Token Issuance and Deflation Design

5.1 Initial Distribution#

LAMA tokens are minted with a finite supply $\mathcal{S}$ and allocated among stakeholders as follows:

Allocation	Percentage	Purpose
Public sale	40%	Provide liquidity and allow broad participation
Trader incentives	20%	Reward early agent publishers and seed the staking pool
Ecosystem & grants	15%	Fund oracle providers, audits and development
Team & advisors	15%	Vest over multiple years to align long-term incentives
Reserve & treasury	10%	Provide liquidity for buybacks and emergency measures

5.2 Emission and Inflation Control#

No further tokens are minted beyond the initial supply. Instead, a portion of performance penalties (slashed LAMA) is permanently burned, reducing the circulating supply.

Additionally, the protocol may allocate part of its revenue to buy LAMA on the open market and burn it, exerting deflationary pressure.

A small emission rate for oracle rewards may be introduced, but this must be offset by burns to maintain a net deflationary stance.

5.3 Buy-Back and Burn Mechanism#

To create long-term scarcity, the protocol dedicates a fraction $\gamma$ of its fee income to repurchase LAMA from secondary markets and burn it.

Assuming annual fee revenue $F$ and market price $p$ , the annual burn amount is:

\text{Burn}_{\text{annual}} = \frac{\gamma \cdot F}{p}

Combined with slashed tokens, this buy-back accelerates deflation as the platform grows.

Deflation Flywheel#

More Agents → More Settlements → More Fees
                                      │
                                      ↓
                    Buy-Back & Burn ← Protocol Revenue
                         │
                         ↓
                  Reduced Supply → Increased Scarcity
                         │
                         ↓
                  Higher Token Value → More Traders Attracted

5.4 LAMA Token Utility#

Use Case	Description
Staking	Traders stake LAMA to register agents and back their performance
Investing	Investors deposit LAMA to enter Long/Short positions
Governance	Token holders vote on protocol parameters (Phase 3)
Fee payment	Settlement fees are denominated in LAMA

5.5 Agent Token (ERC-1155)#

Each registered agent has a pair of ERC-1155 tokens representing Long and Short positions:

\text{Long Token ID} = \text{agentId} \times 2, \quad \text{Short Token ID} = \text{agentId} \times 2 + 1

Property	Description
Non-transferable (initially)	Positions are locked until settlement
Fungible per agent/direction	All Long tokens for the same agent are identical
Burned on claim	After claiming returns, Agent Tokens are burned

In a future release, Agent Tokens may become transferable, enabling pre-settlement position trading and secondary market price discovery.

5.6 Entry Fee Structure#

LAMA employs a 1% entry fee on all investments into Long/Short pools. This fee serves multiple purposes:

Mechanism#

When an investor deposits $D$ LAMA into a pool:

\text{fee} = D \times 0.01, \quad \text{netInvestment} = D - \text{fee} = D \times 0.99

The full deposit $D$ (including fee) is added to the pool's totalAssets, but the investor receives shares based only on netInvestment:

\text{newShares} = \frac{\text{netInvestment}}{\text{sharePrice}}, \quad \text{sharePrice} = \frac{\text{totalAssets}}{\text{totalShares}}

The pool uses a share-based accounting model inspired by ERC-4626 vaults:

Variable	Description
`totalAssets`	Total LAMA in the pool (including all fees)
`totalShares`	Total shares outstanding
`sharePrice`	`totalAssets / totalShares` — increases with each deposit

Fee Distribution#

The 1% fee is not extracted from the pool. Instead, it remains in totalAssets while no new shares are minted for it. This causes the share price to increase, effectively distributing the fee to all existing shareholders proportionally.

Anti-Churn Property#

If an investor deposits and immediately withdraws:

Deposits 1,000 LAMA → receives shares for 990 LAMA
Share price increases slightly due to fee
Withdraws all shares → receives ~990 LAMA
Net loss: ~10 LAMA (the 1% entry fee)

This mechanism discourages high-frequency churning while rewarding long-term participants.