LLT Tokenomics

Introduction

DeFi represents a fundamental shift in how financial systems operate, removing traditional intermediaries and enabling direct community control. Within this ecosystem, governance and tokenomics form the foundation of how protocols evolve, make decisions, and create sustainable value for participants.

Amplified Protocol's governance and tokenomics model builds upon lessons learned from the DeFi ecosystem's development. By studying successful implementations in protocols like Uniswap, AAVE, and Frax, Amplified creates a framework that balances efficient decision-making with decentralized control. This approach is particularly crucial in the LST/LRT space, where careful management of staked assets and yield strategies requires both agility and security.

Core Token Structure

In DeFi protocols, tokens serve multiple crucial functions beyond simple value transfer. They create alignment between stakeholders, enable governance participation, and facilitate the distribution of protocol value. Amplified's dual-token system - consisting of LLT (governance) and aaaETH (yield-bearing) tokens - is carefully designed to serve these essential functions while addressing the unique requirements of LST/LRT management.

The governance token of a protocol represents more than just voting rights - it embodies the collective will of the community and their stake in the protocol's success. LLT serves as the cornerstone of Amplified's governance system, creating a framework where token holders become active stewards of the protocol's development and operation.

In traditional financial systems, decisions are made by centralized authorities, often leading to misalignment between user interests and protocol development. LLT transforms this dynamic by distributing control among stakeholders, ensuring those with the most to gain from the protocol's success have direct influence over its evolution.

LLT holders possess significant authority in shaping the protocol's future through:

1. Protocol Upgrades

In DeFi, protocols must evolve to remain competitive and secure. LLT holders have the power to:

• Vote on implementation of new features and functionalities

• Approve smart contract updates via proxy contracts

• Authorize emergency measures like deposit/withdrawal pauses when necessary

• Direct system security enhancements

This upgrade authority ensures the protocol can adapt to changing market conditions while maintaining security and stability.

1. Strategy Management

The success of Amplified depends heavily on its investment strategies. LLT holders control:

• Risk parameter adjustments to maintain protocol safety

• Allocation limits to ensure proper diversification

• Whitelisting of new LST/LRT assets to expand opportunities

• Integration approval of new DeFi protocols

This level of control allows the community to carefully manage risk while maximizing potential returns.

1. Economic Control

The economic health of the protocol requires careful management. LLT holders govern:

• Protocol fee structure modifications to ensure sustainability

• Treasury fund management for long-term stability

• Distribution of protocol resources to align incentives

• Fee model adjustments to remain competitive

These powers ensure the protocol maintains financial sustainability while providing value to all stakeholders.

1. Fee Structure

LLT holders are responsible for the protocol's economic sustainability through:

• Fee Model Management

  • Setting and adjusting protocol fee rates on yield generation

  • Ensuring competitive and sustainable fee structures

  • Balancing user value with protocol sustainability

  • Maintaining transparency in fee collection

• Treasury Operations

  • Strategic management of collected fees

  • Allocation of funds for protocol growth

  • Investment of treasury assets

  • Authorization of token buybacks when beneficial

• Value Distribution

  • Oversight of fee revenue allocation

  • Management of protocol reserves

  • Direction of funds for liquidity provision

  • Authorization of treasury-funded initiatives

This economic control ensures the protocol can:

• Generate sustainable revenue from yield activities

• Build and maintain protocol reserves

• Support long-term growth initiatives

• Align stakeholder interests through careful resource management

1. Operational Oversight

Day-to-day operations require careful supervision. LLT holders oversee:

• External strategy executor management

• Oracle system supervision for accurate pricing

• Rebalancing strategy oversight

• Vault compound process monitoring

This oversight ensures transparent and efficient protocol operations.

Staking and Voting Power (veLLT)

To align long-term interests and prevent governance attacks, Amplified implements a staking mechanism that transforms LLT into veLLT (vote-escrowed LLT). This system, inspired by successful models like Curve's veCRV, encourages long-term thinking and active participation.

1. Base Staking The foundation of the voting system includes:

• Simple LLT to veLLT staking process

• Initial 1:1 conversion ratio

• Base voting power establishment

This straightforward system ensures accessible participation while maintaining security.

1. Enhanced Voting Rights To encourage long-term alignment, the system offers:

• Lock periods extending up to 5 years

• Voting power increase up to 2x based on lock duration

• Linear scaling between 1x and 2x multiplier

• Incentives for long-term protocol alignment

This tiered system rewards users who demonstrate long-term commitment to the protocol's success.

1. Delegation System Understanding that not all token holders can actively participate in governance, the system provides:

• Flexible voting power delegation options

• Representation by active community members

• Maintained decentralized decision-making

• Enhanced governance participation opportunities

This delegation system ensures high participation while allowing passive holders to have their interests represented.