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Tokenomics & Incentive Design

Mentat’s economics align market quality, timely resolution, and protocol sustainability. This document captures the initial fee structure, staking mechanics, and reward flows for the Solana MVP.

Objectives

  • Quality control: Require skin-in-the-game for market creators (AI controllers + curators) to discourage ambiguous or malicious markets.
  • Timely settlement: Incentivize proof submitters to deliver zkTLS attestations within strict SLAs.
  • Protocol sustainability: Collect predictable revenue to fund model usage, audits, and future incentives.
  • Flexibility: Configure parameters per market type while keeping defaults simple for a pump.fun-style launch flow.

Fee Structure

Fees are denominated in the market quote asset (e.g., USDC) and set at market creation time.

Fee Type Default Split Notes
Trading fee 2.0 % of trade volume Charged on each swap/order fill. Split: 1.0 % to LPs, 0.75 % to Mentat Treasury, 0.25 % to market creator.
Settlement fee 0.5 % of resolved pool Deducted when market settles. Split: 0.35 % to proof submitter bounty pool, 0.15 % to Treasury.
Dispute bond Variable (min 100 USDC) Posted by challengers; returned if dispute succeeds, otherwise paid to proof submitter.

Parameters can be overridden for special markets, but the UI defaults should encourage the standard split to keep discovery and expectations consistent.

Market Creation Stake

  • Each market requires a creator stake (default 50 USDC) escrowed in the Solana program.
  • Refunded automatically on clean resolution.
  • Slash conditions:
  • Market resolves INVALID due to ambiguous criteria.
  • Curator (or governance) forcibly closes market before trading opens.
  • Creator is linked to malicious activity (prompt injection, duplicate spam).
  • Slashed stake is distributed 50 % to Treasury, 25 % to affected LPs, 25 % to curator pool.

Proof Submitter Incentives

  • Settlement fee feeds a proof bounty pool per market.
  • Proof submitter earns bounty when submitting a valid zkTLS proof within SLA:
  • Timely proof (≤ 30 min after outcome data appears): 100 % bounty.
  • Delayed proof (30 min – 6 h): 50 % bounty.
  • Late proof (> 6 h): 10 % bounty; remaining funds go to Treasury.
  • If no proof arrives before resolution deadline, market can be disputed or marked INVALID, returning escrowed funds.

Curator Incentives

  • Curators earn reputation points tracked off-chain initially.
  • Once weekly, active curators share a stipend funded from Treasury (target: 10 % of weekly protocol revenue).
  • Future phases may require curators to stake Mentat governance tokens; for MVP, focus on rapid iteration and accurate approvals.

Treasury Utilization

  • Pays for AI model usage, audits, bug bounties, and liquidity incentives.
  • Governance (initially core team multisig) controls disbursements.
  • Public dashboard should report incoming fees and spending to maintain transparency.

Flow Summary

  1. Creation: Creator deposits stake; trading/settlement fees configured.
  2. Trading: Each trade routes fees to LPs, Treasury, and creator instantly.
  3. Resolution: Proof bounty + settlement fee handled when proof submitted and market settles.
  4. Disputes: Bonds enter escrow; success routes funds to challenger, failure rewards proof submitter.
  5. Post-Resolution: Stake refund or slash executed based on outcome; Treasury updates ledger.

Future Considerations

  • Introduce Mentat governance token for ballot-weighted parameter changes.
  • Dynamic fee tiers based on market risk, liquidity depth, or curator reputation.
  • Insurance fund for systemic failures (e.g., proof provider outage).
  • Optional revenue share to communities hosting market embeds.