From High Stakes, to Staking — What is the $NEZ Token Utility?
Mar 23, 2022
6 min read
From High Stakes, to Staking — What is the $NEZ Token Utility?
In just a few weeks, Nezha will make its debut through an IDO, making the NEZ token available for purchase for the first time. The NEZ token, central to the functionality of the Nezha prediction market protocol, is a vital piece of our entire ecosystem. Without the NEZ token, the Nezha ecosystem can’t function, and we want to highlight its importance to our project ahead of our IDO debut!
NEZ tokenomics can be broadly divided into four key areas of utility, including 1) Access to Games; 2) Access to Premium Tiers; 3) Pool Origination and Maintenance; and 4) Governance.
We’re going to explore each of these features within this article, but do also remember to check out our whitepaper for a more detailed explanation of how the NEZ token functions within each of these Nezha protocol mechanisms.
1) Enhanced Prediction Market Games
Our prediction market games are, naturally, the biggest attraction to the Nezha ecosystem. In order to gain access to the prediction games, users will be required to stake stablecoin tokens, and perhaps other supported tokens in the future, into the NEZ protocol, which will remain locked until the end of each game cycle.
These locked assets, as we discovered in our last article, are pooled and routed to external yield producing protocols, which are then used to generate daily compounding yield that is distributed weekly into the Nezha pools. We’ll explore these below.
However, by staking the $NEZ token, these games can be enhanced. Those staking NEZ will receive access to premium tiers — which we discover in the next section — but there’s also going to be enhanced user experiences and perhaps even enhanced prizes for those staking $NEZ. Therefore, while not essential to access games, $NEZ is a critical component for those looking to up their game and take their prediction market playing up a notch!
2) Access to Premium Tiers
Staking NEZ provides access to premium tiers to its holders. Premium tiers correspond to different levels of user experience, which is solely achievable through staking NEZ tokens.
Depending on the tier level, premium users are rewarded with extra prediction market entries (i.e. more ‘tickets’ to games), which are handed out proportional to their NEZ stake in the protocol.
Staking NEZ tokens also give access to premium game pools — unavailable to regular users — which may have higher jackpots and yields, or to early releases of new games being released in the Nezha ecosystem.
Finally, if a user is a premium member for a long enough time, their commitment to the Nezha community will be rewarded by receiving exclusively minted Nezha NFTs! More information will follow on this after our launch.
3) Pool Origination and Maintenance
Pools are essential to the Nezha ecosystem, as they power our prediction market games, accumulate yields, and generate interest. In order to launch the pools required to operate a game, participants will be required to stake a certain amount of NEZ tokens.
After a pool has been created, NEZ tokens will be required on a rolling basis to maintain the pool’s balance. In addition to the main prediction pool, which generates winnings for Nezha’s YieldPot, there will be several other pools which either support our ecosystem or provide bonus incentives for the NEZ token. These include the Rollover Pool, the Operational Pool, the Reserve Pool, our Affiliate Flywheel Pool, the Nezha Foundation Pool, the Liquidity Provider Pool, and lastly, the Buyback and Burn Pool.
A detailed overview of each pool and it’s functionality is included in our whitepaper, but let’s briefly explore the role of the NEZ token within each specific pool:
- Prediction Pool — The primary generator of winnings for the Nezha ecosystem, the Prediction Pool pays out rewards to Nezha users, who must use NEZ to participate in games.
- Rollover Pool — All yield that has not been distributed through the prediction pool will be automatically rolled over into the Rollover Pool — compounded on a daily basis.
- Operational Pool — A percentage of the yield generated will be awarded into the Operational Fund Pool, which is crucial to sustaining the ongoing development of the Nezha ecosystem.
- Reserve Pool — The reserve pool holds tokens to compensate for any losses of assets due to bad actors. A percentage of the yield will be added to the reserve pool each week. Initially, the reserve pool will be subsidized by the NEZ token.
- Affiliate Flywheel Pool — NEZ tokens will be made available for participants who generate referrals to the Nezha ecosystem. Referral payouts will be made automatically as certain triggers are fulfilled.
- Nezha Foundation Pool — 10% of generated NEZ yield flows back to the Nezha Foundation Pool, enabling growth of the protocol and expansion into new markets.
- Liquidity Provider Pool — Liquidity provision is essential for NEZ trading volume. Nezha will initially subsidize the liquidity provider pool with NEZ tokens for early liquidity, and liquidity mining participants will be rewarded with NFTs that reflect ownership in a liquidity pool.
- Buyback and Burn Pool — This pool ensures price stability and value creation for the NEZ token, buying-back and burning a small portion of each week’s generated yield funds to decrease NEZ total supply.
Last but not least is the role of the NEZ token for governance within the Nezha protocol. NEZ token holders will be granted rights that allow participation in governance and administrative decisions, as well as voting on the operational development of the ecosystem.
Any token holder who has staked their NEZ within the Nezha platform can contribute a suggested improvement proposal to the wider Nezha ecosystem. All suggested improvements will be reviewed by the board of the Nezha DAO and suggested solutions will be proposed to all members for voting. This will evolve over time as Nezha grows.
Independent of DAO membership, NEZ holders will be able to vote on newly submitted games or game proposals by developers; allowing devs to validate game ideas before embarking on their development.
As you can see, NEZ is a token with deep utility and a multitude of clearly defined use cases within the Nezha ecosystem. We went to great lengths to define our tokenomic strategy ahead of the NEZ IDO, and we hope you’ll agree that we’ve laid the foundations for a strong and flourishing NEZ token economy.
To learn more about Nezha’s upcoming initial decentralized offering, follow us on social media below:
- Website — https://www.nezha.fi/
- Twitter — https://twitter.com/NezhaFi
- Telegram — https://t.me/nezhafi
- Whitepaper — Click here
About Nezha: Nezha.fi is a revolution in prediction markets. Nezha is the liquidity engine for prediction markets where the participants do not wager their principal investment, but rather the yield generated on the pooled principal of all participants. Learn more at: https://www.nezha.fi/