ZIGCOIN (ZIG) tokenomics

The ZIG token is the native utility token of the ZIGChain ecosystem, a Layer 1 blockchain built on the modular architecture of the Cosmos SDK. ZIGChain is focused on democratizing wealth generation by enabling developers to build innovative wealth-generation protocols, which utilize the Wealth Management Engine for delegated investment management.

The tokenomics of ZIGChain are primarily structured around securing the network through a Proof-of-Stake (PoS) mechanism and incentivizing participation in governance and ecosystem development.

Issuance Mechanism

ZIGChain utilizes the Cosmos SDK's Mint module to regulate the issuance of ZIG tokens. This module is responsible for ensuring a sustainable token economy through controlled inflation and supply management.

While the specific inflation rate or total supply cap for ZIG is not detailed, the mechanism is designed to:

• Control Inflation: Regulate the issuance of new ZIG tokens.
• Support PoS: Issue ZIG tokens to fund staking rewards for validators and delegators.

Allocation Mechanism

The allocation of ZIG tokens is managed by the Cosmos SDK's Distribution module, which handles the allocation of staking rewards to network participants and maintains the community pool for ecosystem development.

Key components of the ZIGChain ecosystem that benefit from token allocation include:

• Staking Rewards: Distributed to validators and delegators for securing the network.
• Community Pool: Maintained for ecosystem development and funding initiatives.

Furthermore, ZIGChain has launched ZIGLabs, a venture initiative offering $100 million in growth capital to support innovative founders within the ZIGChain ecosystem, indicating a significant commitment to funding ecosystem growth and adoption.

Usage and Incentive Mechanism

The ZIG token serves multiple critical functions within the ZIGChain ecosystem, primarily centered on network security, governance, and transaction utility.

1. Network Security and Staking

ZIGChain uses the Tendermint Byzantine Fault Tolerance (BFT) consensus mechanism, secured by a Proof-of-Stake (PoS) system.

• Validators secure the network by validating transactions and creating new blocks. They are selected based on the total amount of delegated ZIG tokens (self-staked plus delegators).
• Delegators enhance network security and decentralization by delegating their ZIG tokens to validators.
• Incentives: Both validators and delegators earn rewards from transaction fees and block rewards (newly issued ZIG tokens) for their contributions.

2. Governance

The Governance module allows ZIG holders to participate in decentralized decision-making.

• Users can propose and vote on changes to the network, such as adjusting fees or the validator count, or deciding how to spend the treasury.
• Each ZIG token equals one vote.

3. Transaction Utility

• Gas Fees: A small fee, known as the Gas Fee, is paid upfront in ZIG for each transaction on the ZIGChain network.
• Wealth Management Engine: This core module transforms complex investment strategies into tokens that fluctuate based on strategy performance. ZIG token holders participate and share in both the returns and risks associated with these tokenized strategies.
• Decentralized Exchange (DEX): ZIGChain includes a native DEX module that powers on-chain token swaps and liquidity pools, where ZIG is the native asset.

Locking Mechanism and Unlocking Time

The primary locking mechanism for ZIG tokens is through staking to secure the network.

Staking Lock-up

• Delegation: Users delegate their ZIG tokens to validators to participate in staking.
• Unstaking (Undelegation): When a delegator wishes to withdraw their ZIG tokens from the staking pool, they must initiate an unstaking request.
• Unbonding Period: A mandatory 21-day waiting period (unbonding) is applied to all unstaking requests for network security purposes. The ZIG tokens become available for withdrawal only after this 21-day period has elapsed.

Security Measures

• Slashing: ZIGChain employs a Slashing module to enforce network security. Validators (and, indirectly, their delegators) are penalized for misconduct, such as double-signing or prolonged downtime, ensuring accountability and network integrity.