Cook — Tokenomics 2.0
In any ecosystem a delicate balance is essential for healthy functioning. For the COOK token ecosystem, that means creating new ways to enable COOK tokens to provide additional utility and in turn demand within the overall ecosystem. On the supply side, this means potentially executing new community proposed programs that will take a portion of the fees generated on the platform and set them aside for burning. This will in turn reduce the supply of the COOK tokens over time. As new community DAO proposals that specifically address tokenomics supply and demand are enacted, they will have the ability to foster a growing and healthy ecosystem that will improve the Cook platform.
Areas of Improvement on the Demand Side
Cook Utility — The Cook platform provides a wide array of ways to integrate and make COOK tokens a key part of driving the functionality of the platform. Specifically around participation in the DAO, index exclusivity, buying Cook NFTs and even being used for payments in online platforms such as ecommerce.
- DAO — The Cook DAO was created to give the community a platform to become deeply involved in every aspect of the development of the Cook platform. To make suggestions, changes and to vote on these updates, COOK tokens will be required to participate in all aspects of the proposal creation stages and for voting on proposals. Currently, COOK tokens holders can propose to create new indexes. Later on, the intention is to add more functionality such as treasury management to the DAO so that COOK tokens will have even more governance power.
- Index Exclusivity — As new indexes are launched in the future, some of the most popular indexes have the potential, if proposed and approved through the DAO, to be limited to users who have a minimum amount of staked COOK tokens or hold special COOK NFTs.
- NFTs — As NFTs become more popular and a bigger part of the crypto world, they will be integrated into programs that increase community engagement. Cook recently launched a campaign where users were rewarded for participation in the Cook governance process. In the future, more NFT related campaigns will be launched and future COOK NFTs will potentially have even more utilities, such as early access to test new platform features. In order to get these future NFTs, community members will need to use COOK tokens to get them.
- Good and Services Redemptions — Using utility tokens to exchange them for goods and services is a growing area and there are new partnerships with crypto payment platforms in development that will enable COOK holders to actually use the tokens to exchange for goods and services within the Cook ecosystem.
Areas of Improvement on the Supply Side
Burning Fees — As the Cook platform scales up, there will be significant growth in fees. While the majority of these fees will be directly funneled back to the community, a portion of the collected fees will be set aside to exchange for burning COOK tokens.
- Transaction Fees — A portion of the fees paid to issue/redeem or transact indexes on the Cook platform will be used to exchange for and burn COOK tokens. Another portion of the fees will be distributed among the COOK token stakers as rewards. As more and more indexes are introduced on the platform, the amount of COOK burned and given out as rewards will increase proportionately.
- Liquidity Mining Fees — For indexes with additional yields such as yield farming assets, a percentage of the yield rewards will be used to exchange for and burn COOK tokens. Also some percentages of the yield rewards will be distributed among COOK token stakers.
- Other Fees — As marketing programs are created such as lottery games and NFTs, a portion of the fees that are collected will be used to exchange for and burn COOK tokens. Another portion of the fees will be distributed among the COOK token stakers.
Staking Pools — When the Cook community proposes and votes through new liquidity mining and staking pools, these incentives will serve to drive up the participation level from the community. While it would be great to set extremely high APYs with no lockup periods to attract a large amount of capital, this will have the negative effect of dramatically increasing circulating supply. In this ecosystem though, it’s important to reach a balance between the APYs, reward vesting periods, lockup periods and new pool launch frequency that will create the feedback loops that improve the health of the COOK ecosystem over the long term.
- APYs — High APYs rewards will attract takers, however excessively high APYs also increases the COOK supply. Instituting a gradual decay in higher APY pools creates a healthier ecosystem. This will help reach sustainable TVLs which are important for a vibrant ecosystem.
- Vesting Periods — A sudden release of a large amount of tokens might cause a supply shock. Therefore, token rewards with reasonable vesting periods will be implemented to ensure COOK token utility is not affected negatively.
- Lockup Periods — Long term alignment is important to ensure that COOK token holders provide liquidity over time. Therefore lockup periods for staking will be regularly presented to the community for reviews and implemented to ensure a sustainable liquidity supply that will increase the utility of the COOK token.
- Frequency — While liquidity mining and staking pools are very popular, oversupply of tokens may dilute the overall utility of them. Therefore, when new liquidity mining and staking pools are proposed and voted through on new L1 protocols or when there are major upgrades to the platform, these programs will be reviewed by the community. By closely engaging with the community, liquidity mining and staking programs will serve to improve the overall health of the ecosystem.
As these areas of improvements on both the demand and supply side are considered by the community, it is the intention that when implemented, the overall ecosystem will improve. In the long term it is in the best interests of all those involved with Cook to see a well balanced and growing ecosystem. With the Cook DAO there will be numerous opportunities for the community to create even better proposals that have the potential to improve Cook tokenomics such as those shared here and to create even more use cases for the COOK token.