How-To: SNS tokenomics configuration

Goal

• This intention of this page is to collect information enabling teams to choose a tokenomics set-up for their SNS DAO.
• Furthermore, it should help potential participants of SNS decentralization swaps to review proposed SNS tokenomics configurations.

SNS rewards & participation

The SNS governance framework is a customizable version of the NNS framework. All its parameters can be set in the SNS initialization file, which also contains a comprehensive guide to these settings. For more detailed information about SNS rewards, please refer to this link.

In the SNS decentralization swap process, community members have two ways to get involved. One is direct participation, where they can exchange their ICP for SNS tokens.

Alternatively, community members can engage indirectly through the Neurons' Fund (NF). The extent of the NF's involvement in a specific SNS swap is decided by the Matched Funding scheme. This scheme correlates the fund participation with the level of direct participation. For more details on the Neurons' Fund, visit this link.

SNS tokenomics training & tools

Via this spreadsheet tool you can assess SNS tokenomics configurations. In order to use the tool and modify input parameters, please make a copy. The tool covers

• SNS input parameters: Contains all tokenomics parameters for SNS initialization, e.g. voting reward rate, swap parameters, initial token allocation, etc.
• Token price range: Visualizes the minimum & maximum funding target vs the amount of tokens swapped, as well as the token price range in ICP and USD.
• Voting power assessment: Visualizes the initial token allocation and voting power. It is further possible to parametrize and simulate 51% attacks.
• Total supply over time: Simulates how total supply of SNS tokens could develop over time.

Frequently asked questions

• How many and what kind of neurons do you receive when directly participating in an SNS swap ?
  • "In an SNS initialization, a project defines the number of SNS neurons and their dissolve delay range. For instance, a neuron basket with 3 neurons and a 1-month interval will result in neurons with dissolve delays of 0, 1, and 2 months."
• How precisely do the minimum and maximum funding targets influence the swap ?
  • "The swap fails if the minimum funding target is not met within the swap window. Conversely, if the maximum funding is reached, the swap concludes immediately."
• What should projects consider when setting the minimum and maximum funding targets?
  • "Set a realistic maximum funding target to create scarcity and drive token demand, as reaching this target ends the swap, possibly excluding some participants. A very high maximum can lead to a post-launch price drop, while a very low maximum might limit participation and miss funding opportunities."
• What considerations are there when choosing the minimum stake of SNS neurons?
  • "The minimum stake is the lowest amount of SNS tokens required for a neuron. A lower value increases accessibility for those wanting to participate with fewer tokens. However, with a technical limit of 200K neurons in an SNS, a very low minimum stake might lead to too many small neurons."
• What should be considered when setting the minimum dissolve delay for SNS neurons?
  • "The minimum dissolve delay is crucial for voting eligibility. It encourages prudent, long-term voting as tokens are locked up. It also offers some defense against attacks, especially those funded by borrowed resources. However, if an attacker gains 51% of the voting power, the minimum staking period becomes irrelevant.

Background material

• Overall intro to SNS https://internetcomputer.org/sns/
• Tokenomics of a DAO: https://internetcomputer.org/docs/current/tokenomics/sns/tokenomics