Funding

Superstate has a fundamentally different approach to funding than the space has traditionally used, whereby most valuations were purely speculative guesses as to a reasonable amount the founders thought the project should be worth, with the investments being based on speculation that the speculative value for tokens will be higher than the value the founders proposed, this models bad so we made a better one.

Tldr

The 10m tokens @ $0.6 per tokens creates a $6m target for the round. Redeemable by burn post successful LP swap for about $0.65 directly as a risk free rate should they wish to just burn tokens for money back as a hard floor. Tokens have vote rights, earn LP fees, protocol fees and RFR increase based on treasury.

LP Swap

To understand the funding model you need to understand the post launch LP Swap. At launch 70m SUP tokens from the 100m allocation will be allocated towards the LP Swap. The LP for Superstates AMMs will be able to be swapped for the SUP governance token with the Superstate Treasury at $1 in LP for 1 token. LP Swap creates a mechanism whereby people are able to help the project grow liquidity that can be moved by the DAO and managed, while having a say how the money they contributed gets used, increasing sovereignty and agency by those who participate to help control the Treasury.

By having 70m tokens allocated and swapped for $1 USD in LP the Treasury will be funded to $65m target for the LP Swap to be considered successful. These tokens in the Treasury earn fees from their use as they are LP assets and so each SUP token will be backed by $0.65 in Treasury assets that also should increase with time. This creates a $0.65 hard redeemable floor using rageQuits per 1 SUP token at the moment the LP swaps successful for all tokens. We consider this the Risk Free Rate as it's a hard gauranteed value that the tokens are redeemable for post the LP Swap.

rageQuit

SUP tokens are able to be burned at any time for their fair, relative stake from the Treasury. This allows users who feel the DAO does not represent them or that theres a malicious actor to burn assets and walk away with their fair stake in the DAO. This mechanism allows 1 SUP token to be burned for $0.65 in assets post LP Swap or whatever the Treasury value / supply happens to be.

As the Team allocation and investor allocation do NOT directly fund the Treasury, this creates dilution from the $1 to 1 SUP LP swap rate. This however also allows SUP holders to have vote rights to the DAO and Treasury, earn fees from the Treasury LP as well as earn protocol fees from ALL fees from the protocol for all users for funds they contributed, creating direct agency and sovereignty/autonomy, as well as a mechanism to walk away from the DAO with your fajr share.

Distribution

100m Tokens Total Supply

20-27m Team allocation

3-10m Investment allocation

70m LP Swap

• 28m USDc/USDt LP

• 22m USDc/DAI LP

• 10m USDc/ETH LP

• 10m SUP/ETH LP Uniswap v3

Funding

So now that the LP Swap and rageQuits are explained the valuation will be as follows for the seed round.

10m token allocation for investment

Tokens are valued at the risk free rate, which assumes that the LP swap will be successful given enough time (though $65m mcap seems relatively low considering the project scope and we feel should be easy to achieve) and as such tokens are valued at the $0.6 they are directly burnable for post a successful LP Swap (a $0.05 discount to account for some volatility wrt ETH/USD LP) which creates a hard floor investors can burn their allocation for for their money back.

Tokens will not be vested and there will be no restrictions on the assets as the LP Swap should put everyone on roughly the same level (with investors getting a rate closer to the RFR due to the speculative risk that the LP Swap may not be immediately filled and successful at the start) we believe that the hard floor using rageQuits creates a hard foundational value for the project, as thats the hard guaranteed rate they can burn for to get any funds back.

We acknowledge that theres a chance the LP Swap may not be successful right away but we want investors that believe in the project and are willing to wait even through a bear cycle for the LP Swap to be successful, and the RFR rewards them with a hard floor on their investment in return while also having exposure for the protocol as a whole, earning protocol fees, having vote rights, earning LP fees as well as any valuation for the protocol itself.