ceTokens
ceTokens are generated by Colony for each Seed/Private sale conducted on the platform. These ceTokens are specifically designed to mirror the tokens locked within the associated vesting contract of a Seed/Private sale. They serve as a representation of a user's complete unlocked allocation from a specific Seed/Private sale. CeTokens grant users the right to claim the project's native token (purchased through NEST) depending on the vesting contract of the project.
ceTokens Distribution:
The way ceTokens are distributed within Colony's protocol is crucial to enable the Liquid Vesting mechanism. It also helps both passive income enthusiasts and active investors to benefit from the Early-Stage Program.
Active investment: KYCed CLY stakers can actively participate in NESTs and fund projects. They receive 80% of ceTokens, in proportion to their investment amount. They can also choose to maximize their ceTokens allocation by providing liquidity on Colony's DEX by pairing their ceTokens with AVAX, staking their LPs and farming ceTokens rewards. Through this process users can maximize their ceTokens allocation, thereby increasing their ability to swap for additional native project tokens over time.
Passive investment: all CLY stakers, regardless of NESTs participation, stand to benefit from the platform's success. A portion (8%) of NESTs allocations is airdropped to all CLY stakers, providing a passive income stream.
The exact distribution of the ceTokens for each NEST is as follows:
When you invest in a Project through Colony’s NEST, you receive 80% of your Project's ceTokens allocation. The remaining 20% of ceTokens are distributed within the Protocol, crucially enabling the functionality of the Liquid Vesting feature on the platform and providing you with opportunities to boost your ceTokens allocation. Below is a breakdown of the distribution:
80% of the ceTokens are distributed to NEST investors proportionate to their investment amount.
8% of ceTokens are airdropped to all CLY stakers, establishing a passive income stream for stakers, regardless of their involvement in a Project’s NEST.
10% of ceTokens are allocated as rewards for liquidity providers on the DEX trading pools associated with each project (ceToken/AVAX).
2% of ceTokens are designated to create initial liquidity within the trading pools (ceToken/AVAX), ensuring smooth trading and enhancing the overall user experience of the Liquid Vesting feature on the platform. Additionally, a small portion of this 2% contributes to supporting Colony's ongoing protocol development efforts.
ceToken Specification:
CeTokens are ERC-20 tokens generated upon the completion of a project's fundraising through a NEST. After the fundraising concludes, the project team transfers their tokens to the NEST contract and retrieves the raised USDC. Subsequently, the project's native tokens are locked in a vesting contract created by Colony, aligning with the project token's vesting schedule requirements. Once locked, ceTokens are minted in the same quantity as the project tokens provided to the vesting contract. Each ceToken entitles its holder to claim the corresponding project token available in the vesting contract as the vesting schedules progress. As ceTokens are utilized for claiming, they are burned in exchange for the vested token. Upon the full claim of all tokens in the vesting contract, all ceTokens are burned.
Specification details:
ceToken Name: The ceToken name is constructed as "[project token name] ceToken". For instance, if the project token name is "Alpha", the ceToken name would be "Alpha ceToken".
ceToken Symbol: The ceToken symbol is formed as "ce[project token symbol]". For example, if the project token symbol is "ALP", the ceToken symbol would be "ceALP".
Decimal Precision: ceTokens have the same number of decimal places as the corresponding project token.
Transferability: ceTokens function as regular ERC-20 tokens and can be transferred and traded accordingly.
Burning Mechanism*: ceTokens are burned after use to claim the project token they represent.
*ceToken burning mechanism:
The ceToken burning mechanism operates as follows: Initially, ceTokens are minted in the same quantity as the project tokens provided to the vesting contract. With each claim made during the vesting period, a portion of the ceTokens used for the claim is burned as a fee. This fee is utilized to provide bonus tokens for late claimers. Over time, the fee gradually decreases, reaching zero by the end of the vesting period. Consequently, claiming tokens later results in a higher quantity of project tokens received in exchange. Therefore, it is advisable to wait until a later stage to claim project tokens in order to maximize the amount received.
This mechanism is explained in detail in the "Long-Term Incentives" section, which outlines the Bonus/Penalty features aimed at incentivizing users who are long-term investors to claim project tokens later in the vesting period, rather than immediately.
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