6. Economic and Utility Summary

6.1 Specific Utility

HIDE holders can choose between

1. Providing liquidity in the HIDE Pairs.

• Provide free liquidity on the HIDE leg

• Receive a share of overall liquidity fees in return.

2. Vote for any Liquidity Pool.

• The Pool receives a share of the overall liquidity Fees.

• The HIDE Stake receives no direct benefit but incentivising more liquidity brings benefits back to the HIDE token as transaction fees increase.

This allows economic flexibility for the HIDE holder to maximise their return on capital, by rotating between (1) Direct liquidity fees and (2) Indirect catalytic capital appreciation.

6.2 Protocol Economics

The use of Staking to set the Distribute-or-Burn relationship further models the system view on the capital view of the HIDE token as Staking would begin to correlate to perceived value. A system would collectively want to Burn expensive tokens and Distribute cheap tokens.

The maximisation of revenue for a liquidity venue involves solving for the optimal price point for fees from Volume × Fees.

Simply put, if fees are too cheap, LPs lose money and liquidity reduces. If fees are are too high, volume reduces.

The existence of the HIDE token allows this balancing act, which in a centralised context is a non-trivial problem, to be resolved through specific returns on HIDE capital. That is to say, HIDE holders, acting rationally in their own interests, through rational risk-adjusted return on capital, will collectively solve for the balance of fee rates and liquidity allocations to solve the system optimisation.