Tokenomics
Tokenomics: $BUB Ecosystem Design
A hybrid economic system combining controlled supply management with aggressive deflationary mechanisms driven by network utility
Token Overview
The $BUB token serves as the native utility and governance asset for Buburuza-Chain, a Layer 3 blockchain built on Arbitrum Orbit architecture designed specifically for AI-powered neobanking services. Unlike traditional governance-only tokens or inflationary Proof-of-Stake models, $BUB implements a hybrid economic system that combines controlled supply management with aggressive deflationary mechanisms driven by network utility.
Core Tokenomics Principles
Utility-First Design: $BUB functions as the primary gas token for all network operations
Sustainable Economics: Fee-based revenue model without automatic inflation
Community Governance: DAO-controlled supply adjustments and parameter management
Technical Specifications
Token Standard: ERC-20 on Arbitrum L2, bridged to Buburuza-Chain L3
Initial Supply: 1,000,000,000 $BUB
Decimals: 18
Symbol: $BUB
Contract Governance: Upgradeable via DAO multisig
Token Supply & Distribution
Total Supply: 1,000,000,000 $BUB
Sequencer Rewards Pool
25%
250,000,000
Fee-based earnings over 5 years
Smart contract controlled
Ecosystem Development
20%
200,000,000
Milestone-based over 3 years
DAO governance approval
Community Treasury
15%
150,000,000
1-year lock, then DAO controlled
Multisig with timelock
Initial Liquidity
10%
100,000,000
50% immediate, 50% over 12 months
Liquidity mining contracts
Team & Advisors
10%
100,000,000
4-year linear vesting
Time-locked contracts
Community Airdrops
8%
80,000,000
Phased claims over 24 months
Merkle tree distribution
Strategic Partnerships
5%
50,000,000
Performance-based milestones
Escrow contracts
Gas Fee Reserve
4%
40,000,000
Bootstrap period subsidies
Algorithmic distribution
Compliance & Legal
2%
20,000,000
As-needed for regulatory costs
DAO treasury allocation
Future Reserves
1%
10,000,000
Unallocated for opportunities
DAO governance decision
Supply Circulation Schedule
Year 0 (Launch):
Initial Circulation: ~15% (150M $BUB)
Sources: Airdrops, initial liquidity, team TGE allocation
Year 1:
Target Circulation: ~25% (250M $BUB)
Additional Release: Ecosystem grants, sequencer rewards, community programs
Year 3:
Target Circulation: ~35% (350M $BUB)
Major Unlocks: Team vesting completion, ecosystem development milestones
Year 5:
Target Circulation: ~50% (500M $BUB)
Stable State: Majority of allocated tokens in circulation, ongoing fee-based distribution
Long-term (10+ years):
Expected Range: 40-60% depending on burn rates and DAO decisions
Net Effect: Deflationary pressure from high network usage offsetting new distributions
Core Utilities
1. Gas Payments
Primary transaction fee token for Buburuza-Chain operations
2. Sequencer Bonding
Collateral requirement for network operators with minimum 100,000 $BUB per sequencer
3. Governance Voting
Weighted voting power for protocol decisions with delegation capabilities
4. AI Service Access
Premium features and document processing fees paid in $BUB
5. Cross-chain Operations
Bridge fees and interoperability costs for multi-chain transactions
6. BUBURUZA Transaction Fees
Neobank operation costs and financial service fees integrated with platform
Deflationary Mechanisms
Primary Burning Sources
1. Base Fee Burning (60% of transaction fees):
Automatic burning of base fee portion from all transactions
Scales directly with network usage
Estimated range: 1-5% of circulating supply annually at full adoption
Burn address:
0x000000000000000000000000000000000000dead
2. AI Service Burns (100% of fees):
Document processing fees completely burned
KYC/AML verification costs burned
Premium AI feature access burned
Compliance reporting fees burned
3. Cross-Chain Operations:
Bridge transaction fees: 50% burned, 50% to operators
Interoperability protocol costs: 75% burned, 25% to treasury
4. Treasury Buybacks:
Automated buyback program during low network activity
Emergency deflation mechanisms during market volatility
Strategic burns to maintain economic stability
Burn Rate Projections
Conservative
100,000
$0.001
~1.5% of supply
Moderate
1,000,000
$0.0015
~3.5% of supply
Optimistic
10,000,000
$0.002
~8% of supply
Gas Fee Economics
EIP-1559 Inspired Fee Structure
Buburuza-Chain implements a dynamic fee mechanism similar to Ethereum's EIP-1559, optimized for Layer 3 operations:
Base Fee Calculation:
Network Parameters:
Target Gas per Block: 15,000,000 gas units
Max Gas per Block: 30,000,000 gas units (2x target)
Adjustment Factor: 0.125 (12.5% maximum adjustment per block)
Minimum Base Fee: 0.1 gwei
Block Time: 250ms average
Total Transaction Cost:
Fee Distribution Mechanism
60% Token Burning (Deflationary Pressure):
Base fees permanently destroyed through smart contract burning
Creates deflationary pressure proportional to network usage
Estimated annual burn: 2-8% of circulating supply at full adoption
35% Sequencer Rewards (Network Security):
Immediate payment to active sequencer operators
Covers operational costs and provides profit incentive
Distributed proportionally based on block production performance
5% Treasury Allocation (Protocol Development):
Funds protocol development and ecosystem growth
Controlled by DAO governance voting
Used for security audits, infrastructure upgrades, emergency reserves
Governance Framework
DAO Structure and Voting
Governance Token Model: $BUB holders participate in protocol governance through a delegated voting system with anti-plutocracy measures.
Voting Power Calculation:
Time Lock Multipliers:
No lock: 1.0x voting power
3-month lock: 1.2x voting power
6-month lock: 1.5x voting power
1-year lock: 2.0x voting power
2-year lock: 2.5x voting power
Delegation System:
Token holders can delegate voting power to active participants
Delegates earn reputation scores based on participation and outcomes
Anti-plutocracy measures prevent single-entity control
Governance Scope
Economic Parameters (51% approval required):
Fee distribution ratios (burn/sequencer/treasury splits)
Minimum and maximum gas prices
Block size and throughput targets
Sequencer bond requirements and penalties
Protocol Upgrades (66% approval required):
Smart contract upgrades and modifications
New feature implementations
Security parameter adjustments
Cross-chain integration approvals
Treasury Management (66% approval required):
Large expenditure approvals (>1% of treasury)
Grant program funding and modifications
Emergency fund utilization
Strategic partnership investments
Critical Changes (75% approval required):
Fundamental tokenomics modifications
Consensus mechanism changes
Emergency protocol shutdowns
Constitution amendments
Governance Timeline
Standard Proposal Process:
Discussion Phase: 7 days community discussion
Formal Proposal: 48 hours for final submission
Voting Period: 5 days active voting
Execution Delay: 48 hours before implementation
Implementation: Automatic execution via smart contracts
Emergency Procedures:
Security Council can implement emergency measures with 4/7 multisig
Community can override Security Council with 75% vote within 30 days
All emergency actions expire automatically after 90 days
Sequencer Economics
Operator Bonding Requirements
Bond Parameters:
Minimum Bond: 100,000 $BUB per sequencer
Maximum Operators: 5-10 initially, expandable via governance
Bond Adjustment: Quarterly reviews based on network growth
Slashing Conditions: 5-50% bond slash for provable misconduct
Bonding Process:
Application: Prospective operators submit technical and financial credentials
Bond Posting: Required $BUB amount locked in bonding contract
Performance Testing: Probationary period with reduced responsibilities
Full Authorization: Approval for full sequencer duties upon successful testing
Revenue Model
Monthly Revenue Calculation:
Performance Scoring Components:
Uptime Weight: 40% (99.9% target availability)
Latency Weight: 30% (sub-250ms block production)
Throughput Weight: 20% (transaction processing efficiency)
Community Score: 10% (governance participation, network contributions)
Revenue Examples:
Scenario: 1M transactions/day at $0.001 average fee
Daily Network Revenue: $1,000
Monthly Network Revenue: $30,000
Sequencer Share (35%): $10,500
Per Operator (5 active): $2,100/month
Scenario: 10M transactions/day at $0.001 average fee
Daily Network Revenue: $10,000
Monthly Network Revenue: $300,000
Sequencer Share (35%): $105,000
Per Operator (5 active): $21,000/month
Slashing and Penalties
Misconduct Categories:
Minor Infractions: 5% bond slash (late blocks, minor downtime)
Major Violations: 20% bond slash (extended downtime, failed upgrades)
Critical Failures: 50% bond slash (consensus attacks, data withholding)
Penalty Distribution:
50% of slashed funds burned permanently
30% distributed to other operators as bonus rewards
20% allocated to treasury for network security improvements
Last updated