TOKEN CIRCULATION MODEL

Token Distribution Mechanisms

Token Emissions

• Emissions to the Vault → Tokens from “Community Incentives & Marketing” and “Ecosystem Treasury” categories may be used to kickstart the Sipher Vault and support its operations over time, following their respective release schedules. These emissions are crucial for seeding and the initial growth of the ecosystem. References: Sipher Vault, Vault Inflow Sources, Distribution & Release Schedule
• Emissions to the Circulating Supply → Tokens allocated towards Community and Marketing, Ecosystem Treasury, and Team and Investors are considered part of the circulating supply once vested and unstaked, as applicable. Reference: Distribution & Release Schedule

The Sipher Vault’s Role in Token Distributions

The Sipher Vault is critical to the ecosystem's growth and sustainability. It acts as a central hub for managing the flow of $SIPHER, ensuring a healthy balance between supply and demand.

• The Vault receives inflows from multiple sources, including token emissions, buybacks, royalties & fees from marketplaces and platforms, 100% of $SIPHER spent by users, and all value accrued from Sipher AGI ecosystem products and features.
• The Vault stores up to 20% of the value of $SIPHER’s Total Supply and burns and/or reinvests any surplus of tokens exceeding the Vault’s capacity.
• Each season, the Vault distributes a projected 25% of its balance as outflows, to incentivize ecosystem growth and reward participants. These distributions enable a self-sustaining cycle where incentives promote engagement, retention, and spending while leading to more inflows.

This mechanism creates a reinforcing cycle where the Vault receives inflows from various sources of ecosystem revenue, which serves as a funding source for incentives that ultimately lead to the consistent growth of engagement and drive more inflows.

📌 Learn more about the Vault Outflow categories and the Vault governance process by visiting Sipher Vault and Vault Outflow Categories.

Token Scarcity & Deflationary Mechanisms

$SIPHER Utility and Demand within the SIPHER AGI Ecosystem

$SIPHER serves as the native token of the SIPHER AGI ecosystem, playing a fundamental role across all its products. It's the key to unlocking a wide range of utilities and benefits, driving demand through its multifaceted use cases:

• Web Shop Currency: In Sipher Odyssey, players can spend $SIPHER to acquire premium currencies at a discount. These currencies can then be used for various in-game items, upgrades, consumables, and even to facilitate trades within the in-game marketplace. Similar mechanics may be integrated into other games within the ecosystem.
• AI Agent Interaction and Customization: $SIPHER fuels the creation, maintenance, and customization of AI Agents. This includes:
• Creation Fees: A fee, determined by a bonding curve, is applied when creating new AI Agents or unlocking advanced abilities, ensuring sustainable development and maintenance of the AI infrastructure.
• AI-Abilities Unlock Fees: Players can spend $SIPHER to unlock customizations and specialized functionalities for their AI Agents, enhancing their capabilities and personalization.
• Ecosystem Perks: Holding $SIPHER unlocks exclusive benefits across the entire ecosystem:
• Sipher Odyssey: Get new vessel lootboxes at each new vessel launch, get in-game battle pass, and obtain lifetime eligibility for $SIPHER rewards from competitions and leaderboards.
• Sipherian Strife: Increased income and resource generation.
• Other Ecosystem Initiatives: Exclusive benefits and rewards in initiatives like play-to-airdrops, and future initiatives throughout the ecosystem.
• Marketplace Transactions: $SIPHER facilitates a vibrant marketplace economy:
• Marketplace Currency: $SIPHER may be used to exchange items on Web3 marketplaces.
• Marketplace Fees: A 0.5% transaction fee on all marketplace transactions. Fees from transactions denominated in currencies other than $SIPHER will be used to buy back and convert to $SIPHER. All transaction fees will be directed to the Vault.
• Staking for Governance: Staking $SIPHER or LP tokens is required to participate in the governance process, influencing the Sipher Vault's management and the ecosystem's future. This locks up $SIPHER, contributing to scarcity. Please visit Sipher Vault to learn more about the Vault’s Governance process.

The Sipher Vault’s Role in Scarcity and Deflation

The Sipher Vault plays a key role in fostering scarcity and facilitating deflationary environments within the tokenomics model. This is due to its funnel-like structure, where funds flow into the Vault throughout the season via protocol revenue, buybacks, and emissions, while only a projected 25% of all Vault funds get distributed back to the ecosystem each season. Additionally, periods of ecosystem growth and success lead to a deflationary environment via buybacks and/or burning.

Vault Inflows

One of the primary scarcity mechanisms enabled by the vault is its inflows. These inflows are derived from multiple sources, including value accrued from and $SIPHER spent by users across all products within the Sipher AGI ecosystem, royalties & commissions from on-chain marketplaces & platforms, and periodically specified portions of token emissions from the “Community Incentives & Marketing” & “Ecosystem Treasury” categories (as per the Token Distribution).

📌 Visit Sipher Vault and Vault Inflow Sources to learn more about the Vault and its various inflow sources.

Deflationary Vault Surpluses

We target that, around 20% of the value of the $SIPHER Total (minted) Supply should be stored in the Vault at the start of each season.

When the Vault accumulates more than this 20% target due to a thriving ecosystem, the tokens exceeding that target percentage will be considered a “surplus”. A portion or the entirety of these surpluses shall be burned, leading to a deflationary environment.

📌 To learn more about Vault Surpluses, please visit Sipher Vault.