Database Launch Architecture

This document explains how individual databases launch their application-specific tokens using $DB as collateral, creating sustainable economic incentives for database development and operation.

Overview

The database launch mechanism enables any developer to create a new database with its own token economy. Users lock $DB tokens to earn veDB (voting-escrowed DB), which then generates daily emissions of the database's native token. This creates a self-sustaining ecosystem where:

• Databases receive funding through user token locks
• Users earn database-specific tokens proportional to their commitment
• Liquidity forms automatically through protocol-managed pools
• Trading activity generates ongoing revenue for participants

Timeline

Database creation becomes possible starting at month 9 when $DB becomes lockable for database creation (3 months before transferable). New databases can be created perpetually after this point.

• Month 9: $DB becomes lockable for database creation
• Month 12: $DB becomes transferable (TGE)
• Ongoing: New databases can be created perpetually

1. Token Emission and Distribution

Reserve Allocation

The protocol allocates 20% of total $DB supply (200M tokens) to a yield reserve (YR). This reserve emits $DB yield over ~10 years according to a daily decay function (r = 0.9997), ensuring the reserve is never exceeded.

Daily emissions begin at approximately 65,900 tokens and decay at 0.03% per day (r = 0.9997), front-loading support when databases need infrastructure funding most while ensuring the reserve budget is not exceeded over the emission period.

Mathematical note: Total emissions over 10 years = 65,900 × (1-0.9997^3653)/(1-0.9997) ≈ 199.8M < 200M reserve budget

Emission Mechanism

1. Locking and veDB
   • Users lock $DB.
   • The protocol assigns them veDB points (non-transferable accounting units) based on amount and duration.
   • veDB determines each user's relative weight in emissions.
2. Yield Allocation
   • YR uses veDB weights to decide how much $DB yield to allocate to each database.
   • Formula:

db_daily_yield = total_daily × (db_total_veDB / ecosystem_total_veDB)
user_db_share = db_daily_yield × (user_veDB / db_total_veDB)

3. Distribution
   • The allocated $DB yield flows to the database treasury for infrastructure costs (operators, storage, etc.).
   • Simultaneously, the protocol mints dbX tokens 1:1 against that $DB yield, which are distributed to users according to their veDB share.

This creates a dual flow:

• Databases receive $DB to cover infra.
• Users receive dbX tokens as rewards, matched 1:1 to the infra funding.

Emission Decay

The daily emission rate decreases gradually over time at a 0.03% daily decay rate (r = 0.9997) to ensure the 200M token reserve lasts approximately 10 years. This front-loads rewards to support early database infrastructure development when funding is most critical.

2. veDB Boost Mechanism

Time-Locked Rewards

Users who lock $DB for longer periods receive higher yield multipliers through the veDB (voting-escrowed DB) system. This mechanism encourages long-term commitment and provides maximum funding when databases need it most.

• Maximum boost: 2.5x for 4-year locks
• Minimum boost: 1.0x (base rate, never goes below)
• Linear decay: Boost decreases from 2.5x to 1.0x as unlock time approaches
• Front-loaded rewards: Maximum yield when databases need infrastructure funding most
• Predictable schedule: Users know exactly how their rewards will change over time

Individual Allocation

Within each database, users receive tokens proportional to their veDB holdings:

user_daily_yield = database_daily_yield × (user_veDB / database_total_veDB)

This creates a fair distribution mechanism where larger commitments and longer lock periods receive proportionally higher rewards.

3. Automatic Liquidity Creation

Pool Formation

Once dbX tokens are minted and distributed, the protocol automatically pairs them with a portion of the user's locked $DB to form liquidity pools:

1. User locks $DB → receives veDB points.
2. YR allocates $DB yield to the database (infra funding).
3. dbX tokens are minted 1:1 against that $DB yield and sent to users.
4. Protocol pairs the earned dbX with a portion of the user's locked $DB to create an LP position.
5. User receives LP tokens representing pool ownership.
6. Trading begins immediately with organic price discovery.

• Infra funded: Databases get $DB directly.
• User rewarded: dbX minted 1:1 with $DB yield, distributed by veDB share.
• Liquidity provided: dbX is auto-paired with locked $DB, so every emission event strengthens the pool.
• Capital efficiency: One locked $DB simultaneously:
  • Generates veDB points (governance + emission weight),
  • Routes $DB yield to infra,
  • Mints dbX rewards for users,
  • Supplies LP liquidity for trading.

Trading Dynamics and Arbitrage

When users withdraw database tokens for utility purposes, it creates price imbalances that drive arbitrage activity:

Initial Pool: 29,500 $dbSocial : 29,500 $DB (Price: 1.0)
After 5,000 token withdrawal: 24,500 $dbSocial : 29,500 $DB (Price: 1.204)

This 20.4% premium above fair value creates immediate arbitrage opportunities, driving trading volume and generating fees for LP stakers.

Fee Distribution

All trading generates fees (0.3% per swap) that flow to LP token stakers:

• Direct income: Proportional share of all trading fees
• Compound growth: Fees can be restaked to increase position
• Market-driven returns: Higher trading activity = higher yields

4. AI Agent Integration and Efficiency

Automated Arbitrage

AI agents dramatically increase market efficiency by:

• Speed: Sub-second response to price discrepancies
• Scale: 24/7 monitoring across all database pools
• Precision: Optimal trade sizing for maximum profit
• Network effects: More agents = tighter spreads and higher volumes

Market Evolution

As AI adoption increases:

• Week 1: Human arbitrage (5-30 minute response times)
• Month 1: AI arbitrage (1-5 second response times)
• Month 6: Optimized AI (under 1 second response times)

This evolution creates increasingly efficient markets while generating substantial fee income for LP participants.

5. Economic Sustainability Model

Revenue Transition

The architecture creates a natural transition from protocol-subsidized to user-generated economics:

• High veDB boosts provide maximum protocol funding
• Database development and user acquisition focus
• Lower trading volumes but guaranteed token emissions

• Declining veDB boosts reduce protocol dependency
• Increasing trading activity and fee generation
• Balance between emissions and market-driven revenue

• Minimal protocol emissions
• Primary revenue from trading fees and token appreciation
• Mature database ecosystems with independent value creation

Multiple Revenue Streams

Users benefit from several income sources:

1. Token Emissions: Decreasing but guaranteed yield based on veDB
2. Trading Fees: Increasing income from LP participation
3. Token Appreciation: Market-driven value growth
4. Governance Rights: Influence over database development

This diversification provides both immediate income and long-term value creation opportunities.

Design Elegance and Network Effects

Elegant Capital Efficiency

This mechanism achieves remarkable capital efficiency by making locked $DB serve multiple simultaneous functions:

• veDB Generation: Determines ongoing yield allocation and governance power
• Liquidity Provision: Automatically pairs with earned $dbX for immediate tradability
• Long-term Commitment: Maintains user alignment with database success over time

• Infrastructure funding flows directly to databases based on genuine user commitment (total veDB)
• Token issuance scales 1:1 with infrastructure funding, creating natural supply-demand balance
• Automatic liquidity emerges from the reward mechanism itself, not separate programs
• Fair price discovery through organic market formation without artificial interventions
• Utility-driven volatility where user withdrawals for database usage create constant arbitrage opportunities and memecoin-like trading activity
• AI-amplified fee generation where autonomous agents capitalize on this volatility, multiplying trading volume and fee income by 10-50x

Inter-Database Routing Network

The architecture automatically creates a network of interconnected liquidity pools, with the protocol providing native cross-database token swapping as a built-in feature. This enables seamless token exchange across the entire ecosystem using $DB as the universal routing intermediary.

$dbSocial ↔ $DB ↔ $dbMarket
$dbBlog ↔ $DB ↔ $dbGaming  
$dbSocial ↔ $DB ↔ $dbBlog (via $DB)

• Automatic routing: Protocol finds optimal paths across all database pairs
• Slippage minimization: Routes through deepest liquidity pools
• Atomic execution: Multi-hop swaps execute in single transaction
• MEV protection: Built-in protections against sandwich attacks

• Cross-database arbitrage: Price inefficiencies across databases create trading opportunities
• Composable yield strategies: Users can optimize returns across multiple database ecosystems
• Reduced slippage: Deeper combined liquidity through $DB as universal routing token
• Network effects: Each new database increases utility for all existing databases

Example Protocol Swap: User wants to exchange $dbSocial for $dbMarket:

1. Protocol automatically routes: $dbSocial → $DB → $dbMarket
2. Optimizes for best price across available liquidity pools
3. Executes atomically with minimal slippage
4. User receives $dbMarket tokens directly in single transaction

This creates a self-reinforcing network where database diversity strengthens the entire ecosystem's liquidity and utility, while maintaining the elegant single-token lock mechanism for individual users.

Key Design Principles

Front-Loaded Support: Maximum protocol assistance when databases need infrastructure funding most, transitioning to market-driven sustainability.

Proportional Incentives: Larger commitments and longer lock periods receive proportionally higher rewards, aligning user incentives with database success.

Automatic Liquidity: Protocol-managed pool creation ensures immediate tradability without manual intervention.

Market Efficiency: AI agent integration drives optimal price discovery and fee generation.

Economic Sustainability: Multiple revenue streams create long-term viability independent of protocol emissions.

This architecture creates a self-reinforcing ecosystem where user success directly correlates with database success, ensuring sustainable economic incentives for all participants.