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Token unlocks are a crucial part of any project, requiring careful planning to align the interests of early backers, team members and the community. Many view token unlocks with a degree of caution and skepticism, due to potential sell pressure, but a well-designed unlock schedule can mitigate risks. We designed our unlock schedule to reduce token volatility while ensuring that our backers and team members are incentivized to support our project in the long term. As the date for our final two allocations to begin vesting is approaching, we want to share a primer with our community on our unlock strategy where we lay out our thinking and the research that informed us.
In case you’re new here: Auki Labs is building the Auki network. The Auki network is a posemesh: a decentralized machine perception network and collaborative spatial computing protocol, designed to allow digital devices to securely and privately exchange spatial data and computing power to form a shared understanding of the physical world.
This shared understanding of the physical world unlocks new applications in augmented reality, robotics and physical AI. It might help to think of the Auki network as a new, more accurate alternative to GPS that works in indoor environments and tall buildings. The Auki network is much more than just that though, as it allows digital entities like AI agents and robots to start understanding and participating in the physical world.
As mentioned above, the Auki network is a decentralized machine perception network. It is part of a wider DePIN / DePAI movement that aims to build and manage infrastructure in a new, decentralized way through blockchain. The Auki network is underpinned by the AUKI token which is used by participants to access the network and to reward participants for their contributions.
For a deep dive into the tokenomics, watch the video below with Auki founder, Nils Pihl.
In summary, the tokenomics are designed to ensure stable provisioning, predictable service costs, and sustainable incentives for network participants.
The key takeaways are:
The burn and deflation mechanism is vital to understanding our long term thinking. The deflationary rate starts at 50% and gradually decreases, ensuring long-term scarcity. Not only does this burn-credit-mint system prevent price volatility from destabilizing the network, it also ensures sustainable rewards and the long term health of the ecosystem.
Network utilization and subsequent burns are key to driving deflation. This is why we have put so much focus on driving adoption through our developer partnerships and business development in areas like retail. We have demonstrated the real world utility of the Auki network which will lead to increased burns, drive deflation and benefit our community.
When creating our token allocation strategy we had a guiding principle:
Token volatility affects confidence in the long run. That’s why we went with daily linear unlocks, so that no single unlock event disrupts stability and allows for market manipulation. Research backs this, and we’re committed to minimizing unnecessary external factors that influence the token. – Nils Pihl, Founder & CEO
As stated above, the reason for daily linear vesting schedules is that we want to reduce volatility and the research backs this up:
Founders looking to reduce token price volatility should aim to unlock smaller token amounts in relation to circulating supply. Our data suggests that unlocks under 1% of supply had no correlation to price impact, meaning block-by-block, daily or weekly schedules may be preferred over quarterly & annual unlock events. Another notable benefit of smaller, more frequent unlocks is that potential sell pressure is more evenly distributed and not concentrated at large events.
To see our full allocation table take a look at our whitepaper or our vesting page on Cryptorank.
All of our presales were allocated without a cliff and so have been vesting daily since day 1 according to their vesting period (12-48 months). We chose to avoid cliffs with all but two of our allocations to ensure that tokens began circulating as soon as possible. Following the research above this makes sense; the more tokens that have vested the smaller any unlock will be as a percentage of the circulating supply.
As we are nearing the end of our first six months since TGE, the final two allocations (team and accelerator) will begin their daily linear vesting on February 28:
The important thing to note here is that these two allocations are also on daily linear vesting schedules. What this means is that there is no large unlock event at the end of the cliff.
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As an example on day 1 of the vesting schedule 525,715 and 469,851 tokens are due to be vested to the team and accelerator, respectively. This corresponds to a total of 0.068% of the circulating supply. A week of vesting corresponds to 0.48%. This is why we chose daily linear. There is no single unlock event that comes in at over 1% of circulating supply.
This reduces price volatility in the early phase of the token, this is particularly key as the research shows:
tokens that have already vested most of their tokens are far more stable and appreciated more in value than tokens that are still vesting their tokens.
Over time as circulating supply increases, each daily unlock will represent a smaller percentage. So midway through the vesting period on day 639 of the vesting schedule the same amount of 525,715 and 469,851 tokens are due to be vested for the team and accelerator, respectively. However now this corresponds to roughly 0.015% of the circulating supply at that time.
We made sure there was no day 1 unlocks at TGE, because the real value of Auki is in its adoption, not in early liquidity events. Our approach is to avoid value extraction from the network before there is adoption. – Santeri Aramo, Co-Founder & COO
The most important aspect of the tokenomics is the deflationary mint. As we burn more tokens through increased demand, fewer tokens are minted. The deflation rate is adjusted asymptotically towards 0 as the total supply of tokens approaches 50% of the initial mint at network launch.
This means that the Auki network starts with an initial supply of 10 billion tokens, but will eventually reach an equilibrium of only 5 billion tokens.
This deflation mechanism creates extra incentive for early adopters, including the team and accelerator, to hold their tokens for a longer period, as deflation rates are the highest when the protocol is gaining its initial traction. This why the team is so motivated to create more demand through real world applications and partnerships: the increased demand and subsequent burn drives the deflationary mint.
Deflationary tokenomics works well when there’s real demand behind it. That’s why we’re focused on driving adoption through real world utility. Every burn strengthens the ecosystem. – Santeri Aramo
Finally, this brings us to what we are doing to bring demand. We are building a number of different applications on the Auki network that are in various stages of piloting. Cactus, our retail facing platform, is on course to be in thousands of locations by the end of the year and we are aiming for 100,000 by the end of 2028. But of course, retail is not the only industry in which collaborative spatial computing can solve billion dollar problems.
There are a number of other projects that plan to or are already building on Auki:
Any project building on Auki will be burning tokens as they gain market share in their respective fields.
And this is just the beginning. We are in the process oflaunching a foundation together with a number of other prominent DePIN projects that will streamline adoption and increase the number of Auki ecosystem projects.
We will also soon be making an announcement on an initiative that will allow community members to drive demand and further utilization.
Hype doesn’t sustain a network, adoption does. Our focus is on real-world utility, solving billion-dollar problems with spatial computing, and ensuring that every token burned is a step toward long-term value creation towards the ecosystem. – Santeri Aramo
Token unlocks always have the potential to cause volatility, however we believe that our unlock strategy and token economy together mitigate the worst risks and align our interests. In the end, adoption and utilization will be the drivers of value for the network and that is what we are focused on.
Auki is building the Auki network, a decentralized machine perception network for the next 100 billion people, devices and AI on Earth and beyond. The Auki network is a posemesh, an external and collaborative sense of space that machines and AI can use to understand the physical world.
Our mission is to improve civilization’s intercognitive capacity; our ability to think, experience and solve problems together with each other and AI. The greatest way to extend human reach is to collaborate with others. We are building consciousness-expanding technology to reduce the friction of communication and bridge minds.
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The Auki network is a posemesh: a decentralized machine perception network and collaborative spatial computing protocol, designed to allow digital devices to securely and privately exchange spatial data and computing power to form a shared understanding of the physical world.
The Auki network is an open-source protocol that powers a decentralized, blockchain-based spatial computing network. Designed for a future where spatial computing is both collaborative and privacy-preserving, it limits any organization's surveillance capabilities and encourages sovereign ownership of private maps of personal and public spaces.
The decentralization also offers a competitive advantage, especially in shared spatial computing sessions, AR for example, where low latency is crucial.
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