A Token to Power the Assembly Ecosystem
EDIT: IOTA staking for the Assembly network is now live! Find out more here.
ASMB is the native token of Assembly. The ASMB token secures the Assembly network and what will eventually be thousands of independent but interconnected smart contract chains within the Assembly ecosystem. As is the case in all Proof of Stake-based networks, the security of Assembly is directly correlated to the amount of staked ASMB tokens and their value. The protocol provides the necessary incentives through staking rewards and the minting of new ASMB tokens (as well as punishment through token slashing) to keep token holders actively participating in the consensus and security of the network through staking.
Apart from Assembly’s security, the ASMB token also serves as a governance mechanism that empowers the community to participate in the decision-making of the protocol, DAOs and treasuries and the project's general direction. Assembly will be a fully community-governed project, where the most active and valuable stakeholders of the ecosystem will be able to directly influence the future of the project.
Considering the importance of the ASMB token in the security and governance of the entire network, the initial token distribution of ASMB has to be done in an open, fair and egalitarian way. Tokens have to be distributed to those who are actually contributing to the success of the project and the community at large should be able to participate in the distribution without restrictions or limitations.
There are several ways in which a new token can be distributed, such as public sales, launchpads or multiple private rounds to investors. From our experience, and what we’ve seen in other projects, all of these options have considerable shortcomings and potential risks that will lead to worse outcomes and frustrations in the future.
We’ve chosen to distribute the Assembly token in a way that is egalitarian and fair: 70% of the ASMB tokens will be distributed to the community in the form of community-governed DAOs, developer and governance incentives, grants and rewards to IOTA token holders staking their tokens to secure the Assembly network. The rest of the tokens are distributed to early participants that are providing the necessary ecosystem funding and technical development to bootstrap Assembly and its ecosystem.
Initial token distribution
The initial token distribution of ASMB will be 100 billion tokens, which will be fully vested over five years and distributed to the various network participants and early contributors.
The most important stakeholders of Assembly are its community of builders and innovators. As such, the majority of tokens from the initial token distribution – 40%, or 40 billion tokens – are reserved for community-governed DAOs and developer incentives. This will be one of the biggest builder incentive programs in the crypto space and will provide unique opportunities for early adopters of Assembly.
Tokens will unlock gradually over five years, making them available for the community to vote on and decide. The community will be fully empowered to independently direct funding to important software tools, libraries, building blocks and dApps building on Assembly. Dedicated community DAOs will be equipped with funding and a clear mandate to grow the Assembly ecosystem.
The exact distribution of available tokens will be decided according to the governance rules of the DAOs, which will be defined and voted on by all token holders during the official setup of the DAOs. The exact mechanics of this distribution will be openly discussed and decided by the community after the mainnet launch.
The IOTA network plays a special role in helping to bootstrap and secure the Assembly network. As such, Assembly will provide incentives to all IOTA token holders by distributing 20%, or 20 billion ASMB tokens, over a span of two years to IOTA stakers. This will allow anyone to participate in the launch of the Assembly network and get tokens simply by staking.
A regulated non-profit foundation based in Berlin, the IOTA Foundation has been operating successfully since 2017, helping to develop and grow the IOTA project and its ecosystem. Today the Foundation has close to 200 full-time team members distributed around the globe and it is one of the leading open-source research and development organizations.
The IOTA Foundation and its subsidiary, Smart Contracts Technologies AG, are entities that support the research, development and ecosystem of the Assembly network. The IOTA Foundation will receive 20% (20 billion) ASMB tokens which will be distributed over a five-year vesting period with one year cliff (lock-up).
Assembly will have a dedicated grants foundation in Switzerland. This fund is used to support the ecosystem in addition to the community DAOs and fund projects and teams that might not be able to receive funding from a DAO. A total of 10% (10 billion) of all ASMB tokens will be allocated to the ecosystem fund to spur innovation and help build and develop solutions for the Assembly ecosystem. The tokens will be distributed over a five-year vesting period with one year cliff (lock-up).
Early participants are composed of strategic supporters committed to the development and growth of the Assembly network and its ecosystem. These early participants are geographically distributed around the globe and will receive 10% (10 billion) of the ASMB tokens from the initial distribution. They have provided an initial $18 million in capital, and significantly more in ecosystem funding commitments. The tokens will be distributed over a two-year vesting period with one year cliff (lock-up).
Token release schedule
The release and unlocking of the initial ASMB token distribution will take place over the course of five years. Tokens have various vesting and lock-up schedules, to ensure the long-term success and aligned incentives of all participants. To keep the network secure and enable growth, a small portion of locked tokens will also be able to be staked in the main Assembly.
At genesis, around nine billion tokens will be unlocked to support applications, use cases and network liquidity. These tokens will make up the initial circulating supply and will be freely available to transfer on the network. An additional four billion tokens will be available within the Community DAO to vote on its distribution, and will only count to the circulating supply once voted on by the community.
The other part of the initial distribution will gradually be as follows:
- IOTA stakers will receive 20% of the ASMB token supply, distributed over two years, with rewards gradually decreasing over the duration. Assuming a 60% staking ratio on IOTA, around 5.1 billion tokens should be unlocked and available at the mainnet launch.
- 10% of the tokens from early participants (one billion), IOTA Foundation (two billion) and Ecosystem Fund (one billion) are unlocked at the launch of the mainnet.
- Tokens held by early participants will be unlocked incrementally by vesting daily over a two-year period, with an initial one-year lock-up.
- Tokens held by the IOTA Foundation and the Ecosystem Fund will unlock incrementally, vesting daily over a five-year period with an initial one-year lock-up.
- Tokens from the DAO are released gradually over a five-year period but only count to the circulating supply once they are distributed after a community vote.
At the end of year five, all 100 billion tokens from the initial token distribution will be fully unlocked, be freely transferable, and distributed around the world.
IOTA token rewards
IOTA token holders play a crucial role in providing access and security to the IOTA ledger. Assembly will be one of the main drivers of adoption on IOTA and will need reliable throughput access. It is in the best interest of the Assembly network to also provide short and long-term incentives to IOTA token holders to provide this access and further align the incentives of both networks.
As part of the initial token distribution of Assembly, IOTA stakers will receive 20% of the total supply, which is 20 billion ASMB tokens. These tokens will be distributed over a two-year period, making IOTA holders the largest stakeholders in Assembly and empowering them to actively participate in the governance of the Assembly network, and the further distribution of tokens to DAOs.
The first ASMB token distribution will happen over a 90-day period, with one MIOTA receiving 0.000004 ASMB every 10 seconds (or four microASMB). Assuming a staking ratio of 60% on IOTA, a total of 5,187,270,595 ASMB tokens will be unlocked. In the case of more stakers, the unlocked ASMB tokens will be higher.
Following the upgrade of the IOTA mainnet with the Tokenization and Smart Contracts frameworks, the Assembly token distribution will resume with fixed daily token distributions to IOTA stakers. This means that, for this staking period, staking rewards will be variable and dependent on the amount of stakers. These staking rewards will then continue for the next 21 months until the initial token distribution is fully released. The exact rewards will be defined upon the launch of the ASMB mainnet.
Considering the importance of the IOTA base layer to the Assembly network, there will be future governance decisions to provide further incentives to IOTA token holders. Ultimately it will be up to the Assembly community to decide the scope.
Community DAOs and incentives
Many Layer 1 networks have launched significant developer incentive programs, throwing around hundreds of millions of dollars worth of tokens to incentivize developers and liquidity. Assembly will take a different approach and instead empower the community to strategically allocate part of the initial token supply and effectively achieve the same goal: to accelerate the growth of the ecosystem and reward early participants.
As part of this allocation, tokens may be used for:
- Developer incentives, as part of the builders’ program to reward projects launching on Assembly with ASMB tokens after they reach certain milestones.
- Liquidity and bridge incentives, to reward liquidity providers on Assembly that reach a certain total value locked (TVL), or assets that are bridging from other networks to Assembly.
- Governance incentives, for participating in the overall governance of Assembly.
- Community-governed DAOs, where tokens are thematically allocated and governed by a group of community members.
The 40% distribution and its allocation to the various initiatives will ultimately be decided by the community. The exact details of the distribution will be discussed in depth within the Assembly community over the coming months.
There is no single initiative or effort that will make Assembly a successful and thriving ecosystem. Instead, there will be hundreds or even thousands of different community-led efforts to bootstrap, grow and scale the ecosystem. By reserving such a large supply of the initial token distribution, the community will be fully empowered to take matters into their own hands and build one of the largest crypto ecosystems. Anyone will be able to propose their unique ideas, discuss them and let the community vote on them.
ASMB staking and staking rewards
The protocol is designed to provide incentives in the form of staking rewards to increase the number of validators and stakers. Apart from receiving a share of execution fees earned, stakers also receive a share of newly distributed minted ASMB tokens. The initial inflation rate set by the protocol will be around 8%.
As execution network fees and other token rewards increase, the inflation on ASMB will decrease every year. This is because a natural incentive is provided to Assembly validators and delegators as more transaction volume is generated on the network. The inflation on ASMB can be voted on via community governance.
All ASMB tokens, including those locked in the initial token distribution, will be able to be staked. This is intended to maximize the security of the Assembly network.
The Assembly protocol will implement a governance mechanism deeply integrated into the protocol, empowering the community to vote on upgrades and defining certain network parameters (such as yearly inflation rate). Exact details of the governance framework will be shared in the coming weeks. Ultimately, the ASMB token will be used as part of the governance and used to either elect representatives to certain DAO councils or vote directly on issues.
It is important to note that only tokens in the circulating supply will be able to participate in governance. Locked tokens will not be able to vote.
As an example, see below a theoretical estimation of how the distribution of governance voting rights in Assembly would develop over time (assuming no one of the entities is selling tokens and excluding the yearly 8% inflation for staked tokens)