$ARC, a Utility Token.

Abstract

ARC exists to empower community-driven innovation that builds, supports, maintains, and secures a safer future for Web3. The Reactor and its surrounding ecosystem is fueled by the participation from its users of a broad community of builders, developers, service providers, and more to succeed. This overview will help you understand how the core facilitating component of the ecosystem, the ARC token, is distributed and utilized to support the growth of this ecosystem.

It's important to make the distinction between a token distribution schedule and the utilities of that token. This overview describes the functions of the utility token, its new soon to be born synthetic partner and how both tokens play a crucial role in the evolution of the ecosystem. The distribution, allocation and  unlocking frequency of the tokens has also been highlighted and reiterated in this document to assist in providing clarity.

1. What is a Cryptocurrency?

A cryptocurrency is the native asset of a blockchain network that can be traded, utilized as a medium of exchange, and used as a store of value. A cryptocurrency is issued directly by the blockchain protocol on which it runs, which is why it is often referred to as a blockchain’s native currency. In many cases, cryptocurrencies are not only used to pay transaction fees on the network, but are also used to incentivize users to keep the cryptocurrency’s network secure. 

Cryptocurrencies typically serve as a medium of exchange or store of value. A medium of exchange is an asset used to acquire goods or services. A store of value is an asset that can be held or exchanged for a fiat currency at a later date without incurring significant losses in terms of purchasing power.

Cryptocurrencies typically exhibit the following characteristics: 

  • Decentralized, or at least not reliant on a central issuing authority. Instead, cryptocurrencies rely on code to manage issuance and transactions.

  • Built on a blockchain or other Distributed Ledger Technology (DLT), which allows participants to enforce the rules of the system in an automated, trustless fashion. 

  • Uses cryptography to secure the cryptocurrency’s underlying structure and network system.

2. What is a Token?

Tokens are also referred to as Crypto Tokens and are basically a unit of value that companies create on the top of existing blockchain networks. For example, the native token for the Ethereum blockchain network is called ETH. While many other crypto tokens have also been created utilizing the existing Ethereum network which are LINK, COMP, crypto kitties, etc. Each of these tokens might have various functions depending on the platforms they are built for using smart contracts. 

There is a huge variety of tokens that currently exist in the market and most of them utilize the Ethereum blockchain network. As per crypto auditor, they use the ERC-20 token standard most commonly as it interoperates with Ethereum Ecosystem. They also use ERC-721 which enables non-fungible tokens, which are unique and cannot be interchanged with any other token. These tokens are often used by platforms to issue a token to the user for providing an NFT and the token has all the information of the owner and transactions coded to it. Due to their use, the number of tokens available on the network is constantly increasing every day. 

  • Tokens are programmable

  • They are also permissionless 

  • They are decentralized which means that no central authority can control it and it runs on the regulation put down by the network protocol. 

  • The transactions and protocol are viewable and verifiable by all the users having the tokens which makes it completely transparent as well.

A. Some common types of cryptocurrency tokens

  • Utility Tokens
    Utility tokens are designed to be used as a means of exchange within a specific platform, network, or ecosystem. They do not have any intrinsic value outside of their use within their environment, and they are not intended to be used as a form of investment.

  • Security Tokens
    Security tokens represent ownership of an asset, such as a company's stock or real estate. They are subject to federal securities laws and are intended to be used as a form of investment.

  • Asset-backed Tokens
    Asset-backed tokens derive their value from, and are backed by a physical asset, such as gold, fine art, gems, or real estate. They can be used as a way to trade the underlying asset, and may be subject to regulations depending on the specific asset and jurisdiction.

  • Payment Tokens
    Payment tokens are designed to be used as a means of transacting payment(s) and can be used to purchase goods and services from merchants that accept them.

  • Stablecoins
    Stablecoins are designed to be pegged 1:1 to the value of a fiat currency, such as the US dollar (USD), in order to reduce price volatility.

  • Governance Tokens
    Governance tokens are used to give the token holders a voice or vote in the governance of a decentralized autonomous organization (DAO) or other decentralized platform.

  • Non-Fungible Tokens (NFTs)
    NFTs represent a unique asset, such as a digital collectible or a piece of art, and they cannot be exchanged for other tokens on a one-to-one basis.

3. What is $ARC?

$ARC is an ERC-20 Token. An ERC-20 token is a type of digital asset that is built on the Ethereum blockchain. It conforms to a set of standards, known as ERC-20, which define a common set of rules for all Ethereum-based tokens. This standardization allows for interoperability between different tokens, as well as ease of development for new projects. ERC-20 tokens can be used for a variety of purposes, such as representing a unit of value, a digital asset, or a right to participate in a decentralized platform. They are created and managed using smart contracts on the Ethereum blockchain.

What is $ARC’s Utility?

  • Rewards & Airdrops

  • Staking $ARC earns you a share of rewards that we generate from  partnership deals involving tokens, NFT’s, and the Reactor

  • To access the ARC Reactor, $ARC must be staked to allow access, thus removing liquidity from circulation

  • Gas Fees for Reactor (future)

  • Governance (future)

  • Staking $ARC in a Farm 2.0 generates the $stARC token - the reward sharing mechanism reflected as a % of the staker’s $ARC of the total liquidity pool 

4. What is $stARC

$stARC is a synthetic reward token with no value outside of the $ARC ecosystem. The price of $stARC is set and will not fluctuate. $stARC is a reward token and can’t be purchased.

The volume of $stARC issued will be directly correlated to the volume of funds in the LP (highlighted in blue) not by the price of $ARC.

$stARC has its own LP and this will be automatically topped up by the Company’s revenue pooled in 3 areas:

  • ARC Bank Account

  • ARC Reactor Treasury

  • ARC Decentralised Treasury

Illustrated below some of the key elements of the interactions between different processes within the ecosystem.

  • When a user stakes $ARC in Farms 2.0 they will start to accumulate $stARC tokens as a reward.[You will notice that ARC staked to access the Reactor (Stake for Service Access (POS) is not eligible for $stARC]

  • $stARC will be used as a reward token, and the amount issued to individuals will be in direct correlation the following factors:

  • 1. The volume of revenue being generated and deposited into the liquidity pool (highlighted in blue)

  • 2. The amount of tokens held by a specific user in farms

  • $stARC can not be farmed or staked and it can not generate yield. The only way to earn stARC is to stake ARC

  • Equity investors will be paid dividends in $ARC up until their allocation has been depleted. After the $ARC tokens have been depleted, equity investors will be paid in stable coins

  • When $stARC goes live it will be the sole reward for staking in our Farms

  • $stARC can't be compounded or staked, only burned for $ETH

Example

200m tokens in total are staked in the Farm 2.0. User A controls 1m of these tokens.
User A will command 0.5% of all $stARC issued on a monthly basis
$stARC is issued in correlation with ARC’s revenue that month (see diagram above).

A. Converting $stARC to ETH

When the user wants to convert their $stARC rewards into $ETH, they can sell their $stARC which will burn the synthetic token and exchange the value of the tokens for the amount equal in $ETH.

As $stARC has a fixed value it acts as a reward on company performance and the sale of the $stARC tokens will have zero (0) price impact on the $ARC Utility Token.

As the Reactor and DeFi ecosystem expands in size and scope, so does the liquidity sent to the LP.  This growth* increases the volume of $stARC issued, which in turn, increases the reward amount. In future giveaways, and rewards from partnerships, a % will be deposited into this fund in order to increase the volume of $stARC tokens distributed.

$stARC will be deployed along with Farms 2.0 in Q3 2023 and as ARC continues executing  its Roadmap, the community will be updated with all facets of development via social media outlets, Newsletters, and other publications.

*Note if the revenue decreases so do the rewards sent in $stARC

    Stake $ARC, receive $stARC

    5. Token Unlock Schedule

    To further provide clarity around the $ARC token and its distribution, this section explains the unlock schedule and overall Tokenomics.

    Token Circulation
    At present there are 535,095,675 tokens in circulation (as at 12 Jan 2023).https://www.coingecko.com/en/coins/arc33.69% of these tokens are staked in ARC Farms (as at 12 Jan 2023).

    Volume
    At present (as at 12 Jan 2023) there are 460,004,324 $ARC tokens locked in Unicrypt’s Vault (210m added on [05 Jan 2023] for an additional 12 months).
    https://etherscan.io/token/0xc82e3db60a52cf7529253b4ec688f631aad9e7c2?a=0xdba68f07d1b7ca219f78ae8582c213d975c25c
    Frequency
    The 460m tokens locked in Unicrypt are set to unlock at 18:00 UTC on the 29th of each month concluding on the 29th August 2024, at 18:00 UTC (20 unlocks scheduled from January 2023 with the sum of 12.5m tokens each month). The final 210m tokens will be released on 13 January 2024. ARC reserves the right to lock these tokens again for a period of time depending on the need to access these tokens for cross chain expansion, CEX listings, partnerships and marketing campaigns.

    6. Token Allocation & Distribution

    The tokens are distributed as per the tokenomics on the website https://www.arc.market/arc-tokenThe current allocation of tokens to wallets can be found on Etherscan:https://etherscan.io/token/0xc82e3db60a52cf7529253b4ec688f631aad9e7c2#balance

    So what do all these sections mean and is it just a fancy way to hide tokens controlled by the project? In short, the answer is no. The amounts are carefully thought out and will explain these sections in more detail.

    • Seed Sale - 8% - 80m - $0.00125 per token
      Initially offered to close friends and family of the founders and was part of the initial raise.

      - All tokens from this initial raise are in circulation.

    • Private Sale - 20% - 200m - $0.0025 per token
      This was offered to approximately 650 investors on an investment platform and comprised the largest single body of investment to date. A majority of the ARC community originated from this group of token holders.

      - All tokens from this section are in circulation.

    • Public Sale - 5% - 50m - $0.004 per token
      This sale was completed through a separate investment platform. This sale constituted a smaller sum of money to round off the initial investment phase.

      - All tokens from this section are in circulation.

    • Future Investment - 6.3% - 63m
      Whereas the initial investment was in tokens the next investment round is in equity. Individuals or entities purchasing company equity would have no effect on the token price, but instead they would receive vested amounts of rewards in tokens and other areas. These tokens are set aside for a reward based dividend for any future investor. This allocation of tokens will vest in equal increments over longer periods of time to ensure the safety of all $ARC token holders.

    • Uniswap Liquidity 1.2% - 12m
      This amount is locked within Uniswap and provides ARC with the liquidity that can be found on Dextools.https://www.dextools.io/app/en/ether/pair-explorer/0x47082a75bc16313ef92cfaca1feb885659c3c9b5At present, this figure represents  ~ $200,000 USD as it is paired with $ETH to create LP tokens. This provides the LP for trading of the token at present.
       
      - All tokens from this section are in circulation.

    • Team - 18.8% - 180m
      These tokens have been allocated for the purpose of attracting and incentivising new talent to the company and scaling up the team in the future. Future team members will be placed on a four year vesting schedule with a 12 month cliff. Cliff vesting is a process where employees either receive ownership of, or permitted to purchase shares/tokens of an equity award granted by the company at a predetermined discount on a specific date (i.e. vesting date). The company also reserves the right to institute milestone incentives and required targets built into this linear vesting process. This helps to promote and generate desire and motivation to achieve company goals.
      These tokens have been re-locked in Unicrypt as mentioned previously. This is because the cliffs for the team have already been issued.

    • Marketing - 10% - 100m
      Wen? A portion of these tokens are in circulation from previous marketing campaigns. However, there are a considerable number of tokens remaining, and a decent proportion of these have also been locked away for a time when they will be of more use to the company. The purpose of these tokens is not to be sold to pay for marketing. They are normally used to supplement a financial payment and thus allow ARC to negotiate favorable deal terms. They are also utilized in airdrops, call-to-action marketing campaigns, as well as co-marketing initiatives with strategic projects and partners.

    • Staking - 10% - 100m
      10% of the supply has been allocated towards $ARC holders who wish to stake their tokens in the farms. https://app.arc.market/farm. There are two farm options:

      Single Side Staking (SSS)
      Deposit your tokens and earn approximately 20% APY for holding onto these tokens. All it costs is for the user to pay 0.1% of the amount you deposit.

      Liquidity Pool (ARC-WETH)
      People who wish to contribute a 50/50 of ARC-WETH in the form of LP tokens are then able to earn approximately 20% APY as well as 0.3% of every transaction made. Impermanent loss is applicable for this staking option only.

      Impermanent Loss is a phenomenon that can occur when trading or holding assets on a decentralized finance (DeFi) platform, such as an Automated Market Maker (AMM) exchange. It refers to the temporary loss of value that can happen when a trader moves assets between liquidity pools on an AMM exchange, or when they move assets in and out of a pool. This can happen because the value of the assets in a pool changes based on the trading activity of other users, and as a result, the value of a trader's assets can fluctuate even if they have not executed any trades themselves. Impermanent loss is a risk that traders need to consider when trading on AMM exchanges and it is related to market volatility, the spread, and the size of the liquidity pools.

    • Advisors - 2.7% - 27m
      Similar to the team allocated tokens, tokens allocated to advisors are structured to include a cliff and then linear vesting based on performance. Not all of these tokens are utilized and some are saved for future advisor additions as well as vesting periods.

    • Market Makers & Exchanges - 10% - 100m
      Listing on exchanges is not free. In order to provide a LP for the centralized exchange, ARC will need to donate a sum of ARC/WETH. Part of this token allocation will utilize this portion of tokens. Unless an exchange market buys the token which smaller ones sometimes do, these will have to be provided to the exchange by ARC.

    • Ecosystem - 8% - 80m
      This portion of $ARC tokens are used to support the growth and scaling requirements of the ecosystem as the company expands and executes the roadmap.

    Conclusion

    It is ARC’s intention that familiarity with the current state of tokenomics and the plan going forward has been illustrated, especially with the integration of the new synthetic reward token (stARC). The document aims to provide the basic understanding of how these two tokens structure the backbone of the ecosystem. ARC will continue to provide educational materials as the company expands and evolves its products and ecosystem to ensure that the correct information is always available and remains transparent.

    Disclaimer

    The contents of this document do not in and of themselves form an offering nor solicitation of investment. The information in this document is subject to change without notice and indicates best efforts on behalf of ARC and its employees and associates to interpret the intended functions and utilities of the $ARC token and technology offerings. As new feedback from the market and clients arise, or new innovations and realizations occur, ARC reserves the right to make changes to this document without prior notice, and in the spirit of good faith to all of its investors and community.