DeepBook, the premier native liquidity layer on the Sui network, has unveiled plans to introduce its own native token, DEEP. This strategic move aims to strengthen its foundational role within the ecosystem's financial infrastructure. The DEEP token is engineered to support institutions and traders who contribute liquidity to decentralized finance (DeFi) through DeepBook. By combining DeepBook's advanced architecture with the utility of the DEEP token, the platform establishes itself as a leading source of Web3 liquidity for DeFi applications.
Key features of the DEEP token include transaction volume-based fee discounts and maker incentives. To participate in these programs, users must meet specific staking thresholds within DeepBook's liquidity pools. Additionally, staking DEEP tokens grants users governance rights, allowing them to influence the future development of these pools.
The fully on-chain central limit order book (CLOB) design of DeepBook enables DeFi protocols and professional traders to access deep liquidity while supporting a variety of retail services. Users can place both market and limit orders, facilitating sophisticated trading strategies. This infrastructure not only enhances liquidity efficiency but also paves the way for innovative financial products within the DeFi space.
The official DEEP token launch is scheduled for later this year. In preparation, DeepBook distributed a unique soulbound NFT, called DBClaimNFT, on March 28. Recipients of this NFT will be able to unlock it upon the token's release to claim liquid, fungible DEEP tokens.
The DBClaimNFT, which was distributed on March 28, 2024, specifies the amount of DEEP tokens that can be redeemed upon launch. This NFT is non-transferable, non-exchangeable, and non-saleable, ensuring that only eligible recipients can claim the tokens.
Designed for Wholesale Trading
The DEEP token is designed to incentivize a diverse range of participants to provide consistent and ample liquidity on DeepBook. Its structure supports DeFi protocols with foundational liquidity and includes features tailored for institutional users.
- Volume-Based Fees: While anyone can trade on DeepBook, fees decrease with higher trading activity within the pool. This allows active participants like institutional traders and DeFi protocols to pay lower marginal fees, while less frequent traders may pay standard rates, often through intermediaries.
- Maker Incentives: Liquidity providers, known as makers, receive additional incentives denominated in DEEP. These rewards generally decrease as the total liquidity provided in a given period increases, helping maintain depth even during low-liquidity intervals.
- Staking for Participation: Access to discounted fees and maker incentives requires users to stake a predetermined amount of tokens consistently throughout an epoch. Staking does not yield explicit rewards. Those who do not meet the minimum stake pay standard fees and are ineligible for incentives, positioning DeepBook as a hub for wholesale rather than retail liquidity.
- Staking-Based Governance: Stakers in specific pools gain governance rights, allowing them to control parameters such as fee structures and incentive rates. Governance power increases with the amount staked, though safeguards are in place to prevent monopoly.
Protecting Users
Many DeFi protocols inadvertently incentivize detrimental behaviors like wash trading and governance monopolization. Wash trading artificially inflates volume to exploit fee discounts, while governance monopolies can lead to rule-setting that favors large stakeholders at the expense of others. The DEEP token incorporates protections against these exploits.
To prevent wash trading, the amount of tokens collected in fees within a pool during an epoch will never be less than the amount distributed as incentives, with any surplus being burned. Additionally, total incentives decrease significantly as overall activity increases, reducing the economic appeal of artificial trading.
DeepBook mitigates governance monopoly risks by constraining rule-setting to simple parameters. For example, while stakers can vote for lower fees, any changes apply universally, eliminating biased adjustments. Furthermore, governance rights do not increase linearly with stake size beyond a certain threshold, preserving influence for smaller participants.
For detailed information on DEEP's distribution and tokenomics, refer to the DeepBook Whitepaper.
Frequently Asked Questions
What is the process for claiming the airdropped tokens?
The airdrop is distributed via a soulbound NFT sent to eligible wallets. Recipients do not need to claim it manually; they can unlock the NFT when the DEEP token launches to access their tokens.
How can I verify the authenticity of my DBClaimNFT?
The official DeepBook website and Twitter account provide the contract address for the DBClaimNFT collection. Users can cross-reference this address to confirm authenticity.
Is the DBClaimNFT transferable or sellable?
No, the DBClaimNFT is soulbound, meaning it is permanently tied to the recipient's wallet address and cannot be transferred or sold.
What happens if my NFT is in an inaccessible wallet?
If you lose access to the wallet containing your DBClaimNFT, you will be unable to claim your DEEP tokens upon launch. It is crucial to safeguard your private keys.
When can I use my DBClaimNFT to claim DEEP tokens?
Once the DEEP token is officially launched, users will be able to initiate a transaction to unlock their NFT and claim the tokens. The exact date will be announced by DeepBook.
Why was the DEEP token created?
The DEEP token supports DeepBook's goal of becoming the primary decentralized CLOB on Sui. It enables reliable and cost-effective liquidity for protocols and professional participants, decentralizing the infrastructure and benefiting the entire ecosystem.
What are the key utilities of the DEEP token?
The token facilitates four main functions: volume-based fee discounts, maker incentives, staking for participation, and staking-based governance. Each function is designed to enhance liquidity and decentralization.
How is the token allocated?
All tokens are minted at the Token Generation Event (TGE), with no further minting planned. The initial distribution is outlined in the official whitepaper.
Can the claimed NFT be transferred?
No, the NFT is soulbound and non-transferable, ensuring it remains with the original recipient.
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Note: This content is for general educational and informational purposes only. It should not be interpreted as an endorsement or recommendation to buy, sell, or hold any asset, investment, or financial product, and does not constitute financial, legal, or tax advice.