🦄Value Capture
Last updated
Last updated
Rainbow Protocol is not just about implementing new technologies on Bitcoin; it also creates sustainable value for ecosystem participants through its unique token economic model and powerful VM system. Here's how Rainbow captures, empowers, and distributes value:
The value of RBO Tokens stems from their unique definition and issuance on the Bitcoin network. We chose to issue RBO tokens on Bitcoin because this declarative issuance method ensures that RBO tokens are tightly bound to Bitcoin's value. This binding means that RBO tokens are not just digital assets but extensions and representations of Bitcoin's intrinsic value.
After the issuance of RBO tokens, the Rainbow VM system endows them with the ability to circulate, granting them real transactional value. Rainbow VM not only allows RBO tokens to circulate freely within the Bitcoin network but also expands their application scenarios and transaction efficiency through its robust system functionalities. This dual empowerment positions RBO tokens as the core value carriers within the entire Rainbow ecosystem.
On the Bitcoin network, various protocol assets like ARC20, Runes, and BRC20 have emerged. However, these assets often face significant limitations in liquidity and cross-protocol exchange due to Bitcoin's native computational constraints, despite having value bindings.
Rainbow VM offers a breakthrough for these protocol assets. Through Rainbow VM, we can add adapters and asset bridges for different protocol assets. By default, these assets can enter Rainbow VM via bridging, converting into Rainbow Tokens, and thereby facilitating direct exchange and complex computations. This functionality significantly enhances the liquidity of protocol assets and creates conditions for cross-protocol asset exchanges.
Furthermore, for assets with smart contract capabilities (like ARC20), Rainbow VM can achieve interoperability with other networks through AVM's hash computations. This means that these assets can not only circulate within the Bitcoin network but also perform more complex functions across networks. Rainbow VM's empowerment capabilities fully unlock the potential of protocol assets on the Bitcoin network, providing them with broader application scenarios and higher value capture capabilities.
Transaction Fees: Every transaction (such as executing smart contracts, transferring assets, or using dApps) incurs fees. These fees are paid in RBO tokens, with a portion redistributed to network participants as incentives to support network security and activity.
Staking Rewards: Users can stake RBO tokens within Rainbow Protocol to contribute to network security and receive corresponding staking rewards. The staking mechanism not only provides stable returns for token holders but also encourages long-term participation.
Protocol-Level Revenue: dApps and DeFi projects built on Rainbow Protocol generate revenue through various means (transaction fees, loan interest, trading spreads, etc.). A portion of this revenue flows back into the protocol, creating a continuous cycle of value capture and reinvestment, promoting the healthy development of the ecosystem.
Future Governance and DAO Participation: In the future, Rainbow Protocol will gradually introduce governance and DAO participation mechanisms. Token holders will be able to partake in governance decisions, influencing protocol upgrades, fee structures, and ecosystem development. We plan to implement these mechanisms in the future to involve the community in the long-term development of the protocol, thereby achieving decentralized management.
Fund Management: A portion of the fees and revenue generated within the protocol will be allocated to a treasury, supporting ongoing development, security audits, and community projects. This ensures the long-term sustainability and growth of Rainbow Protocol.
Continuous Innovation: As Rainbow continues to evolve and integrate new technologies, RBO tokens and other protocol assets will continuously gain new application scenarios, ensuring long-term returns for ecosystem participants.
