Seigniorage Code

Our seigniorage contracts, as well as peripheral contracts like liquidation bots and token contracts, are our own. They are loosely based on older seigniorage protocols, but have seen so many adjustments that referral will only lead to confusion. Our seigniorage side of the protocol and its token contracts can be updated, so we can essentially do anything with them. the following section discusses the minting of tokens, because that is what worries most people. We'll describe what we will and won’t mint tokens for and how token minting does or doesn’t affect the users.

Esteem

We mean to have BetterBank mint Esteem almost exclusively through user-initiated actions or user rewards. The only planned exception to this is a reserve mint for the treasury at the start of the protocol. This initial mint is intended for the team members who have helped build BetterBank in the year before the launch. We’ll share these funds to them at a pace that won’t disrupt the Favor distribution in the Groves. We may also use this minted Esteem for marketing purposes in the future, but not much else. We don’t expect to manually mint Esteem ever again in the future.

Since Esteem doesn’t have an LP, no amount of Esteem minted could extract funds unduly. However, an overminting could dilute the groves and/or could be smelted into Favor tokens, so it’s still not something that should ever happen.

Favor

Outside of the protocol printing Favor to the Groves and to the Esteem smelter, there are a few other instances where the protocol mints Favor tokens.

BetterBank employs a contract that mints Favor and then zaps that Favor into an LP cushion for the treasury to hold. The exact workings and the reason for it is explained in the whitepaper under the section about the LP cushion. This minting is required for protocol safety, and it is designed to happen in such a way that it rarely as well as barely impacts the Favor token price.

While setting up the protocol or a newly listed token, the team creates Wildlands positions on burner wallets to start up the interest rate for the Stronghold side and to have a starting supply for the Groves to calculate from. We’ll borrow extra funds on these wallets, and we’ll mint Favor to pair these funds with, so that we have an initial LP cushion. We then send that LP to a specific treasury and leave the burner wallets to their fate of eventually getting liquidated as interest on their debts rise. We’ll set the wallets intentionally at different risk levels, so that they don’t liquidate all at once.

Any minting of Favor increases the supply, and any increase in the supply grows the daily output in the Groves. This is essentially beneficial to Wildlands users.

The BetterBank team members do not sell Favor untaxed, but admin access provides the ability to whitelist wallets so they pay no tax. Because full decentralization remains a goal, we could potentially work towards decentralized admin access, and history has shown that it sometimes is possible to exploit such decentralized admin systems. Any huge untaxed sell-off by someone with admin access (which would be a rug pull) would essentially liquidate all Wildlands positions using that Favor type and bring down the Stronghold interest rates, but would not otherwise endanger any user’s Stronghold funds. So even if in the far future someone manages to get malevolent admin access, the Stronghold remains safe.