5️⃣Tokenomics

5.1 The dual-token ecosystem: Tracer and Carrot

The ecosystem consists of two primary tokens:

1. Tracer Token:

• Type: ERC20 token with a pre-minted supply.

• Purpose: Governance, incentivizing and economic stability.

• Ticker: $TRCR

• Total supply cap: 12,500.000.000 (12.5 billion) - 100% minted at token generation event.

• Deflationary mechanism: Tracer tokens are automatically bought and burnt using proceeds from the carrot minting commission to reduce supply and create deflationary pressure​​.

• Staking: a staking mechanism for endorsers and project developers is proposed to enhance accountability.

• Description: Tracer tokens are used to vote on issues related to both tracer and carrot, manage the treasury, and ensure the integrity of the ecosystem. Locking mechanism protects governance (defense against Sybil attacks).

1. Carrot Token:

• Type: ERC1155 fungibility-agnostic token.

• Ticker: $CRRT

• Purpose: Enable efficient management of multiple token types within a single contract.

• Minting process: Progressive by the project.

• Description: Carrot tokens are minted by projects validated by endorsers and can be either fungible or non-fungible. Each carrot token represents a specific amount of CO2 removed and includes details about the project and its persistence. A percentage of minted carrot tokens are transferred to the Tracer DAO​​.

5.2. Tracer token distribution

The Tracer tokenomics are structured to ensure a balanced distribution that supports long-term project sustainability and growth. All 12.5 billion tokens will be minted at the Token Generation Event and allocated into the following categories:

• Current and future core team (20%): allocated for the team to incentivize ongoing development and operations.

• Early backers & advisors (20%): reserved for early backers that enabled the start of the project.

• Public sale (2.5%): made available to the public, ensuring community participation and ownership.

• Ecosystem Growth (25.0%): used to foster the ecosystem's expansion through partnerships, community grants, and new integrations, this approach also defines a method by which participants can earn tokens, clearly establishing a cap to ensure sustainability and value preservation.

• Treasury (25%): funds earmarked for future operational needs, contingency plans, and scaling the project's impact.

• Airdrop (0.5%): intended to increase token distribution and promote wider user adoption.

• Tracer Ltd (5%): Tokens reserved for Tracer Ltd to cover operational needs on behalf of the DAO.

• Private Sale (2%): Tokens allocated to early strategic purchasers prior to the public launch.

5.3 Token release schedule

Tracer uses a vesting delay and vesting schedules to slowly ease liquidity into the market. Vesting is when a beneficiary earns tokens based on certain conditions (usually time-based). It creates a more fair token release mechanism for both early backers and the token community, which is what Tracer stands for. Each stakeholder group has its own token lock and vesting schedule.

This is a visualization of the Tracer token release schedule based on the vesting schedules. Only the Private Sale tokens, 2% of the total, and the Public Sale (2.5%) and Airdrop (0.5%) are fully vested at the TGE. Note the one year Vesting Delay for the team (the yellow line), followed by 36 months vesting. This shows long term commitment and belief by team members in the Tracer project.

5.4 Total circulating supply

The majority of the token supply is subject to long-term lock-ups to slowly ease liquidity into the market. The chart below shows how the total circulating supply will gradually release coins into the total supply in time. The chart represents the hard-capped supply of 12.5 billion Tracer tokens. The chart ignores how the token burn mechanism will reduce the total supply over time.

5.5 Rewards and incentives

Buyback and burn

Yet, it is crucial to understand that the maximum circulation of Tracer tokens, 12.5 billion, is only theoretical, as Tracer tokens are continuously purchased with 1% of the the proceeds of minted Carrot tokens. These tokens are then burnt which in turn creates a deflationary pressure on the remaining Tracer tokens.

Staking mechanism

Tracer is studying different staking mechanisms as potential tools to enhance credibility, accountability, and alignment of incentives across the ecosystem. Options under consideration include staking by project developers, certification entities, token holders, and partners who introduce Carrots to their customers, with the possibility of rewards being funded from the Ecosystem Rewards Pool.

These mechanisms could serve multiple purposes, such as backing the integrity of endorsed projects, supporting governance, incentivizing market adoption, or reinforcing confidence in carbon credit issuance. The final design, including eligibility, timelines, and reward levels, will be determined through DAO governance and may adapt as the ecosystem grows.

5.6 Use of proceeds

As the ecosystem matures and the ecosystem expands, the allocation of funds is expected to shift, with a greater emphasis on incentives for buyers, exchanges, and suppliers, and ongoing software development.

5.7 Regulatory compliance

To ensure compliance with evolving global regulations, Tracer will:

• Implement rigorous KYC and AML procedures to prevent illicit activities and enhance transaction security.

• Adhere to relevant securities and financial regulations, ensuring that all token sales and operations are conducted within legal frameworks.

• Engage continuously with regulatory authorities to stay ahead of regulatory changes and ensure compliance across all jurisdictions.