In the rapidly evolving landscape of virtual economies, the LEOS token stands as a cornerstone of the Pangea ecosystem, designed to facilitate global payments, network incentives, network utility services within this virtual nation. Recognizing the critical role of robust tokenomics in ensuring the sustainability and growth of the ecosystem, the Tonomy Foundation embarked on a strategic initiative to audit the LEOS tokenomics. This audit, conducted by the renowned Swiss company Brightnode, aimed to scrutinize the economic models, distribution strategies, and potential market impacts of the LEOS token to fortify its foundation for the long-term success of Pangea.

The Audit's Genesis

The decision to audit LEOS tokenomics stemmed from a proactive approach to economic sustainability within the Pangea ecosystem. As the virtual nation aspires to pioneer in digital governance and economic models, ensuring the integrity and viability of its tokenomics became paramount. The Tonomy Foundation, in its commitment to transparency and excellence, selected Brightnode for their expertise in blockchain economics and their impartial perspective. This audit was envisioned to not only validate the existing models but also to identify opportunities for enhancement, ensuring the LEOS token remains resilient against the dynamics of digital economies.

Audit Scope and Methodology

Brightnode's audit encompassed a comprehensive examination of the LEOS token's economic structure, focusing on key areas critical to its long-term viability and effectiveness within the Pangea ecosystem. These areas included:

• Initial Distribution: Review of the funding distribution pools at launch to ensure they align with the network participant's expectations and economic goals.
• Vesting Schedules: Analysis of the token distribution timelines to ensure they align with the ecosystem's growth and sustainability goals.
• Token Sale: The token sale schedule, pricing and mechanisms where reviewed to ensure successful sales post-TGO (Token Generation Event) stability.
• Token Flow: Evaluation of the token's circulation within the ecosystem, assessing mechanisms for issuance, staking, rewards, and consumption.
• Pricing Assumptions: Review of the pricing strategy for the LEOS token, particularly at the time of public sale and its subsequent impact on the market.
• Rewards System: Scrutiny of the incentives and rewards mechanism designed to encourage participation and contribution within the ecosystem.
• Market Impact: Assessment of potential market reactions to the tokenomics model, including scenarios of volatility and market adoption.

Brightnode employed a rigorous methodology that combined quantitative analysis with qualitative insights, drawing from a wealth of experience in blockchain economics. The audit was designed to be holistic, factoring in both internal ecosystem dynamics and external market conditions to provide a well-rounded review of the LEOS tokenomics.

Audit Findings and Resolutions

The audit conducted by Brightnode unveiled several crucial aspects of the LEOS tokenomics, leading to actionable insights and subsequent resolutions by the Tonomy Foundation. Here’s a detailed breakdown:

Sales Schedule

Initial price and sales mechanism assumptions for private and public sales were identified as overly complicated and slightly optimistic, posing a risk of increased selling pressure post-TGE. The Tonomy Foundation refined the sales mechanism, employing a more robust strategy to mitigate post-TGE selling pressure. The finalized sales schedule, reflecting these changes, is summarized on the Tokenomics page and updated in the Tokenomics whitepaper.

Valuation Analysis

Brightnode highlighted the importance and fundamental techniques for conducting valuation and token sale pricing. Leveraging Brightnode’s advice, the Tonomy Foundation conducted an extensive valuation analysis, culminating in a comprehensive sales schedule and valuation metrics that underpin the final tokenomics structure.

Initial Distribution and Vesting

While the initial distribution was generally deemed well-conceived, there was room for optimization in vesting schedules to curb short-term selling pressure and ensure network viability at launch. Adjustments were made to distribution pools and vesting schedules, resulting in only 12.92% of LEOS tokens being in circulation at TGE. Additionally, the exchange liquidity allocation was made readily available at TGE to foster a liquid market across various exchanges.

Token Flow

The audit scrutinized the network operator rewards, incentives, and the utility fee structure, highlighting the need for a strong utility scope and robust network operation. The Foundation also refined it's overview of the checks and balances within the network model to ensure a more equitable and sustainable network security and operations.

LEOS Holding Incentives

The audit underscored the critical role of incentivizing LEOS token holding to minimize post-TGE selling pressure. Several holding incentives were identified and refined.

Final Audit Results

The culmination of Brightnode’s audit and the Tonomy Foundation’s proactive measures resulted in a balanced tokenomics framework:

• A well-considered initial distribution and vesting schedule were established, aimed at aligning with long-term token value and ensuring operational stability in the short term.
• Private token sale stakeholders were observed to have sufficient incentives to join, with adequate vesting schedules to promote the public sale stability and success for the benefit of such early stage stakeholders.
• The network utility emerged as a focal point, underscoring the strategy for long-term stability.
• Multiple mechanisms were identified to encourage LEOS token holding, including speculative value, utility within the network, and staking opportunities.
• The unique approach of democratic network governance, as opposed to token-based governance, was highlighted as a distinctive feature within the permissionless crypto ecosystem.
• The fiat denomination of network fees and operator incentives was acknowledged to carry unique risks. However, it was also seen as a strategic advantage for promoting higher adoption rates among businesses and enterprises by mitigating price volatility risks. Given that the associated risks become more pertinent 6-12 months post-launch, further research and development were earmarked for the next network development phase, pending clearer token sentiment.

Looking Ahead

The Tonomy Foundation remains committed to ongoing evaluation and adjustment of the LEOS tokenomics in alignment with ecosystem growth and market dynamics. This includes continuous monitoring of the market impact of the LEOS token, engaging with the community for feedback, and adapting strategies to ensure the token's utility and value are maximized. The Foundation's dedication to an agile and responsive governance model underscores its commitment to the sustainable development of the Pangea ecosystem.

Conclusion

The comprehensive audit conducted by Brightnode has been instrumental in refining and strengthening the LEOS tokenomics, laying a solid foundation for the Pangea ecosystem's future. The Tonomy Foundation's proactive response to the audit findings, through strategic adjustments and initiatives, showcases its unwavering commitment to transparency, sustainability, and community engagement. As Pangea continues to evolve, the LEOS token remains a pivotal element of its economic model, poised to support the innovative digital governance and economic participation that define this virtual nation. The journey of LEOS tokenomics is a testament to the collaborative effort between visionary governance and expert analysis, driving towards a future where digital economies flourish with integrity and resilience.

‍

Read Brightnode's Case Study of LEOS token audit here.