the smooth curve calculated as follows:

Daily Incentive Emissions = 3800 * (0.98⁰.0000005 * Cn) ^ (0.618 * Cn),
where
Cn is the number of days from its launch to the day of calculation

As aforementioned, a major portion of any rents and fees captured by INK DAO treasury will be used to swap for QUILLs in circulation, which is to be placed on the bottom of the reward emission pool. Consequently, when the initial emission pool is exhausted, the recycled QUILLs will form a new reward emission pool to ensure continuous governance staking. This cycle maintains a “non-inflationary” monetary system that strikes the balance between sufficient utility, liquidity, and the scarcity of QUILL tokens.

The INK DAO Treasury

The INK DAO treasury assets are accumulated from fees charged on transaction volumes or assets under custody going through the INK facilities, plus facility rental income. Fees are initially set at a minimum of 0.2% (or the equivalent in QUILL tokens) for transactions, or 0.5% per annum for assets under custody. After 25% being deducted to maintain the facilities, the rest of the 75% will go to the INK DAO treasury’s on-chain vault.

The fees are adjusted annually according to INK DAO’s voting. INK community members can propose to change the fee parameters, and the entire QUILL holding communities can vote on these proposals, and the INK DAO board will approve. Once the resolutions are formed, they will be automatically executed by smart contracts on-chain.

Summary

QUILL, the platform token of Ink Finance, is designed as a completely decentrally managed economic token, and its governance process is implemented entirely by INK’s own flagship facilities, which perfectly manifests Ink Finance’s governance ideology and methodology through self-realization, demonstrating the power of a DAO management platform that integrates governance economics, community management, and comprehensive financial capabilities.

Based on the design of the business model, the market valuation of QUILL will be realized through three incremental steps:

A. Source of Base Valuation

Benchmarked off of the revenue models of traditional SaaS platforms, INK’s group of high-value client DAOs will bring huge cash flow income to this decentralized facility during their operations, which will be directly fed into QUILL’s market value. Such revenue composition is different from that of the traditional software, in that INK directly captures the staking & pledging demand as the required resource investment for governance, on top of the revenue captured from the transactions and assets under custody. Since INK connects DAOs to the wide markets of decentralized financial services in the crypto world, the increasing financial demand of the DAOs using INK will directly drive the value growth of QUILLs due to these two mechanisms. It can be expected that the number of users and the scale of usage entails an extremely high ceiling of growth in the foreseeable future. This is also the core difference between INK and other DAO tools in terms of valuation.

B. The Value from Ecological Growth

The INK Sponsorship mechanism is one of the most innovative features in its economic model. Members of the INK DAO community (through their elected professional managers) can choose to provide high-potential user DAOs with sponsorship pledges, to support their operation on the INK facility. The INK community not only obtains the governance rights of these client DAOs, but also the equity-like returns derived from their tokens paid to INK as a rent. INK laid a path in the crypto world with this decentralized business model, where the owner group of the facility can have the opportunity to “invest” in the client group of the facility and share growth. This is completely unimaginable under the traditional corporate system, and highlights INK’s innovation in governance economy with a crypto mindset.

DAO is the core economic carrier in the Web3 era. Almost all Web3 projects will eventually operate in some sort of DAO mode, and the current progress is less than 1%. INK is precisely the tool platform to accelerate this evolution, and gives all QUILL support There is an opportunity to capture the huge market value dividends of Web3 DAO in the future.

C. The Value of Self-adaptivity

QUILL’s token economy model is not of the crude “one-hat-fits-all”, but of the key mechanisms of self adaptation. These mechanisms are implemented by the INK DAO’s decentralized community, a market oriented and bottom-up decision-making process. The on-chain implementation of such mechanisms fulfills the operation mode of a true decentralized facility. Even in the crypto world, this is a pioneering model (most tokenomics models with dynamically adjustable operating parameters still rely on heavy centralized intervention) attributable to INK itself being a powerful governance economics and financial facility.

For example:

Regarding the core operational parameter of minimum facility occupancy and standard fee capture of financial services, INK adjusts through a DAO governance process to adapt to market realities in different environments, so that INK can stay constantly competitive.
In terms of fiscal issues such as the expenditure proportion of INK DAO treasury and the swapping of treasury assets for the QUILLs in circulation, sensible and transparent financial operations can be made according to the prevailing market conditions.
On the issue of deciding which DAOs can be sponsored to use INK facilities, the community can elect professional managers to make judgment on the prospects of the DAOs in question, in a market-oriented and professional fashion, thereby directly linking these decisions to the interests of the entire community.
Individual QUILL holders’ ability to sponsor DAOs and their managers further extends the power of individuals in a decentralized world that truly reflects the unique advantage of Web3.
These innovative mechanisms will enable INK platform to achieve sustainable and healthy ecological growth, adapt to the dynamic and challenging market environments, and give the QUILL holder community the greatest opportunity for long term return.

About Ink Finance

Ink Finance is a one-stop financial management toolset that empowers DAOs with governance economy, asset or credit financing, investment management, and fiscal control, integrated via a plug-and-play framework. It aims to establish a gold standard for DAO financial management that can reshape financial organizations of the Web3 era.

Learn more about Ink Finance and what we’re building: