SBT: The SwapBlok Native Token

7.1 Token Design and Separation of Concerns

SBT is the native token of SB Chain. It is not a wrapped asset, not a representation of any external asset, and not minted as a consequence of bridge deposits.

This separation is a deliberate architectural decision. When a user bridges ETH to SB Chain, they receive wETH, a wrapped representation of the ETH locked in their dWallet vault. They do not receive SBT. SBT must be acquired independently: through exchange, through liquidity provision, through witness block production, or through the pre-TGE community points programme.

This clean separation serves two purposes:

1. Architectural clarity. SBT's supply and value are not mechanically linked to any external asset or bridge flow. Its value derives entirely from demand for SB Chain's services.
2. Economic independence. SBT cannot be characterised as a proxy for any underlying asset. It is a native network token in the same sense that ETH is native to Ethereum.

7.2 Token Utility

SBT has five utility functions on SB Chain at genesis:

Witness rewards. Every block produced on SB Chain (one every 5 seconds) earns the producing witness a reward denominated in SBT. This incentivises the operation of high-reliability witness nodes and funds the decentralised infrastructure of the chain.

Governance. SBT holders vote for witnesses, committee members, and worker proposals. Voting power is proportional to SBT holdings. Protocol parameters (fee schedules, block size limits, witness counts) are ultimately controlled by SBT holders through this governance system.

Fee buyback and burn. The protocol includes an on-chain buyback-and-burn mechanism governed by a single parameter (burn_fee_percent). This parameter is set to zero at genesis and is activated by governance vote when daily trading volume crosses $1M, the point at which the mechanism has meaningful economic scale. Before that threshold, deploying fee revenue into burn would have negligible supply impact while depriving the protocol of capital needed for liquidity seeding, security audits, and operations. The smart contract and governance parameter are deployed at genesis; only the activation is deferred. Crossing the $1M daily volume threshold will be announced publicly as a tokenomics milestone: the volume number becomes the trigger for a supply event.

See Section 12.3 for the full per-phase revenue analysis.

LP SBT rewards. LP SBT emission rewards. From the 17.5% LP rewards allocation, SBT is distributed to liquidity providers in proportion to their LP share on a declining schedule defined in Section 7.3. This creates a continuous SBT yield stream for LPs that supplements the direct pool fee revenue they earn natively from trading activity.

Exchange pairs. SBT/wETH, SBT/wUSDT, SBT/wBTC, and SBT/wSOL pools provide price discovery for SBT. SBT will not serve as natural entry and exit points for bridge participants.

Operation fees for user-facing actions (LP deposits, LP withdrawals, and governance votes) are set to zero at genesis. There is no gas cost to use SwapBlok. SBT's value accrues through protocol ownership and revenue distribution, not through mandatory transaction friction.

7.3 Token Supply and Distribution

Total supply: 1,000,000,000 SBT. Fixed at genesis. No additional minting mechanism exists within the protocol.

Team & Contributors: 35% (Team 230M + Foundation Reserve 90M + Strategic 30M = 350M) covers the core team, founders, Foundation reserve, strategic partners, and any pre-TGE private investment. All are subject to the same 12-month cliff and 24-month linear vesting schedule. No separate investor or private sale allocation is publicly broken out.

Community & Protocol: 65% covers witness rewards, pre-TGE airdrop, LP rewards, ecosystem grants, and the Protocol-Owned Liquidity Reserve. These allocations flow entirely to network participants: block producers, early community members, liquidity providers, and ecosystem builders.

LP reward emission schedule (from the 175,000,000-token pool):

Front-loading incentivises early liquidity provision during the critical bootstrapping period. Declining emissions prevent long-term reliance on inflationary rewards as the protocol matures. Using a time-weighted average, SBT is rewarded to LPs proportionally to how long liquidity was provided in the pools and how much liquidity they provided.

Unallocated emission burn. At the end of each emission year, any SBT allocated to that year's LP rewards that was not distributed (due to lower-than-projected liquidity utilisation) is permanently burned rather than rolled forward into future years. If Year 1 distributes 40M out of the 66M allocated, the remaining 26M is burned. This mechanism:

• Reduces future supply without requiring fee revenue or market purchases
• Works independently of trading volume (active from genesis)
• Tightens the emission schedule mechanically as a function of actual protocol utilisation
• Creates deflationary pressure proportional to how far below projection actual LP participation falls

The unallocated burn operates in parallel with the fee-revenue buyback mechanism and activates earlier (at year-end regardless of volume). Together they push total SBT supply downward under all growth scenarios.

7.4 Pre-TGE Capital

SwapBlok's pre-TGE capital formation is conducted privately within the 35% Team, Contributors & Foundation allocation. No separate public investor token allocation exists. Pre-TGE investors receive SBT subject to the same 12-month cliff and 24-month linear vesting schedule that applies to all team and contributor allocations. Specific investment terms are agreed bilaterally and are not disclosed publicly.

This structure is a deliberate signal of community-first design. Protocols that ring-fence large investor allocations (typically 18–28% in VC-backed alternatives) create visible sell pressure at TGE and misalign incentives between investors and the community. By absorbing pre-TGE investment within the same vesting pool as the team, SwapBlok puts all parties with early access to SBT on identical conditions.

Use of pre-TGE proceeds:

• Independent security audits of SB Chain core code and sBridge contracts
• Legal and regulatory compliance across operating jurisdictions
• Core team expansion and operating runway through TGE
• Initial liquidity seeding for all AMM pool pairs at TGE (excluding SBT pairs, which are funded from the dedicated 17.5% LP rewards allocation)
• Infrastructure, monitoring, and operational tooling

7.5 Foundation Governance and Decentralisation Roadmap

Initial governance position. The SwapBlok Foundation controls 35% of total SBT supply at TGE through the Team, Contributors & Foundation allocation described in Section 7.3. All team and contributor tokens are subject to the 12-month cliff and 24-month linear vesting schedule and cannot be sold or transferred during the lock period.

Phase 1 governance operates on standard liquid SBT voting, proportional to token holdings with no amplification. With 35% of supply under the Foundation's control and typical RDPoS governance participation rates of 10–20% of circulating supply, the Foundation holds a decisive voting majority among active participants during the critical early period. This majority declines naturally as community tokens distribute, accumulate, and engage in governance over time.

This governance concentration during the critical early period serves a defined purpose: it protects the network against governance attacks, parameter manipulation, and hostile actors accumulating tokens to disrupt operations before sufficient decentralised community engagement has developed.

Foundation governance commitments. The following commitments are encoded on-chain as governance parameters at genesis and cannot be unilaterally reversed by the Foundation:

1. All Foundation governance votes are published at least 72 hours in advance, with written public rationale.
2. The Foundation will not vote to alter the LP reward emission schedule by more than 10% per year without a 66% supermajority of total SBT.
3. The Foundation will not vote to modify team vesting schedules after TGE.
4. Changes to the core bridge architecture (sBridge module parameters) require an 80% supermajority.

Decentralisation roadmap:

This roadmap converts the Foundation's initial governance majority from a control mechanism into a trust signal: it is disclosed, time-limited, and structured around increasingly meaningful community checks at each stage.

7.6 The SBT Demand Flywheel

SBT demand compounds across multiple independent vectors simultaneously, anchored by real protocol revenue:

More exchange volume
        │
        ├── More market fee revenue (wETH, wSOL, wBTC, wUSDT)
        │         │
        │         └── Phase-gated distribution (see Section 12.3):
        │               Phase 1 (<$1M/day)  → 100% treasury
        │               Phase 2 ($1M–$10M)  → 60% treasury · 30% SBT LP rewards · 10% burn
        │               Phase 3 ($10M+/day) → 30% treasury · 40% SBT LP rewards · 30% burn
        │
        ├── More native taker fee income to LPs
        │   (deeper pools → better rates → more users)
        │
        ├── LP SBT emission rewards (from 21% allocation, declining schedule)
        │         │
        │         └── SBT distributed to LPs proportional to pool share → deeper liquidity
        │
        ├── Unallocated LP emission burn (year-end, independent of volume)
        │         │
        │         └── Unused annual allocation burned → supply decrease from day one
        │
        └── More RDPoS governance participation (SBT held for witness votes)
                │
                ▼
        More value captured by SBT holders
                │
                ▼
        Deeper SBT/asset pools → better rates → more users → more volume

The fee buyback mechanism is the critical structural addition over a standard inflationary rewards model. When activated at the $1M daily volume milestone, every unit of exchange volume creates direct buy-and-burn pressure on SBT from real fee revenue, not from printing new tokens. This is the same mechanism responsible for HyperLiquid's HYPE accumulating over $1.3 billion in cumulative buyback volume within 18 months of its launch. The activation milestone turns a volume number into a tokenomics event: it is announced publicly, encoded in the protocol as a governance parameter, and serves as a clear signal of protocol maturity rather than a mechanical background process nobody notices. LP SBT emission rewards run in parallel, funded from the dedicated 17.5% allocation on a front-loaded declining schedule defined in Section 7.3, creating a continuous SBT yield stream for liquidity providers independent of fee revenue. The unallocated emission burn (Section 7.3) operates from genesis, providing supply reduction before the fee buyback mechanism activates.

7.7 Token Classification

SBT is a native protocol token whose value accrues through governance rights, witness reward distribution, and the progressive reduction of supply through two independent mechanisms: unallocated LP emission burn (active from genesis) and fee-driven buyback and burn (activated by governance at the $1M daily volume milestone). It is not a toll token; there is no gas cost to use SwapBlok.

SBT is not a stablecoin. It has no peg, no reserve, and no stabilisation mechanism. Its supply is not managed in response to price movements. The buyback-and-burn activation threshold is a function of protocol volume, not SBT's market price; it does not respond to price.

SBT is not an asset-referenced token. It does not reference any external asset or basket of assets. Its value is determined by governance participation, witness reward demand, and the deflationary pressure of the two-track supply reduction programme.

SBT is not a security. It does not represent ownership in any company, does not entitle holders to dividends, and does not constitute a share in SwapBlok's revenue. LP SBT rewards are earned by providing a service to the protocol (liquidity provision), a functional utility, not a passive investment return. The Foundation has sought independent legal opinion confirming this classification across its primary operating jurisdictions.

SBT is a governance and protocol revenue token. Holding SBT grants voting power over the witnesses who run SB Chain, the committee members who set its parameters, and the governance proposals that determine its future. Supply reduction operates through two mechanisms: the unallocated emission burn removes unused LP allocation at year-end regardless of volume, and the fee buyback activates at $1M daily volume to add proportional buy-and-burn pressure from real protocol earnings. Both anchor SBT's long-term supply trajectory to measurable protocol activity rather than to speculation or inflationary incentives.