Cyclic Tokenomics: A Sustainable Economic Model

In order to build a sustainable economic system, Cyclic Protocol has designed a virtuous cycle token economic model to ensure the long-term value growth of CYC tokens and optimize the liquidity of the protocol.

The core role of CYC tokens

1. Protocol governance: CYC tokens give holders voting rights to participate in the adjustment of key protocol parameters, such as interest rates, liquidation mechanisms, and liquidity pool allocations.

2. Income distribution: The protocol will distribute part of the income (such as lending interest and liquidation fees) to CYC pledgers to increase the income of token holders.

3. Liquidity incentives: CYC tokens are used to incentivize liquidity providers and enhance the depth and market competitiveness of the lending pool.

4. Repurchase and destruction mechanism: The protocol can periodically use part of the income to repurchase and destroy CYC, reduce market circulation, and increase the value of CYC.

Economic cycle mechanism

1. Users pledge LP tokens/assets → obtain loan funds

2. Lending generates interest → part of the income is distributed to CYC pledgers

3. Part of the income is used to repurchase & destroy CYC → reduce circulating supply

4. CYC holders vote to optimize parameters such as interest rates and mortgage ratios to promote protocol development

5. More users participate in lending → ecosystem growth → fund pool expansion → form a healthy cycle

This token economic model ensures:

• Continued growth of the lending ecosystem

• Steady increase in the value of CYC tokens

• Decentralization and long-term healthy development of protocol governance