💎Tokenomics

Growth Flywheel

The key to HoneyPool's growth and long term sustainability is large prizes. Large prizes attract more deposits which create bigger prizes attracting more deposits. This is the growth flywheel for HoneyPool.

The HoneyPool protocol will reach escape velocity when

1) Prizes are large enough to organically attract new depositors and

2) Depositor consistently win enough small prizes to remain engaged and economically better off than a traditional savings account.

However, the protocol has a "cold start" problem. Large prizes are needed to get deposits but to get deposits we first must have large prizes. Two mechanisms help overcome this, reserve capture and HNYP token distribution.

The HNYP Token & Kickstarting the Growth Flywheel

The HNYP token solves the cold start problem. At the early stages, the distribution of the HNYP token serves as an additional incentive to deposit into the protocol when prizes are not yet large enough to achieve escape velocity. People initially deposit primarily to receive the HNYP token but these deposits create larger prizes and grow the reserve. Larger prizes begin to trigger organic growth. As organic growth increases and becomes self-sustaining the distribution of the HNYP token can be reduced.

Reserve Capture & Perpetual Growth

The "Reserve" is a percent of every prize that is kept in the prize pool and placed under the control of HNYP token holders. Funds directed to the reserve make the prizes larger without diluting the odds of winning. Prizes in turn contribute to a larger reserve. This creates a perpetual growth cycle and mathematically speaking, increases the expected value of a deposit into HoneyPool. A large reserve accelerates the growth flywheel.

You can view the current protocol reserves here (LINK WHEN LIVE).

Staking HNYP

HNYP holders can deposit their HNYP tokens to enable voting without transactions fees. Deposit your HNYP tokens here to begin (LINK WHEN LIVE).

Governance and the Growth Flywheel

The above is the playbook for how the protocol can create self-sustaining organic growth. It's up to HNYP holders to manage the different variables properly to ensure this growth happens.