Introduction to SolStar
SolStar is a platform for creating Community Tokens.
Overview
SolStar communities are built on top of the STAR protocol, a set of programs running on the Solana blockchain that negotiates in the $STAR token to create the incentive layer of these communities. The STAR protocol forms a “meta-community” that sits at the center of the communities running on top of it. As the SolStar meta-community grows, all communities within benefit as well.
Community tokens have several functions:
- Investment in a community: As a community grows in value/size, stakeholders in that community can expect their investment to go up. This incentivizes an interest in curating and maintaining a quality community through early buy-in.
- Intra-community transfer: Communities can transact within their community using their community coin. This can take the form of tips (send a tip to someone who answered a question for you, posted a funny meme, or an interesting discussion), bets (make a wager against another member of the community), airdrops (reward the whole community in one fell swoop), and more.
- Limited Access/Perks: Limiting access to a community can help ensure the quality of that community by forcing “skin in the game”. Discords could require that a user owns a certain amount of the community token before being granted access. This incentivizes community buy-in and high-quality participation. It is a proven model by communities such as Friends with Benefits. More permissively, a community may just give certain perks to token holders or tier those benefits based on the quantity of tokens held.
This paper will be primarily focused on the mechanisms of the $STAR token, especially in relation to minting and creating markets for community tokens. SolStar is building a suite of tools for implementing the functionality discussed above that will be expounded upon further in future articles.
Minting Community Coins
There are two options for minting community coins: backed and non-backed. Backed tokens are supported by $STAR tokens as an underlying asset, while non-backed tokens have no underlying value from the STAR protocol.
Non-backed tokens can essentially be thought of as “fun coins”, that is, coins that are transacted with with no expectation of monetary gain. They do not require a market to be traded on, and will likely be minted with a fixed supply to a single recipient who can then distribute them as they see fit. If they so choose, a community owner will be able to transition their non-backed token into a backed token.
Backed tokens bring with them the interesting incentive mechanisms described above. Backed tokens are minted according to bonding curves encoded in the community token Solana program. Bonding curves offer an on-chain mechanism to determine the price of some asset based on the current supply of that asset, thereby automating the market and allowing tokens to be traded to and from a contract as opposed to swapped in between individuals or through an exchange. Generally, as the number of tokens in circulation increases, the price of minting a new token increases as well. The parameters of these curves can be tweaked in order to obtain different results. Overviews of different curve parameters can be found at the end of this document.
The price can be calculated directly from the current circulating supply of the token. This price is delineated in $STAR. Thus, a user must stake $STAR in order to receive some amount of the community token, and will burn that token in the same contract to receive $STAR back.
Curation markets supported by bonding curves are a proven model. BitClout is an example of curation markets applied to creators. Users can invest in some creator and expect their investment to increase as that creator gains greater buy-in. These “creator coins” can be thought of as one dimension of the “community coins” that SolStar is creating.
Rewards & Fees
Staking Rewards
Communities are rewarded in $STAR proportional to the amount of $STAR currently staked into their community coin contract. Thus, a community’s value goes up over time by the simple virtue of existing with value vested into the system, relative to that current value. The rate of return for staking $STAR is determined by the emissions schedule, the amount of $STAR currently staked in the system, and the amount of $STAR accumulated in fees.
Market Fees
A small fee is exacted on transactions that make use of the market contract (swapping from $STAR to a community coin or vice-versa). This fee is currently set at 0.3%, modeled after decentralized exchanges (DEXs) such as UniSwap. Half of the fee (0.15%) is returned to the market contract, thereby distributing it to to current holders of the community token managed by that contract. This is similar to a DEX rewarding Liquidity Providers through a fee. The other half (0.15%) is distributed to owners of $STAR tokens, proportional to their stake. This incentivizes involvement with the broader SolStar ecosystem and allows staking rewards to continue even after the emissions schedule is completed.
Transferring a community token to another user (without going through the market contract) does not incur a fee.
Governance
Starting out, the STAR protocol is governed by a core team of 3 founders. This is important early in the project’s lifecycle when many things are still in flux and the protocol is under rapid development. SolStar intends to distribute governance of the STAR protocol to a DAO once it reaches maturity. When this happens decisions will be made by holders of the the $STAR token.
Tokenomics by the Numbers
Note: These numbers are subject to change
Hard cap: 1,000,000,000 $STAR
Distribution
- $STAR Rewards: 40%
- Treasury & Community Fund: 25%
Fund to help grow the SolStar ecosystem and unlock partnerships - Team/Advisors: 15%
- Investor Presale: 5%
- Yield farming: 10%
- Liquidity: 5%
Don’t get scammed
Note, there is no SolStar token yet! Do not buy any tokens that claim to be SolStar. When we launch our token, it will be announced on our Official Twitter.
Community Curve Parameters
As mentioned above, different community growth outcomes can result by tweaking curve parameters. Different types of curves can influence community growth in different manners. Community leaders can customize their curves how they see fit. SolStar will offer default curves based on a user’s preference for factors such as exclusivity, growth rate, and more.
Polynomial Curves
The most recognizable bonding curve. But likely not the curve optimized for most communities.
Goal: exclusivity and larger returns for early adopters
Formula: y=a*xⁿ
x is the current supply of the token
y is the current price of the token
a can be increased to make a curve linearly more aggressive
n can be increased to make a curve exponentially more aggressive
Linear curves
The simplest and easiest curve. Can map 1:1 to $STAR if horizontal.
Goal: Constant price tiers and steady growth
Formula: y=m*x+b
x is the current supply of the token
y is the current price of the token
m can be increased to make a curve linearly more aggressive
b can be increased to adjust the starting price of the token
Sub-linear curves
Curves that grow quickly, but asymptotically level out at a price ceiling
Goal: Reward early adopters, and allow a community to grow indefinitely at an expected price level
Formula: y=logₙ(x)
x is the current supply of the token
y is the current price of the token
n can be decreased to more aggressively taper off to the price ceiling
a can be increased to raise the price ceiling
S-Curves
S-Curves start slow, grow aggressively, and taper off to an asymptote similar to sub-linear curves
Goal: Mimic the natural growth of communities
Formula: y=1/(1+e^(-a(x-b)))
x is the current supply of the token
y is the current price of the token
a can be decreased to give a gentler slope to the curve
b is the inflection point of the graph
