H2O is the first non-pegged stable asset for the Web3 Data Economy. Initially, it is backed by the OCEAN token but in Q3 it will also be backed by other next-generation data tokens. H2O serves as a medium of exchange and unit of account in data marketplaces. The governing token of the protocol is POSEIDON, which will be used to govern the initial parameters of the protocol, bootstrap ecosystem development, and incentivize the liquidity of the protocol. We see H2O becoming the dominant medium of exchange and unit of account for data tokens, and positioning itself as an integral part of decentralized data economies.
How does H2O work
The long term price trajectory of H2O is determined by the demand for OCEAN leverage. H2O tends to appreciate if SAFE users deleverage and/or H2O users long and it depreciates in case SAFE users leverage and/or H2O users short. To better understand how H2O behaves, we need to analyse its monetary policy which is made out of four elements:
- Redemption price: this is the price that the protocol wants H2O to have on the secondary market (e.g on Uniswap). The redemption price is used by SAFE users to mint H2O against OCEAN and it is also used during Global Settlement in order to allow both SAFE and H2O users to redeem collateral from the system. The redemption price almost always floats and it does not target any specific peg.
- Market price: this is the price that H2O is traded at on the secondary market (on exchanges).
- Redemption rate: this is the rate at which H2O is being devalued or revalued. The process of devaluing/revaluing H2O consists in the redemption rate changing the redemption price
- Global Settlement: settlement consists in shutting down the protocol and allowing both SAFE and H2O users to redeem collateral from the system. Settlement uses the redemption (and not the market) price to calculate how much collateral can be redeemed by each user.
Total Supply: 1,000,000 $PSDN
POSEIDON will be initially distributed as follows:
- 25% of the total supply will be allocated to the H2O protocol treasury for contributor compensation, treasury raises and swaps.
- 15% of the total supply will be distributed to New Order DAO, who are a permissionless incubator that built H2O.
- 4% of the total supply will be Airdropped to New Order stakers as part of bootstrapping H2O activity via distribution to ecosystem members.
- 5% will be sold to investors to fund runway and operations, who are subject to a 6 month cliff (10% unlock) then a linear vest over 2 years.
- 4% of the total supply will be airdropped to Ocean Snapshot voters to incentivize H2O protocol use and distribute governance to ecosystem members.
- 3% of the total supply will be allocated to the Ocean DAO treasury.
- 10% of the supply will be distributed to the core team that founded the protocol and will lead operations. These tokens will be subject to a 1-year cliff (10% unlock) then a linear vest over 3 years.
- 7% of the total supply will be allocated as Reflexer community rewards, further distributing governance among ecosystem members.
- 15% will be allocated as liquidity mining rewards.
- 12% will be distributed to Ocean protocol data farmers as liquidity incentives.