Clip Finance $CLIP Token Ecosystem Part 2

Clip Finance
4 min readSep 8, 2023

The Clip team has diligently worked throughout the summer on the Clip Finance protocol. We’re excited to announce that we’re now in our private beta phase. A major development we’ve achieved is the finalization of our tokenomics, which we’ve detailed in an extensive spreadsheet. This illustrates our unique TVL (total value locked) based token allocation model.

What sets Clip’s tokenomics apart is its emission approach. Instead of relying on a time-bound emission, tokens are released based solely on increases in TVL within the protocol. We believe this method is more logical as it’s tied directly to the growth and success of the protocol, ensuring that tokens aren’t emitted unless genuine growth occurs. Further aligning interests, tokens designated for the team and investors are vested based on reaching these TVL milestones. This structure encourages our team to focus on scaling the platform, rather than passively waiting for token vesting. Consequently, this aligns the goals of the team, investors, and users.

Tokens for the team, investors, and advisors will be fully unlocked when the TVL hits $500 million. Meanwhile, token emissions for Clip users will cease at a TVL of $1 billion. We believe these benchmarks will adequately support the Clip ecosystem’s maturation and its establishment as a major player in the DeFi sector.

For users, team, investors and advisors token unlock happens with TVL growth and not with time-based unlock. Only 2% of Clip’s token supply is unlocked for initial liquidity seeding into DEXes and 10% is reserved for a war chest that is subject to DAO voting in the future to decide its purpose.

Clip Finance token allocation

While the first part of Clip tokenomics post was an intro about TVL based token emission, in this blog post we look in detail at projections of $CLIP token when certain TVL milestones are hit.For a comprehensive overview, check out our $CLIP tokenomics litepaper, detailing the rationale and mechanics behind our tokenomics strategy.

Click above or click here for the Clip’s tokenomics speadsheet. ‘Lifetime Vesting & Emissions’ sheet shows milestones in $ value when CLIP token unlocks happen. As you see the first unlock happens when the total protocol TVL reaches $10 million.

Under the “Market Assumptions” section you can change the inputs to calculate assumptions for different growth scenarios. You can adjust inputs like the underlying yield the protocol is receiving (currently, in September 2023, Clip’s strategy portfolio is farming ~9% APY), also how quickly the TVL is growing, what is $CLIP staking APR, and the percentage of tokens staked out of the total circulating supply. These assumptions are made based on reviewing the performance and growth of other protocols on the market.

As you navigate further right, you’ll notice that as the Clip protocol grows, we’re channeling more earnings back to our community (refer to column AA). The breakdown is as follows:

  • At $10 million TVL: 50% to the Clip treasury, 50% to the community
  • At $50 million TVL: 40% to the treasury, 60% to the community
  • By $500 million TVL: 10% to the treasury, a whopping 90% to the community.

This progressive distribution reflects our belief that as the platform grows, our operational costs will diminish, allowing more value to be returned to our users.

Scrolling the sheet more column AD shows the theoretical fair market value of the $CLIP token at every milestone. This is highly speculative and you should take it with a grain of salt. As you see it’s calculated based on entered Market Assumptions. This gives you an idea that TVL-based token emissions make it impossible for the token to simply go to 0 as with TVL growth revenue of the protocol increases.

Implied CLIP token value at different milestones

In columns AG to AM, you can visualize the potential earnings from a $10,000 deposit into the Clip Protocol, showcasing the additional $CLIP tokens and APY from those tokens up to the end of emissions at $1 billion TVL.

Lastly, there’s an exciting segment for NFT enthusiasts. Every Clip NFT is not just a piece of exquisite digital art but also a ticket to more rewards in Yield Wars. Owning an NFT grants a CLIP token airdrop, and staking that NFT earns even more CLIP tokens. 10% of CLIP tokens are allocated for NFT minters, with an additional 5% for stakers. The unlocking rules, consistent with our philosophy, are TVL-driven. Columns AO to AS offer projections based on “Market Assumptions”, detailing the potential return on your NFT investment.

NFT minters and stakers cumulative rewards on early milestones

We hope this detailed exploration offers clear insights into our novel approach to tokenomics, reflecting our commitment to aligning with user interests and ensuring sustained growth for the Clip ecosystem.