How to Become the Largest BTC Whale? A Detailed Explanation of Citadel DAO Token Economics
A DAO focused on building a large treasury.Written by: Chloe, Chain Teahouse
The Bitcoin investment agreement Citadel DAO has announced its tokenomics, distinguishing the native token CTDL into xCTDL and vlCTDL based on staking and locking actions, to provide different yield utilizations.
Citadel DAO has also introduced an elastic release mechanism, which balances the strategies of stakers and financing based on the project's market capitalization and the size of user treasury, to avoid significant fluctuations in project market value affecting the staking ecosystem.
Citadel is a DAO treasury that aims to become the largest community holding Bitcoin positions in the world. Its treasury and protocol will be governed by the CTDL token, actively earning yields from its Bitcoin treasury and sharing them with long-term holders of CTDL.
It will utilize a unique financing mechanism to accelerate the continuous growth of its funds while employing the tested vault strategies of BadgerDAO to optimize its yields.
To ensure it can generate sustainable yields on its Bitcoin positions, it will not only hold Bitcoin but also assets that impact DeFi. This allows Citadel to exert significant influence across multiple ecosystems and secure the rightful yields for Bitcoin.
Citadel will grow into a Bitcoin whale for users, supporting the creation of Bitcoin-focused products in DeFi and backing the severely underfunded Bitcoin core development system.
1. Project Overview
The rapid growth of the treasury is crucial for the success of Citadel. To provide sustainable yields to long-term holders of CTDL, it will invest significant funds and increase its impact across various DeFi ecosystems.
Over time, the yields for CTDL holders will be driven by the production of the treasury and its returns, rather than strict regulations. This mechanism is also built on relatively stable assets—Bitcoin.
Thus, when designing the protocol mechanism, Citadel's goal is to make the dapp the most attractive trading venue for CTDL while ensuring continuous growth of funds.
Trading Mechanism:
This is very similar to the experience of trading on decentralized exchanges. With just one click, users can exchange Bitcoin or other assets for xCTDL (interest-bearing Citadel) at a discount below the current market price, which we refer to as "financing," the primary source of treasury income. The amount of xCTDL that can be exchanged is limited by the originally scheduled 10-year token release plan and distributed periodically based on the protocol's operational status.
Both CTDL and xCTDL are standard ERC 20 tokens.
Long-term Holding or Recharge:
Users will receive xCTDL when they deposit assets into the treasury, and upon receiving xCTDL, the release amount of CTDL will further increase, almost like a ticket to enter the castle.
With a fixed release rate, the goal of xCTDL is to achieve the target APY within its 10-year plan. To further align the protocol with its holders while ensuring transparency among all participants, xCTDL has a rule—upon the holder's exit, an authorization period will be activated during which holders will receive their CTDL linearly until the period ends.
This means holders can withdraw CTDL at any time while limiting their short-term arbitrage opportunities and helping other holders clearly understand when others decide to exit. Holders who already possess CTDL can also access the dapp and deposit xCTDL.
Lock-up:
When users are ready, they can join Citadel to benefit from long-term Bitcoin profits. Inspired by veTokenomics and the Convex protocol, users can lock their xCTDL for a period of 21 weeks, which will grant them:
- A multiplier on the release of their accumulated CTDL (e.g., 2-3 times xCTDL yield)
- BTC funds obtained through financing
- A percentage of the earnings generated by the active treasury
- The right to participate in governance
Any protocol that can influence the operation of the Citadel treasury, acquire assets for the treasury, allocate its yield, and provide any governance suggestions can join through Citadel's partner platform.
Over time, as Citadel releases, future plans will aim to reduce its target allocation yield, initiating a continuous cycle. This means that the total yield percentage received by users primarily comes from new BTC entering the treasury and the yield generated by that treasury, creating a sustainable model for users.
2. Application Scenarios
Built-in Yield Mechanism:
Only a few users actively invest funds into a treasury, as many protocols are limited by management and return processes, leading many community members to demand a certain level of transparency from the treasury. Citadel's secret lies in the built-in yield mechanism possessed by the Badger treasury system.
This allows for the transparency, non-custodial, verifiable, and automated productivity of the treasury.
Badger has extensive experience in creating yield strategies, and Citadel leverages these strategies to ensure that all assets in the treasury can actively earn yields.
The sum of treasury productivity and yield will create a synergistic effect. As new assets are added to the treasury, Badger will ensure that free treasuries are activated to start earning yields.
For example: Citadel deposits BTC into Badger's ibBTC and earns BADGER, bveCVX, and bcvxCRV.
In the BADGER dapp, BADGER will significantly enhance the yield of Citadel's BTC, while bveCVX will vote to drive the base yield of the ibBTC CRV pool, ensuring that yields are proportional to treasury growth and creating a unique cycle.
Why is this so important for Citadel? The rewards earned by Citadel's BTC treasury also influence the yield assets, allowing it to vote to drive its Bitcoin to obtain more base yields.
In simple terms, more BTC = more yield + acceleration = more treasury yield.
This cycle will ensure that Badger and Citadel not only dominate the curve but also compete for yield influence in subsequent ecosystems in the future. The same approach can be applied to ensure that BTC yields are appropriately reflected across all DeFi.
Partner Pre-launch Program:
When launching the DAO, it is crucial to have participants in governance, with the community sharing common values and belief systems, working together towards common goals and interests. Thus, Citadel planned to seek unique partners to participate in the initial launch process from the very beginning.
The goal is to have a completely fair and transparent mechanism, distributing Citadel not just to early participating users but also to every DAO and application in the ecosystem that has an influence on Citadel.
Citadel refers to this launch plan as the Citadel Knighting Round.
Users will be able to exchange xCTDL using WBTC, ibbtcCRV Badger vault tokens, CVX, and/or bveCVX, with only whitelisted users eligible to participate in the launch event.
Knighting Round:
The knighting round is a fixed Citadel token pool that can be allocated to partner DAOs/applications, which will become Citadel's knights.
How the funds are allocated will depend on the participants in the launch event. During the event, they can choose a DAO to vote for, and at the end of the event, Citadel will proportionally distribute these statistics to these DAOs, which will then have the ability to influence Citadel's direction.
BTC-focused Treasury:
Badger is a Bitcoin-focused DAO because there is no better asset to serve as the foundation for a treasury protocol that will thrive in the coming years. This will be a key factor in differentiating Citadel from others.
Citadel enables users to tokenize and exchange Bitcoin for xCTDL through the Badger bridge, similar to how users can deposit local BTC into Badger's treasury today to earn yields. This is a new attempt to bridge Bitcoin users who wish to gain additional benefits from their assets.
3. Token Economics
The design of Citadel's token economics balances the advantages of existing token economic models while fundamentally maximizing returns for holders.
Citadel can be staked or locked up, solely to provide higher benefits, and these two derivative tokens are xCTDL and vlCTDL. vlCTDL holders will receive rewards in three forms: CTDL APR, mechanisms for producing BTC, and finally, xCTDL holders will receive CTDL APR.
4. Project Planning
Before releasing the basic protocol, there will be various RFFs for the community to weigh. More details will be provided to users about the release plan, whitelist eligibility, partner DAOs, the role of Badger-Citadel, and how to participate in the release.
5. Community Status
Twitter:
https://twitter.com/TheCitadel_DAO
5344k followers
Discord:
https://discord.com/invite/67vc73jsat
6878 followers
6. Conclusion
Citadel, launched as an affiliated DAO incubated by Badger, will have an independent dapp while also incorporating functionalities of the Badger application. Badger will receive a share of the Citadel tokens supplied at launch, including earnings from Citadel.
Citadel is expected to become the largest BTC holder in the Badger application (ensuring TVL and sustainable income), the largest holder of Badger tokens (through treasury accumulation and yields earned from BTC deposited in the protocol), the largest holder of BADGER tokens (when vlBADGER launches, this will increase Citadel's BTC deposit yield), and the largest holder of bveCVX treasury (allowing for sustainable BTC yields in the Curve/Convex ecosystem).
This will create the best cycle for the entire ecosystem, establishing a close connection between the two DAOs while promoting the development of Bitcoin in DeFi.
In this field, DAO treasuries have yet to be fully explored and utilized. Imagine a DAO focused on building a massive treasury, allowing the community to manage its influence, developing autonomous methods to enhance treasury productivity, and enabling long-term holders to share in the benefits of these activities.
To realize this vision of DAO operation, a sustainable model is urgently needed to align users with the protocol's status and accelerate fund growth.
This is precisely what Citadel DAO aims to achieve through innovative new mechanisms.
