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ai16z: Tokenomics Proposal

presented by Ejaaz (@cryptopunk7213), Mark (@markus9x), Ropirito (@ropirito), Tres (@TresFlames031) & Eskender (@Esk3nder)

This proposal is also inspired by the incredible suggestions provided by various partners in the ai16z discord, telegrams. Our goal here is to provide a structure that is consistent with the community’s wishes.

Background
Ai16z is a decentralized community dedicated to pushing the boundaries of the open source AI Agent ecosystem.

Ai16z is currently composed of:

  1. The ai16z DAO: a DAO fund, native token ($ai16z), core team & token holders.
  2. The ELIZA Foundation
  3. The ELIZA Open Source Agent Framework (Under the elizaOS GitHub Organization)
  4. A thriving developer ecosystem building on ELIZA across every major L1, L2 and various different platforms.

The Vision
The end-goal is decentralized, open-source AGI.

In order to get there we must build not only the most accessible, but the best tooling, platforms & services to support builders.

The Challenge
Ai16z’s agent framework ELIZA has been the dominant & favored developers choice for building agents not just within the crypto community but among all developers working in tech today.

The Eliza framework has been hailed as an industry innovation by top institutions and academics including Stanford University’s Future of Digital Currency Initiative (FDCI) which announced the launch of its first ever web3 x AI research lab with the Ai16z team. Stanford professors Dan Boneh and David Mazières noted:

"By combining FDCI's established infrastructure with Eliza Labs' expertise in multi-agent systems, we're positioning ourselves at the forefront of this transformative technology.”

With over 5000+ stars, 2000 forks & consistently trending as the top github repo in the world, it’s safe to say ai16z is leading as the fastest growing open source agentic AI movement today.

Its native token, $ai16z, however currently lacks demonstrable capacity to capture value produced from ELIZA’s success. The donation-to-DAO model no longer holds up.

Without this, the incentives of each stakeholder within this decentralized community (developers, holders, core team etc) will be misaligned.

But therein lies the opportunity.

Successfully tying in value to the community’s native token will have the opposite effect: creating an exponential flywheel that enables ai16z’s development towards AGI

The Proposal

We propose ai16z DAO considers a multi-stage upgrade of its native token’s economic design, culminating in a flywheel that continually feeds the DAO’s mission of achieving & supporting decentralized AGI.

Stage 1: The Official ai16z Launch Platform (TBD due: Mid-End Jan, 25’)

Read the full details of the official ai16z launchpad + tokenomics plan

This describes an “official” ai16z agent platform where creators can leverage the ELIZA framework + an array of tooling to design and launch their own agent. This platform will facilitate agent-to-agent interaction (swarms), multi-chain integrations, and several new cutting edge innovations.

The Ai16z core team will lead this initiative to oversee development and control because it is vital to ensure that launchpad operations are fully aligned with token holder interest.

This platform will not be issuing a new token but will be fully adopting the $ai16z token to ensure that the explosive growth of the Eliza framework is reflected in the token value.

The role of $ai16z:

  1. Agent Token Liquidity Pool Strategy (core ai16z team led bytres@eliza.systemsplan)

    1. These pools will be an effective way of bootstrapping demand for $ai16z which will create more resources for the community to work towards stage 2 (a monetary capital advantage is crucial in the race to AGI).
    2. Narrative-wise: This provides a “rational economic thesis” to investors (HNWI, Funds), partners & holders of the token to purchase and hold these tokens supporting long-term development of the Dao.

  2. Buy-back & Re-Invest

    1. Essentially 50% of all trading fees on the official ai16z launchpad highlighted above would be used to buyback $ai16z and added as permanent lp to a 2nd pool (read The official ai16z launchpad plan for more details.) In addition to this, we suggest that some of the $ai16z treasury be used to reinvest into development and open-source projects building on ELIZA.Including potentially retroactive funding for contributions as suggested by Jin.
    2. Narrative-wise: this paints the ai16z brand as flag-holders for the open source agent movement.

  3. Stake $ai16z

    1. Staking $ai16z could earn you an array of advantages within the ai16z ecosystem:
      1. Early access, capped allocation (e.g. 30 mins before public launch) to new agent launches.
      2. A % of LP fees from trading fees (this works well in stage one when pools are tied to $ai16z as the base pair)
    2. Narrative-wise: the paints the ai16z ecosystem as “long-term actors” Crucial if you want a stable and trusted asset to make up the AGI community.

Additional potential considerations:

  1. Partner economics

    1. Enabling $ai16z partners (those holding more than 100,000 $Ai16z tokens) to be able to vote to ‘whitecheck’ their favorite projects.

      The launchpad would remain fully permissionless for anyone to launch tokens regardless of whitechecks but this optional partner endorsement would provide a spotlight on teams that are building over the long term and aligned with the ai16z vision.

      This would in effect be systemizing and scaling ‘Shaw’s endorsement model’ and shifting the responsibility to partners who are aligned (via token holdings) to ensure the best projects have the highest chances of success.

Stage 2: The ELIZA Ecosystem (due: TBD) This describes an ecosystem of “official ai16z” products & services that support its community and are built on top of the ELIZA Platform.

The goal of this ecosystem is to have multiple products add value to each other and inextricably tie value to the $ai16z token.

The analogy here would be how $ETH or $SOL underpins most core decentralized infra built on top of it (e.g. used as collateral, base trading pairs etc). The argument here is if AI16Z is building decentralised AGI then its token should be the medium that aligns its actors to get there.

1. Developer Partner Program

Currently, core developers for the ELIZA codebase are compensated for their work, and part-time contributors receive automated airdrops. However, this approach does not account for the depth, complexity, and impact of specific contributions.

To address this, we propose a Developer Partner Program with a decentralized and transparent approach:

  1. Contribution Tracking
    1. Reputation scores: Use a mix of LLMs and open-source tools to analyze GitHub data, merged pull requests, and code complexity to assign each contributor a dynamic score.
    2. Contribution Types:
      1. Code Contributions: Number of merged PRs, code quality, complexity.
      2. Issue Resolution: Bug fixes, feature requests, or community initiatives.
      3. Mentorship & Community Engagement: Guiding new contributors, answering technical questions (Discord)
  2. Voting Mechanism for Project Access
    1. Partner Voting: Anyone who is a partner at ai16z can vote on which projects get developer resources.
    2. Criteria: Market potential, alignment with mission, technical complexity, ensuring developers focus on high-impact, relevant projects.
  3. Fund Allocation
    1. Decentralized Allocation Fund: Partners vote on which projects to fund, and developers are matched based on skills and reputation. Projects must pay in $ai16z with a % being burned and rest being given to the devs.
    2. Equitable Compensation: High-impact contributions and reputable developers receive a larger share of allocated funds.
    3. Focus on Acceleration: Targeted funds drive forward critical developments in the ELIZA framework.

2. Platform Rewards for Builders​

To further encourage sustained, high-value contributions, the ecosystem includes a multi-parameter reputation system and corresponding rewards:

  1. Reputation System & Scoring
    • Weight contributions across four main categories:
      • Code Contributions (40%): Merged PRs, feature complexity, bug fixes.
      • Community Engagement (20%): Forum activity, discussion facilitation, user onboarding.
      • Mentorship (10%): Guiding other devs, contributing to knowledge-sharing.
      • Impact (30%): Measured by user adoption, performance improvements, or roadmap acceleration.
  2. Rewards Distribution
    • LP Fee Distribution: High-scoring developers can receive a payout out of a fund built from LP fees, incentivizing ongoing, quality contributions.
    • Token Incentives: Allocate $ai16z tokens or other rewards based on these contribution scores. Larger rewards go to devs whose work is central to the ecosystem’s success.

3. Compute Resources​

Ai16z will partner with decentralized compute and model providers to offer preferred rates or special access for Eliza-based developers and platforms. When purchasing compute on-chain (e.g., sending USDC or SOL to a provider wallet such as Hyperbolic AgentKit), a portion of every payment is automatically converted into $ai16z and burned. This arrangement accomplishes three things:

  1. Benefits Providers: Partners gain a consistent stream of new customers from Eliza developers.**
  2. Incentivizes Token Holding: The automatic conversion-and-burn mechanism drives continuous demand for $ai16z and reduces circulating supply.**
  3. Strengthens the Ecosystem: Developers who hold $ai16z can access discounts or exclusive features, reinforcing loyalty and use of the token.**

This approach delivers mutual value—providers expand their customer base, and ai16z drives a recurring deflationary effect for $ai16z while bolstering platform utility.

Stage 3: The ai16z L1 (due: TBD)

We believe that an independent L1 should be the endgame for ai16z. This would be the ultimate home and support layer for agents interweaving across any chain/infra layer and would result in the true culmination of protocol-level decentralized AGI.

Rationale for L1: Developing a proprietary L1 blockchain offers:

  • Greater control over ecosystem narratives and tokenomics.
  • Reduced dependency and risk on existing blockchains.
  • Enhanced utility for AI agents as the L1 can be optimized for agents.
  • The L1 premium narrative.

Preliminary areas to explore:

  • Stake to secure layer.
  • Medium of payment and the currency of agent to agent interactions.
  • Transaction tax (gas).
  • Self-hosted LLMs being part of the network.

Potential challenges would include the migration of liquidity (especially when considering the virtuals flywheel of locking up lp for years) and the fact that any token migration or rebranding would require extreme care.

FAQ

Isn’t the $ai16z token set to expire next year? How will this affect tokenomics?
Fund closing does NOT halt trading. Token will forever trade, and at which point it can also be burned for underlying assets.

Using $ai16z as the base LP token will result in huge volatility in pairs.
See liquidity mining section under stage 1 above. LPs will be incentivized to provide deep liquidity for longer resulting in a more stabilized price per token.

What about the infinite mint function for the token contract?
No single actor can trigger infinite mint. It would require a majority vote from the dao which wouldn’t happen in the first place as it’s a direct disincentive.