Nebula Token

The Nebula Token (symbol: NEB) is the governance token that is given as a reward to users for maintain liveness properties that keep the protocol operational. Actions that receive NEB tokens as rewards include:

• locking NEB tokens for voting power
• providing liquidity to cluster token markets
• successfully rebalancing clusters
• participating in an active incentive campaign

Governance

The Nebula Token (NEB) is Nebula Protocol's governance token, and has the following functions:

• Polls: NEB tokens must be deposited to create governance polls.
• Staking: Users can stake NEB to vote on polls and earn NEB rewards.
• Voting: Users staking NEB receive voting power proportional to locking time.

The NEB token captures value from the cluster rebalancing fees across the protocol: the fees are collected and used to purchase NEB off Terraswap, which is then distributed to NEB stakers pro-rata to their voting power.

You can learn more about the governance procedure here.

Rewards

There are several ways through which a user is able to earn NEB token rewards through interactions with the protocol. This yield is paid to the users as NEB tokens that are newly minted through inflation, which gradually increases the total supply of NEB until the end of 4th year. See the distribution schedule for a specific breakdown.

Rebalancing & Arbitrage

note

While rebalancing and arbitrage are considered core mechanisms, they are implemented in the nebula-incentives contract as a "default" campaign.

The act of rebalancing a cluster provides users with both potential profit (for the discount applied by the penalty/reward function) as well as NEB rewards. Separately,

LP Staking

Users can stake CT-UST LP tokens for various clusters to accrue NEB tokens for each LP staking pool to which they provide liquidity. These LP tokens can be unstaked at any time to be traded back for deposited liquidity, with the potential of impermanent loss depending on the pool state.

Governance Staking

Users can stake NEB tokens by locking them for a number of weeks (up to 2 years) in the Governance contract. This allows them to vote on proposals with voting power proportional to amount of tokens multiplied by time staked. NEB token rewards from governance come from protocol fees incurred during rebalancing operations, which is accumulated by the protocol and used to purchase NEB tokens off Terraswap.

Campaigns

Campaigns are events through which participating users can earn NEB tokens (and potentially other rewards) for completing tasks or performing operations outside of the core reward pathways. The decision to run a campaign is made through a governance poll, and is funded by a NEB token grant from the Community Pool.

Whereas core mechanisms are incentive pathways directly built into the protocol and are more or less fixed in their design, campaigns are implemented as smart contracts which can define arbitrary logic. Campaigns provide Nebula Protocol with the flexibility to explore various ideas for driving ecosystem expansion from the community that have been approved through governance.

Token Supply

There are planned to be a total of 100,000,000 NEB tokens to be distributed over 4 years continuously per block. Beyond that, there will be no more new NEB tokens introduced to the supply.

Distribution Schedule

	Launch	Y1	Y2	Y3	Y4
LUNA Staking Airdrop	5	5	5	5	5
LUNA Staking Rewards	0	10	10	10	10
Rebalancing Rewards	0	7.5	15	22.5	30
Cluster Token LP	0	8.75	17.5	26.25	35
Community Pool	0	2.5	5	7.5	10
Team	0	2.5	5	7.5	10
Token Supply	5	36.25	57.5	78.75	100
Annual Inflation (%)	-	625.00%	58.62%	36.95%	27.00%

Airdrop

The NEB token will be airdropped to users on Terra that stake Luna. The airdrop ratio $R_{x, t}$ for LUNA staker $x$ at snapshot $t$ is given by the following formula, wherein $V_{x,t}$ refers to their voting power.

$$R_{x, t} = \frac{V_{x,t}^{0.75}}{\sum_i V_{i, t}^{0.75}}$$

With $A_t$ as the amount of NEB tokens allocated for airdrop at snapshot $t$, they can expect to receive the number of NEB tokens:

$$\lfloor{R_{x, t} \cdot A_t} \rfloor$$