Tokenomics

Dive into how DOLO, veDOLO, and oDOLO form the core of the Dolomite ecosystem

With a total fixed supply of 1,000,000,000 tokens, DOLO leverages mechanisms inspired by successful DeFi models, while integrating unique innovations tailored to Dolomite’s ecosystem. The distribution of DOLO is structured to incentivize community participation, protocol growth, and alignment with long-term stakeholders.

The Virtuous Cycle

DOLO’s tokenomics are designed to create a self-sustaining virtuous cycle that aligns incentives across all stakeholders:

1. oDOLO introduces buy pressure as users purchase or borrow DOLO for the pairing process and then purchase discounted veDOLO

2. Protocol-owned liquidity (POL) grows from veDOLO purchases, providing stability and increasing platform attractiveness.

3. More liquidity attracts users, increasing protocol revenue.

4. As governed by the DAO, protocol fees can be distributed to veDOLO stakers, incentivizing further DOLO staking.

This cycle ensures that participants benefit proportionally from the protocol’s growth, fostering long-term ecosystem alignment.

DOLO

DOLO

DOLO is a standard ERC-20 token without any of the additional functionality tied to veDOLO or oDOLO. DOLO plays a foundational role in the Dolomite ecosystem by enabling exchange liquidity, transferability, lending, and an on ramp for new users into the Dolomite ecosystem.

Key features:

• Liquidity Provision: DOLO powers the initial exchange pools, ensuring a robust and accessible trading environment.

• Governance Flexibility: Serves as the foundation for governance participation when converted to veDOLO.

• Future-Proof Utility: Supports long-term growth with an inflation mechanism designed to fund ecosystem expansion and strategic initiatives.

Genesis and Deployment on Berachain

DOLO will launch as an ERC-20 token on Berachain using a lock-and-mint mechanism powered by Chainlink’s Cross-Chain Interoperability Protocol (CCIP). This allows seamless token movement across the Dolomite ecosystem.

• DOLO’s total supply will be managed and locked on Berachain.

• The lock-and-mint model ensures supply transparency and facilitates tracking on platforms like CoinMarketCap.

• Over time, DOLO will freely flow between networks where Dolomite is deployed.

Initial DEX Liquidity

Dolomite will launch initial DOLO liquidity through a DOLO/WETH pool on Kodiak. This includes:

• Full-range liquidity to ensure market accessibility.

• Concentrated liquidity near the initial price to maximize trading efficiency.

The DAO will also manage protocol-owned liquidity (POL) to ensure a robust trading environment and to support liquidity mining incentives over time.

Inflation

Starting in year 4 DOLO will adopt a 3% annual inflation rate. This inflation is designed to:

• Fund ecosystem growth and liquidity incentives.

• Allow the DAO to allocate tokens toward strategic initiatives or burn them entirely based on governance decisions.

The inflation mechanism ensures that the protocol has the resources needed to sustain long-term development while giving the DAO flexibility to adapt to market needs.

veDOLO

veDOLO

Vote Escrowed DOLO allows users to maximize their involvement in Dolomite by staking DOLO to gain governance influence and earn rewards. With its flexibility and additional utilities, veDOLO strengthens user engagement and aligns long-term incentives for ecosystem growth.

Key features:

• Voting: Influence protocol governance, asset listings, and upgrades.

• Fee Collection: Earn a share of fees generated by Dolomite's operations, including POL earnings and transaction fees, at the discretion of the DAO.

• Boosting: Increase emissions rewards for liquidity pools based on voting weight.

• Transferrable: veDOLO is implemented as an NFT, offering transferability and the ability to merge or split locks.

Lock Durations and Features:

veDOLO allows users to lock their DOLO tokens for durations of up to 2 years, offering flexibility for participants to choose short-term or long-term staking. The more time remaining on the lock, the greater vote weight and share of fees. Users can break their locks early by paying an exit fee, which includes a fixed burn fee of 5% (modifiable via governance) and a recoup fee that starts at 50% for a 2-year lock and decays linearly to 0% as the lock matures. These mechanisms promote ecosystem stability and ensure alignment between users and the protocol.

oDOLO

oDOLO

The oDOLO token serves as an innovative mechanism to reward liquidity providers. Distributed weekly, oDOLO must be paired 1:1 with DOLO to convert into discounted veDOLO. This system creates buy and borrow pressure on DOLO and supports protocol-owned liquidity (POL).

Once pairing is completed, veDOLO can be purchased at a discount from market price, either creating a new veDOLO lock or adding to an existing one. The discount depends on how much time the lock is for, with a 50% discount for 2 years and 5% for 1 week.

Key Features:

• Pairing Duration: 1 week

• Discounts: Linear discounts from 5% to 50%, depending on veDOLO lock duration.

• POL Growth: Accumulated liquidity can be converted to stablecoins or other key assets to support protocol stability.

By encouraging participants to lock their tokens for longer durations, oDOLO strengthens Dolomite’s ecosystem while discouraging short-term, mercenary behavior.

Instant Exit for oDOLO

For participants who wish to liquidate oDOLO without pairing, the protocol allows for an instant exit option through a buyback mechanism funded by recoup fees:

• The DAO will buy back oDOLO at a rate determined by the DAO.

• Recoup fees are stored in a liquidity pool specifically allocated for these buybacks, funded by penalties paid for early veDOLO lock breaks.

• If the pool depletes, buybacks pause until additional recoup fees are accrued.

This feature discourages dumping and supports healthy token circulation, ensuring the system maintains stability and long-term incentives.