Treasury and Revenue Model
12.1 Revenue Sources
SwapBlok's revenue is derived entirely from exchange volume. There are no subscription fees, listing fees, or other charges.
| Revenue Source | Rate | Mechanism |
|---|---|---|
| Market fee on swaps | Up to 0.20% of output (governance-reducible by volume) | accumulated_fees per asset |
| Market fee on arbitrage | Up to 0.20% of output (governance-reducible by volume) | Same mechanism |
| Market fee on order book | Up to 0.20% of output (governance-reducible by volume) | Same mechanism |
All revenue is denominated in the asset being traded (wETH, wBTC, wSOL, wUSDT etc.) and collected on-chain.
12.2 Treasury Architecture
SwapBlok maintains a two-wallet treasury architecture:
On-chain treasury account (SB Chain): Holds accumulated wrapped asset balances. Fed by asset_claim_fees_operation from accumulated_fees. This account also holds the LP tokens for SwapBlok's own pool positions.
Native cold wallet (per external chain): Holds real ETH, BTC, SOL, USDT. Fed by bridge withdrawals from the on-chain treasury. Multi-signature controlled. Operationally separate from the sBridge hot wallet.
This separation means a compromise of sBridge operational infrastructure does not expose accumulated revenue.
12.3 Revenue Distribution
Treasury revenue is allocated according to a three-phase schedule tied to daily trading volume milestones. The schedule is designed so that capital is directed where it has the most impact at each stage of protocol maturity.
| Phase | Daily Volume | Treasury | SBT LP Rewards | Burn | Rationale |
|---|---|---|---|---|---|
| Phase 1 | < $1M | 100% | 0% | 0% | Capital needed for operations, audits, liquidity seeding |
| Phase 2 | $1M – $10M | 60% | 30% | 10% | Buy pressure established; burn modest but mechanism live |
| Phase 3 | $10M+ | 30% | 40% | 30% | Operations self-sustaining; burn economically significant |
Phase 1: Launch to $1M daily volume
Fee revenue flows entirely to the treasury. Priorities at this stage are: initial liquidity seeding for all AMM pools, ongoing security audit programme, regulatory and legal costs, team runway, and infrastructure. The buyback-and-burn contract is deployed and the governance parameter exists; the burn percentage is set to zero. The protocol does not waste early fee revenue on a burn rate too small to be economically meaningful.
Phase 2: $1M to $10M daily volume
When daily volume crosses $1M, the Foundation proposes activating the burn mechanism via governance vote. This threshold is announced publicly in advance. The milestone converts a volume number into a tokenomics event. At $1M daily volume and the genesis max rate of 0.20%, the protocol earns approximately $730k per year in fees. Of that, 10% ($73k/year) purchases and burns SBT; 30% ($219k/year) purchases SBT for LP reward distribution, creating additional buy pressure without removing supply. Treasury retains $438k/year for continued operations.
Phase 3: $10M+ daily volume
At $10M daily volume, annual fee revenue reaches approximately $7.3M. Burn at 30% represents ~$2.19M/year in SBT purchased and permanently removed from circulation. LP reward purchases at 40% add a further $2.92M/year in buy pressure. Treasury at 30% ($2.19M/year) is sufficient for self-sustaining operations without requiring additional Foundation capital.
Unallocated LP emission burn (independent of fee revenue)
In parallel, any SBT allocated to the annual LP emission schedule but not distributed due to lower-than-projected liquidity participation is burned at year-end rather than rolled forward. This mechanism operates from genesis regardless of trading volume. At lower protocol utilisation in early years, this becomes the primary deflationary mechanism, working without needing fee revenue or market purchases of SBT.
Phase transitions
Each phase transition requires a governance proposal with 72 hours public notice per the Foundation's governance commitments (Section 7.5). The burn_fee_percent and lp_reward_fee_percent parameters are updated on-chain. No transition happens unilaterally or silently.