III.II.V Inflation Mechanics

In each epoch the supply of POWER is inflated by 10% and the supply of ZERO is inflated by up to 5,000,000 tokens. This inflation is claimed pro rata by participating POWER holders, specifically by their delegate address. Any POWER that remains undistributed (or that could not be claimed because the holder did not fully participate in that epoch) is auctioned off to the highest bidder in a pay-as-bid Dutch auction (hereon “Dutch auction”).

When there are tokens to auction, the auction starts at the beginning of the Transfer Epoch and ends at the finish of the Transfer Epoch. Therefore if a user purchases POWER during an auction they will always be able to use those tokens to vote in the subsequent Voting Epoch. Each participating POWER holder during the Voting Epoch will also receive their pro rata (based on their percentage of total voting power) share of the 5,000,000 ZERO tokens.

Once a Standard Proposal has been submitted it can be voted on in the following Voting Epoch, unless it is a POWER Threshold Proposal or a ZERO Threshold Proposal, which can be voted on at any time. When a proposal becomes available for voting, it is mandatory for POWER holders to vote on it or else the owner of the POWER tokens will lose relative voting weight in the system. If a POWER owner’s delegate fails to vote on any proposal in an epoch, they will forfeit any POWER or ZERO inflation they would have otherwise been able to claim. POWER holders must vote on all Standard Proposals in the Voting Epoch; POWER Threshold Proposals and ZERO Threshold Proposals do not factor into POWER inflation dynamics. There is no inflation if an epoch only has POWER Threshold Proposals and / or ZERO Threshold Proposals, or no proposals at all.

Example

Alice is a POWER holder with 1,000 POWER tokens, the total POWER supply is 10,000; hence Alice controls 10% of the POWER voting weight. In epoch 1 she participates fully by voting on all Standard Proposals. Simultaneous to participating, Alice claims an additional 100 POWER tokens and 500,000 ZERO tokens, i.e. 10% of a POWER inflation of 1,000 tokens and 10% of a ZERO inflation of 5,000,000 tokens. In epoch 2 Alice fails to vote on a Standard Proposal and is therefore not able to claim any POWER or ZERO tokens. The 110 POWER tokens (i.e. 10% of the new additional POWER supply of 1,100 tokens) that should have gone to Alice are auctioned in the Dutch auction. Bob buys these 110 tokens for 1 WETH (the internal currency of the TTG) and can now participate in the following voting epoch. The ZERO tokens that should have gone to Alice are simply never minted.