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Overview

The governance token for Nirvana is prANA. It is earned by depositing ANA into the Nirvana system. The rate at which prANA rewards accrue to ANA deposits is governed through community-driven governance.

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Continuous emissions

Nirvana distributes prANA tokens to ANA depositors at a flat, continuous rate. Key features of this emission model include:

  • Earned prANA can be claimed at any time.
  • Fair Distribution: Governance power is allocated based on the amount of ANA held and the duration of the deposit.

The earned prANA tokens can be claimed by depositors at any time. There is no minimum lock-up for ANA, and earned prANA may be claimed even after withdrawing ANA.

Example prANA earning

Alice deposits 100 ANA into Nirvana. The annual emission rate is 50%. After 6 months, the amount of prANA earned by Alice is 25 prANA. After 1 year, she will have earned 50 prANA in total.

Note: There is no fixed supply of prANA. It is distributed based solely on the amount and duration of ANA deposits, ensuring prANA remains a scarce and valuable resource. This scarcity incentivizes investors to hold ANA for longer periods to accumulate more prANA.

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Activated prANA

When prANA is deposited, it activates two key features:

  • Revenue Sharing: prANA holders receive a share of the Nirvana protocol’s revenue.
  • Governance Voting: prANA holders can participate in governance decisions affecting the Nirvana protocol.

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1. Revenue Sharing

Each prANA token represents a share of protocol revenue, which is evenly distributed among all deposited prANA holders. The benefits include:

  • Incentivizes Long-Term Holding: Since prANA can only be earned by holding ANA over time, it remains scarce. Sharing continuous revenue makes holding prANA valuable.

  • Aligns Voting with Protocol Health:

    • Fee Control: Governance, powered by prANA votes, regulates Nirvana’s fees.
    • Balanced Incentives: prANA holders benefit from fee revenue, encouraging them to set fees that promote both protocol usage and profitability.

Revenue distribution is paid out in NIRV and ANA, as all protocol fees are paid in these two tokens.

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2. Voting on Governance

prANA holders have the power to influence Nirvana’s governance through voting. Here’s how it works:

  • Voting Power:
    • 1 prANA = 1 vote.
    • Votes can be freely allocated across various ballot items or opted out (0 allocation).
  • Vote Allocation:
    • Non-Consumable: Votes are not used up and can be re-allocated at any time.
    • Active Support: Allocated votes lock an equivalent amount of prANA in the deposit account.
  • Withdrawing prANA:
    • To withdraw, owners must de-allocate their votes, which frees up the locked prANA.
    • At any time, the amount of prANA that can be withdrawn is limited by the amount of actively allocated votes.

Example prANA voting on the Nirvana ballot

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Executing options

While the primary purpose of prANA tokens is governance, they also serve as perpetual options for ANA with built-in value.

prANA as a call option in the money

When used as options, prANA has the following properties:

  • Perpetual: prANA tokens never expire and can be used at any time.
  • Dynamic Strike Price: The cost to exercise a prANA token is the current floor price of ANA.
  • Always Profitable: prANA tokens are never “out of the money” because the strike price (floor price) is always equal to or below the market price of ANA.

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Value of prANA token

The value of a prANA token is the difference between the market price of ANA and its floor price. With a greater difference between the market price for ANA and the floor, the inherent value of prANA increases.

Example prANA value

If the floor price of ANA is $10 and the market price is $40, exercising a prANA token lets the user acquire ANA at $10 and sell it at $40, making a profit of $30. The value of a prANA token in this market is $30.

When prANA tokens are executed for ANA, the amount of assets transferred to the Nirvana reserves is equal to the floor value of ANA. This price preserves the guarantee that the Nirvana reserves have sufficient capital to back every ANA token at its floor price.

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Calculating prANA returns

The projected returns for prANA yield are based on the value of prANA and the rate of emission.

The formula is:

prANA yield=prANA value×emission rate÷ANA value\text{prANA yield} = \text{prANA value} \times \text{emission rate} \div \text{ANA value}

For an example, let:

  • The floor price of ANA be $10
  • The market price of ANA be $25
  • The emission rate for prANA be 120% per year

The the value of the prANA token is $15, and for each ANA held for a year, there will be 1.2 prANA earned. The prANA yield is then 72% per year:

prANA yield=$15×1.2÷$25=72%\text{prANA yield} = \$15 \times 1.2 \div \$25 = 72\%

Note that if the prANA is not executed to convert into ANA, the returns will also be augmented through revenue sharing earned from deposited prANA.