Will there be an ORCA token?

This post was originally published on Orca

Since we launched Orca last Thursday, we’ve already been over-WHALE-med by the positive response from the community. (For those of you who already saw this pun on Twitter: We’re sorry. 🐳) Thank you for all the love and support!

Unsurprisingly, the number one thing you want to know is:

“Will there be an ORCA governance token?”

The short answer:

We hope so. But only once the conditions are right (enough organic trading activity and community participation) for Orca to serve the Solana ecosystem even better as a community-run protocol. That could take a few months, a year, or even longer. Regardless, we’re in it for the long haul.


The long answer:
As with any major decision, when deciding whether to issue a governance token, we asked: “Is this the most impactful thing we can do right now to achieve Orca’s mission?”

Back in 2018, we were drawn to DeFi by the promise of a more equitable financial system. The actual experience of using DeFi was a different story. Achingly high fees, snail-paced transactions, the trickle of panic when you think you’ve lost your seed phrase… you know the story.

Solana is different.

Our mission is to bring that better financial system one step closer to reality. And we’ll do it by leveraging the performance of Solana to create experiences that are far more usable, equitable, and transparent than traditional financial institutions could ever hope to provide.

…which brings us to another question:

How does issuing a token further our mission?
As an AMM, Orca is inherently incentive-aligned:

  • Traders get speedy and reliable exchanges of digital assets for a modest fee.
  • Liquidity providers earn a portion of those fees in exchange for the opportunity cost of providing capital and risk of divergence or impermanent loss.
  • Arbitrageurs get sweet deals on trades, which in turn keeps prices in line with market rates.

However, one critical party is missing. The community: everyone who invests time and effort into developing the protocol and supporting users. A governance token rewards that community engagement with a say in the future of the protocol.

Something that differentiates us from many other DeFi projects is a strong commitment to our values — values that go beyond “making money.” (We’ll touch on this more in the sections to follow.) Incentivizing community participation gives those values longevity, even in the absence of the founding team.

When will you issue a token?
Not for a few months, at least. We’ve observed some worrying trends in the experiments with decentralized governance on Ethereum. Too often, token issuers make promises they cannot keep, swindling uninformed buyers into purchasing tokens for a protocol with no real value.

This is especially true when tokens are released at launch, before said protocol has had time to prove that it offers any real value. The result: A speculative, FOMO-driven hype-bubble that, when popped, leaves buyers swimming in the red.

So, when is the right time to release an ORCA token?

  • When there is a reasonable amount of organic trade flow on Orca. This requires—among other things—the Solana ecosystem to grow and more legitimate use cases to arise.
  • When there is a thriving ecosystem of designers, developers, and moderators who believe in Orca’s mission, and thus contribute to the continued growth of the protocol.

When both of the above factors are true, we’d like to issue a governance token. Though we’ll work hard to make that happen in the next several months, the actual timing depends on dynamics that are out of our control, like market cycles. But we believe Orca can flourish as a community-run protocol, and we’d love to see that happen sooner rather than later.

What would a fair token distribution look like?
Credibly neutral. (Yes, we’re fans of that phrase — thanks, Vitalik!)

In other words, the distribution would reward:

  • Early adoption. Providing liquidity on a yet-unproven, early protocol involves a higher degree of risk than depositing in Uniswap or SushiSwap. That risk should be rewarded accordingly.
  • Continued adoption. Participants who actively participate over time should receive more than people who were early, but become inactive. One way to achieve this is through a consistent rate of inflation.

The distribution would not reward:

  • Insider information. Everyone will receive tokens according to the same formula. We have not promised any additional incentives, even for friends of the Orca team.
  • Gaming the system. You won’t earn more tokens for congesting the network by creating multiple addresses and wash trading, or for splitting up swaps into smaller amounts.

To expand on that last bullet: Though we were delighted to see so much love for our GUPPY tokens, we think there are better ways to structure distributions. From now on, we’ll strive to reward behavior that contributes to the long-term health of the protocol.

How would ORCA tokens differ from Collectibles?
One thing we love about DeFi is its playful, counterculture personality. (No thanks, stodgy white-shirted bankers.) And as artists ourselves, we’re fans of the growing overlap between cryptocurrency and art. We see our Collectibles as part of this trend. Eventually, they could be bought and sold. But like any other artwork, their value comes from the fact that people like them, rather than any intrinsic use-case.

That said, we do have an idea for a use case for Collectibles! We hope to share more details soon, but for now, know that it’ll be in line with the idea of Collectibles as art. It won’t be limited only to whales. It will be experimental, adorable, and fun.

Whew, that’s a lot! For those of you who read this far: Thank you. We hope that our thinking resonates with some of you, and that you’re as excited about the future of Orca as we are. If you haven’t yet given us a spin, you can visit us at https://orca.so.

If you’re interested in getting involved, please reach out to us via Discord or Telegram and follow our announcements on Twitter (@orca_so). We have ideas for both independent contributors and experienced dev teams hungry for a larger challenge in the Solana ecosystem. See you there!

And finally, a message from our legal team, whom we affectionately call the Tiger Sharks: 🦈 ⚖️

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