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Xythum (THUM) Tokenomics: Utility, Distribution, and Incentives

The THUM Token – Fueling the Xythum Ecosystem​

The Xythum Token (THUM) is the native utility and governance token of the Xythum protocol. It is meticulously designed to be the lifeblood of our decentralized aggregation layer, ensuring network security, incentivizing participation, facilitating governance, and enabling access to premium features. THUM is architected to align the incentives of all ecosystem participants – users, node operators, developers, and liquidity providers – towards the long-term growth, stability, and success of the Xythum network.

Total Token Supply: 3,000,000,000 THUM (Three Billion)

Network Staking & Node Operation (Proof-of-Stake):​

  • Becoming a Node Operator: To participate as a validating node in the Xythum network (responsible for processing transactions, participating in FROST threshold consensus, and maintaining SyncNet), individuals or entities must stake a significant amount of THUM tokens.
  • Dynamic Stake Requirement: The minimum stake required to become a node operator will be dynamically adjusted based on market pricing of THUM and network security parameters, as determined by governance. This ensures that the economic security provided by the staked THUM remains robust.
  • Security & Alignment: Staking THUM acts as a security deposit, disincentivizing malicious behavior. Node operators earn rewards in THUM and a portion of protocol fees for their honest participation.

Decentralized Governance:​

  • Protocol Decision-Making: THUM token holders will have the power to propose, debate, and vote on critical protocol parameters and upgrades. This includes:
    • Modifications to protocol fee structures and distribution.
    • Prioritization and onboarding of new blockchain networks.
    • Allocations from the ecosystem treasury.
    • Technical upgrades and new feature implementations.
    • Changes to staking parameters and slashing conditions.
    • Community-driven initiatives and grant programs.
  • Governance Lockup & Voting Power: To participate in governance, users must lock their THUM tokens. Longer lockup periods will grant proportionally greater voting power, encouraging long-term commitment to the protocol's health.

Access to Premium Protocol Features:​

  • Running Multichain Logic on XythumVM: Developers wishing to deploy and execute custom cross-chain logic (e.g., "if X occurs on Chain A, trigger Y on Chain B") using XythumVM and XythumDSL will need to stake or pay in THUM tokens. This acts as a "gas" or "slot renting" mechanism, compensating the network for computational resources. The amount of THUM required will correlate with the complexity and frequency of the logic.
  • Renting MPC Network Resources (MPCaaS): Protocols or dApps needing to leverage Xythum's robust MPC network (e.g., for MPC wallets, decentralized oracles, private computations) will need to stake or pay in THUM tokens to rent dedicated shards or computational capacity from Xythum nodes.
  • Fee Discounts: Holding a certain threshold of THUM tokens can grant users and dApps discounts on protocol fees incurred during asset and context transfers, incentivizing THUM ownership for frequent users.

Liquidity Provisioning & Incentives:

  • Yield Farming: Users providing liquidity to THUM-paired pools on supported Decentralized Exchanges (DEXs) or to specific Xythum protocol liquidity pools (e.g., for oBTC or other Xythum-bridged assets) will earn additional THUM rewards, bootstrapping liquidity and ensuring smooth trading experiences.

Fee Payments & Protocol Revenue:

  • While primary protocol fees might be collected in the transacted asset or a stablecoin for user convenience, a mechanism can allow for these fees to be partially paid using THUM (potentially at a discount).
  • A portion of collected protocol fees may be used for THUM buybacks or directed to the protocol treasury, contributing to token value accrual or funding ecosystem development.

Economic Incentives & Reward Mechanisms:​

Xythum employs a multi-layered incentive structure to foster a vibrant and active ecosystem.

  • Node Operator Rewards:
    • Staking Yield: Node operators earn THUM rewards proportional to their staked amount and uptime for their role in securing the network, validating transactions, and participating in FROST consensus.
    • Transaction Fee Share: Node operators will also receive a share of the protocol fees generated from the transactions they help process.
  • Liquidity Provider Rewards (Yield Farming):
    • As mentioned in 2.4, LPs earn THUM for contributing to the liquidity of THUM and Xythum-bridged assets. These programs will be designed to offer competitive APYs.
  • Ecosystem Growth Incentives:
    • Rebalancing Bonus: To maintain balanced liquidity across supported chains for seamless swaps, users who help rebalance Xythum's synthetic asset pools (e.g., moving liquidity from an over-supplied chain to an under-supplied one) may receive reduced transaction fees or bonus THUM rewards.
    • Early Adopter Rewards: A dedicated pool of THUM tokens will be allocated to incentivize early users and liquidity providers during the initial months post-launch (e.g., first 6 months), accelerating network effects.
    • Referral Program: Users can earn THUM tokens for successfully referring new active users or significant liquidity providers to the Xythum platform.
  • Bug Bounty Program:
    • A continuous bug bounty program will offer substantial THUM rewards to security researchers and developers who identify and responsibly disclose critical vulnerabilities in the Xythum protocol smart contracts or infrastructure, ensuring ongoing network robustness.

Slashing Mechanisms: Maintaining Network Integrity​

  • Partial Slashing:

    • A predetermined percentage of a node operator's staked THUM will be burned or redistributed to the protocol treasury or honest nodes. The exact percentage will be subject to governance.
    • Triggers for Partial Slashing:
      • Submission of Improper Commitments during DKG/Key Generation: Compromising the integrity of the threshold signature scheme setup.
      • Extended Downtime / Unresponsiveness: Failing to participate in consensus or sign valid transactions for a significant period, hindering network liveness.
      • Refusal to Sign Valid Transactions: Maliciously withholding signatures for transactions that have achieved majority approval from other protocol participants.

  • Full Slashing:

    • The entirety of a node operator's staked THUM will be slashed. These slashed tokens may be burned or redistributed amongst honest protocol participants and the treasury.
    • Triggers for Full Slashing:
      • Confirmed Malicious Signature Submission / Double Signing: Actively attempting to create fraudulent transactions or compromise asset security.
      • Collusion & Large-Scale Attack Participation: If the Signature Aggregator (SA) or on-chain monitoring detects a coordinated attack vector involving a node, indicating a severe breach of trust.
      • Persistent Malicious Behavior: Repeated instances of actions leading to partial slashing, demonstrating a consistent intent to harm the network.