2024-12-20

Published on Friday, December 20, 2024

By PermaDAO

In Aolotto's Tokenomics

Tags Aolotto's Tokenomics

Analysis of Aolotto's Tokenomics: The Magic of $1 On-Chain Betting

Aolotto is the first decentralized lottery protocol of AO, designed to provide users with a fair and transparent lottery experience through low-barrier betting and a profit-sharing model. Players can participate with just $1 and earn $ALT rewards. Tokens are minted through the Bet2Mint mechanism, and in the future, the platform will expand around the LottoFi ecosystem.

Author: Kyle

Translator: Kyle

Reviewer: Marshal Orange

Source: Content Guild Translation

Originally published at: PermaDAO

Original link: https://permadao.com/Analysis-of-Aolotto-s-Tokenomics-The-Magic-of-1-On-Chain-Betting-d3db08bafe7643dfba2a0e71d7ce3294

Lottery has always been a consumer product aimed at the public, fulfilling people's needs for entertainment and hope, with a broad base of participants. In the world of Web3, decentralized lottery protocols not only eliminate the drawbacks of traditional lottery industries (such as opaque operations) but also create a "Shared joy is better than solitary joy" scenario.

Still haven’t become a millionaire overnight? No worries, you can at least enjoy a share of platform revenue. This is the "profit-sharing" philosophy that Arweave & AO ecosystem has always championed. What's more, now everyone can enjoy a seamless on-chain betting experience on Aolotto with just $1.

Aolotto is the first decentralized lottery protocol of AO. Although the product has not officially launched, the tokenomics have recently been announced. Let’s take a look at the gameplay, product highlights, and the details of its economic model.

Aolotto Gameplay

Aolotto’s official gameplay details have not yet been released. The following information is a summary based on in-depth discussions between the author and the team (Twitter: @aolotto_dao). Any changes will be based on official Aolotto announcements.

Specifically, Aolotto’s gameplay is similar to traditional "Pick 3" digital lottery. Players select numbers from 0 to 9 for the hundreds, tens, and ones places, and place their bets using wUSDC. After placing a bet, players can also receive $ALT platform token rewards. Aolotto protocol then generates a 3-digit lucky number between 000-999 using a random algorithm.

The lottery draw time is not fixed. The draw will be triggered when one of the following conditions is met:

No additional bets are placed within 24 hours after the last bet, and the countdown ends automatically triggering the draw.
The total amount of current round bets reaches a preset target value, which triggers the draw.

Winning players can win 50% of the current round's prize pool, and the remaining 50% will be carried over to the next round as the initial prize pool. If there are no winners in the round, the last player to place a bet will win 50% of the total prize pool. Additionally, all participants who placed bets will receive $ALT rewards.

Aolotto Product Highlights

The main highlights of Aolotto protocol include:

$1 ultra-low betting threshold: Users only need to spend as little as $1 to place a bet (with a maximum multiplier of 100x) and no Gas fees are required.
No entry restrictions: There are no geographical or identity restrictions; anyone around the world can participate directly.
Transparent drawing process: The lottery draws are completely executed based on the on-chain HMAC algorithm, ensuring that all data and logic are publicly verifiable, guaranteeing the credibility and fairness of the results.
Anonymous prize claim mechanism: Winners can withdraw their rewards anonymously, without revealing their personal information, ensuring full privacy protection for participants.
Seamless user experience: Aolotto protocol is built on the AO framework, supporting the parallel operation of an unlimited number of processes, which helps alleviate network congestion.
Permanent operation: Both the front-end and back-end are hosted on the Permaweb, ensuring that the lottery rounds can continue indefinitely, realizing the concept of a “never-ending” game.

Aolotto Tokenomics

$ALT (AoLottoToken) is the native token of the Aolotto platform and the future circulating currency of the LottoFi ecosystem. $ALT is used to incentivize user bets and serves as a key tool for platform dividends and governance participation.

The initial issuance of $ALT is 0, with no team allocation, no VC, and no fixed issuance cycle. $ALT can only be minted through users' betting behavior, i.e., Bet to mint. The maximum total supply will not exceed 210,000,000 (210 million).

Token Issuance Mechanism

$ALT are primarily issued through two mechanisms: Bet2Mint mechanism and faucet rewards.

Bet2Mint mechanism: Users mint $ALT by placing bets.
Faucet rewards: Early users can receive a "mint buff (ALTb)" through the faucet, which boosts their ability to mint more $ALT tokens through their bets.

Bet2Mint mechanism is the primary issuance mechanism for $ALT. There is no fixed issuance cycle, and the minting speed depends entirely on users' betting activity. This mechanism accounts for 90% of the total token supply, up to 189,000,000.

The faucet rewards are aimed at incentivizing early users, accounting for 10% of the total supply, up to 21,000,000, which are distributed to players holding ALTb. Once the faucet reward pool is depleted, the faucet will be closed.

Both the Bet2Mint mechanism and faucet rewards are influenced by multiple variables, with a complex formula for calculating how many $ALT are minted per round of betting. For more details, refer to the project’s whitepaper: https://docs.aolotto.com/cn/usdalt.

Token Distribution Mechanism

$ALT minted through betting are not all allocated to users. Specifically, for every $ALT minted, it is allocated into two parts:

80% for user rewards: Users receive the majority of the minted $ALT.
20% for minting tax: The minted $ALT are allocated to the AolottoFoundation to support future protocol operations and development.

Dividends and Buyback Mechanism

The total betting volume accumulated by Aolotto is considered the platform's sales volume. Additionally, at the end of each round of betting, the platform imposes a 40% tax on the winners, which is used for platform dividends and token buybacks.

Token Holder Dividends: The dividend amount is 20% of the sales increment. Aolotto protocol triggers a dividend every 4 hours. Dividends are distributed in $wUSDC based on the proportion of $ALT held. If the sales increment during a dividend cycle is less than $1000, the dividend will be accumulated to the next cycle until the dividend standard is met.
Buyback and Burn: Aolotto protocol will use 20% of the accumulated sales volume to buy back $ALT from the market. The buyback decision is made autonomously by an on-chain agent, aiming to balance the circulation of tokens in the market and stabilize the $ALT market value. The repurchased $ALT will be permanently burned. The buyback and burn process is fully transparent, and all records are publicly available on the blockchain.

Conclusion

Aolotto whitepaper has been released, and the product launch is imminent. Users will soon be able to experience the low-barrier entry lottery experience. For just $1, you can seize the chance for a "huge" surprise while minting $ALT tokens and participating in future platform dividends.

Of course, Aolotto protocol's ambitions don't stop there. In the future, it will build a larger LottoFi ecosystem around $ALT. Through decentralized games, content distribution, and NFT marketplaces, $ALT's scarcity will increase, providing users with more interaction and profit opportunities, forming a diversified LottoFi ecosystem.

Aolotto Official Website: https://aolotto.com/

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Disclaimer: This article does not represent the views of PermaDAO. PermaDAO does not provide investment advice or endorse any projects. Readers should comply with their country's laws when engaging in Web3 activities.