Under the Hood of Lemmatron

Continuing from where we left in our first medium article…

To dive more into the mechanics of the process, LEMA holders and treasury are found to be in the center of everything. Not surprisingly, the liquidity directing highly depends upon the number of holders and the total value of the treasury. However, it is the LEMA pool that heavily determines the value of the treasury. Here, the reason why the LEMA pool does not completely influence the treasury is that the treasury is holding non-native tokens(NNT). The percentage of the NNT varies with time. If we look at the majority of the crypto projects’ treasury, it is composed mostly of its native token. Because of this, they have to dump all the treasury tokens into its pool when they have to use it which is an extremely unhealthy practice. Keeping this in mind, Lemmatron will work to increase the NNT percentage in its treasury.

Liquidity Directing

The amount of liquidity to be directed in each contest can vary but before each contest, the minimum amount will always be announced. This is because the liquidity prize depends upon a few factors which are explained in detail in the “Determining Liquidity Amount” section (coming in the next iteration of this paper). Upon successful governance, the winning project is eligible for liquidity. Under some conditions, this liquidity is then directed to projects and we become a long-term LP for that project. The amount for which we become LP depends upon the negotiation with the winning project. At some point of time in the future when the agreed conditions are met, the liquidity comes back to Lemmatron treasury and for the service that Lemmatron provided to the project, they have to pay a service fee of no more than 1/10th of the liquidity pool that they were granted. However, for the initial contests, no fees are charged to the projects. The service fee can be paid in any token/coin accepted by Lemmatron including the project’s native token/coin. Throughout this process, the liquidity is owned by Lemmatron the whole time.

LEMA Discounts

Users can get LEMA at a discount when they sell their NNT. NNT also includes LP tokens. When they do this, they will be offered LEMA at a discounted price which will then be vested to them linearly within a short time interval of no more than 2 weeks. The discounted LEMA tokens come from the treasury and are designed in such a way as to not mess up the inflation rate.

Staking

LEMA holders can stake their tokens and earn incentives. The working mechanism of staking is dealt with in more detail in the later section of this paper. But the withdrawal of the incentive is designed to prevent the selling pressure of LEMA tokens into the pool. Withdrawal fee tiers are introduced to withdrawals done within certain timeframes.

Voting

Every LEMA holder is granted votes according to the amount of LEMA they hold. Liquidity directing voting is conducted regularly where several crypto projects are listed asking for the liquidity to be directed their way. The LEMA holders then cast their vote on the project they want. Top standing projects then get the liquidity. The way the votes are counted is another big topic to be discussed. (More on this later in the “Staking” section.)

Ad Revenue

Having crypto start-ups finding it extremely difficult to market their project, Lemmatron offers a platform for them too. The governance voting, in particular, is expected to grab a lot of attention of crypto enthusiasts and the ad revenues generated from there are collected into the treasury which again increases the NNT percentage sitting in the treasury.

Combining all of the above, we get the following architecture:

Detailed Architecture of Lemmatron

Reimagining DeFi