Tokenomics
HAT Tokens are utility tokens that hold no association or connection with securities.
They are specifically designed for utilization within the Hats Governance framework and hold no ownership, equity, or financial rights in the form of securities.
Please note that the information provided herein is for informational purposes only and does not constitute an offer, solicitation, or recommendation to purchase HAT Tokens or engage in any investment activities. The acquisition, possession, and utilization of HAT Tokens carry inherent risks, and potential token holders are advised to conduct their own research, seek professional advice, and understand the associated risks before engaging in any transactions or activities involving HAT Tokens.
HAT Tokens may be subject to legal and regulatory requirements in different jurisdictions, and it is the responsibility of individuals or entities to comply with applicable laws and regulations governing their acquisition, possession, transfer, and use.
The project team, developers, and affiliates associated with HAT Tokens disclaim any warranties or representations, express or implied, regarding the functionality, security, or performance of HAT Tokens or the Hats Governance framework. The team shall not be held liable for any losses, damages, or liabilities arising from the use, possession, or reliance on HAT Tokens or any related activities.
By acquiring, possessing, or utilizing HAT Tokens, you acknowledge and agree to release the project team, developers, and affiliates from any claims, liabilities, or disputes arising from the acquisition, possession, or use of HAT Tokens, to the fullest extent permitted by applicable laws.
This disclaimer is subject to change and may be updated without prior notice. Individuals or entities engaging with HAT Tokens are advised to regularly review this disclaimer for any amendments or updates.
TL;DR
$HAT is the native governance token of Hats Finance
50% of the $HAT genesis supply is allocated to Hats community members.
$HAT tokens will be rewarded to users who join any Hats protocol bounty vaults.
Token allocation
The total supply of $HAT tokens is capped at 100 million. Here are some of the key allocations:
Core Team Tokens: 20% (20,000,000 HAT), vesting over 27 months from the TGE.
Seed Round: 11.50% (11,500,000 HAT), vesting over 24 months from the TGE.
Private Round: 6.61% (6,611,111 HAT), vesting over 21 months from the TGE.
Public Round: 0.3% (255,000 HAT), vesting over 6 months from the TGE.
Airdrop: 5.23% (5,228,611 HAT), vesting over 3 months from the TGE.
Marketing: 0.40% (400,000 HAT), vesting over 12 months from the TGE.
Incentives: 28% (28,000,000 HAT), vesting over 48 months from the TGE.
LBP: 4% (4,000,000 HAT) immediately unlocked from TGE
Liquidity mining
The total HATs Tokens for the 1st liquidity mining program will be 8,500,000, comprising 8.5% of the total token supply. The initial PPM(Protocol Protection Mining) program is not subject to vesting.
At its discretion, Hats governance can decide to replace the current liquidity mining program with another one to best align with the implementation of new protocol features.
$HAT token uses
$HAT tokens offer numerous use cases, making them a valuable component in the Hats Finance ecosystem. The key utilities are listed below.
Governance:
By holding $HAT tokens, you gain voting power in Hats Finance’s governance system, allowing you to participate in decision-making and shape the future of Web3 security. Locking or delegating your $HAT tokens lets you benefit from the platform’s economic activities and helps optimize incentives. Token holders also govern platform fees, decide on revenue utilization, and influence decisions on all aspects of Hats Finance, from code changes to competition rules.
This balanced system appeals to both auditors and audit buyers. Community members can also get involved by locking or delegating their tokens and have a say in the future of Hats Finance and security!
Bug Bounty Farming
You can deposit the $HAT tokens into the Hats Finance Bug Bounty Vault and earn APY on your $HAT token deposits. A full guide on Bug Bounty liquidity farming is available on our Medium page.
Please note: APY is subject to fluctuation without prior notice.
Enhancing Security and Community
Community users who hold the $HAT token may stand to enjoy personal security services by security researchers, access previously granted to protocols only. Hats Finance is currently developing these tools and services, which we will share with the community soon.
For Security Researchers
$HAT tokens incentivize security researchers to engage in audit competitions and bug bounties, fostering more secure projects. Security Researchers will be rewarded with Hat Points and $HAT tokens for submitting valid bugs. This collaborative effort bolsters security and secures the future success of Hats Finance and the security of the web3 space.
Security researchers pay a small fee in the network’s native token (e.g., ETH on Arbitrum) to submit a vulnerability, minimizing spam and ensuring constructive engagement, which is converted into $HAT. Initially set at $0.30, the fee can be adjusted by stakers based on activity levels and subsequent DAO governance proposals.
Alternatively, researchers can stake some $HAT to submit reports without paying a transaction fee. Abusing this privilege may result in penalties. Researchers can become Lead Auditors by staking more $HAT and achieving a top 50 leaderboard position. Lead Auditors can be booked for competitions and are responsible for triaging submissions and creating audit reports.
For Protocols and Customers
A minimum amount of $HAT will need to be staked to deploy a vault on the Hats Finance’s Platform. Staking more $HAT increases the vault’s visibility and competitiveness, especially during high-demand periods. Hats Finance is also planning some additional incentives and discounts for loyal customers should they stake additional $HAT tokens, which we will announce in the future.
Please note that the exact amount figures outlined in these utilities are still to be finalized even after the docs are published and may continue to evolve with DAO governance in the future.
HATs token uses in the protocol:
Each exploit that will be fixed and rewarded through the protocol will trigger a split function that will incentivize hackers, committees, and protocol participants to further use the protocol. The split function parameters can be set by the governance and their default is:
60%: 30 days vested Vault tokens for (Hacker reward)
20% Vault tokens (Hacker reward). Fungible tokens for immediate hacker use
5% Committee. To incentivize committee resolution and triage of vulnerabilities reports.
5% Converted through Uni v3 to Hats and vested for 90 days (Hacker reward). To make the hacker invested in the protocol they have just added value to and to incentivise them to further disclose vulnerabilities through Hats protocol
10% Converted through Uni v3 to Hats and sent to Governance. To incentivize the long-term sustainability of the protocol and its community needs.
Goals of the Tokenomics
The $HAT token is designed with clear objectives to serve crucial roles within our ecosystem:
Access to Expertise and Services: The token facilitates access to our global network of security experts and additional features like triage competitions, bot races, and decentralized arbitration services.
Competitive Advantage in Talent Acquisition: Holding $HAT provides a competitive edge in attracting top security talent by offering additional visibility and exclusive opportunities within the Hats Finance ecosystem.
Monetary Benefits and Ecosystem Growth: Stakeholders benefit financially by aligning with the protocol's growth trajectory. This alignment is instrumental in building a sustainable and fortified ecosystem, creating a competitive moat around Hats Finance.
The $HAT token is more than just a means of transaction; it's a cornerstone in our strategy to build a secure, efficient, and community-driven security service ecosystem.
Value Accrual in Two Phases
Phase 1: Network Effects
Objective: Focus on accelerating growth and achieving network effects.
Incentives: Core actions are incentivized through liquidity mining and airdrops, encouraging the creation of vaults and delivery of security services.
Staking Benefits: Staking $HAT tokens offers increased access, visibility, and monetary benefits, signaling long-term commitment. Staking is optional but provides competitive advantages.
Community Ownership and Governance: Stakeholders begin to shape the protocol’s rules and processes, contributing to a strong community-driven ecosystem.
Arbitration Service: Activation requires a token stake, with a slashing mechanism for the losing party in arbitration, doubling as spam protection.
Token Buyback: Fees generated by the protocol are used for token buybacks, enhancing treasury value.
Phase 2: Value-Accrual
Transition: Initiated once the community agrees that network effects are sufficiently established.
Mandatory Stakes: Participation in the marketplace requires a minimum stake from both security experts and customers.
Stake Utilization: Ensures efficient marketplace operation, with potential slashing for malicious actions.
Stake Influence: Determines participant visibility, module access, and fee structures.
Token Buyback and Revenue Sharing: Continuation of the buyback policy; additional incentives for building on the protocol and revenue sharing.
In both phases, the $HAT token plays a crucial role in fostering a thriving ecosystem, aligning stakeholder interests with the protocol’s growth, and ensuring a fair, efficient, and rewarding marketplace.
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