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Tokenomics

1) Analyzing Tokenomics in DeFi​

Your first tokenomics challenge consists of performing a comprehensive breakdown of the tokenomics behind Aerodrome, a top DeFi protocol on Base. The following aspects must be covered:

  • Initial distribution/allocation of AERO
  • Future supply distribution over time
  • AERO/veAERO voting mechanism
  • Bribes mechanism

After completing the breakdown, answer the following questions with supporting evidence:

  • Who controls AERO emissions?
  • What is the strategy to maximize gains in AERO?
  • What is the strategy to maximize gains in USD value?
  • Opinion: Is the AERO system well-designed? Justify your answer.

2) Consensus meets money printing​

Your second tokenomics challenge consists of studying the Terra blockchain. Terra had a popular tokenomic system where the main token, LUNA, was used to secure the network via PoS, while UST functioned as its algorithmic stablecoin. The following aspects must be covered:

  • Initial distribution/allocation of LUNA and UST
  • PoS mechanism using LUNA
  • Governance mechanism
  • Conversion mechanics between LUNA and UST

After completing the breakdown, answer the following questions with supporting evidence:

  • How much is needed to perform a governance attack? How could this attack be orchestrated?
  • How much is needed to perform a consensus attack? How could this attack be orchestrated?
  • Who controls the UST oracle?
  • Opinion: In your view, why did the Terra blockchain fail?

How to Submit Your Work​

  • All work for your chosen challenge must be committed to the GitHub repository assigned to you during onboarding.
  • Include diagrams/charts to illustrate key points.
  • Maintain a technical focus throughout.
  • No need to delve extremely deep into the underlying systems—focus on tokenomics, and wisely manage your time.
  • Structure your commits clearly, with meaningful messages that outline the progress of your work, see Git Practices for reference.
  • Ensure your final submission is well-organized, with supporting files, diagrams, or models included as needed.

🍀 Good luck!