Governance, revenue sharing, and yield
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.
Nirvana distributes prANA tokens to ANA depositors at a flat, continuous rate. Key features of this emission model include:
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.
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.
When prANA is deposited, it activates two key features:
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:
Revenue distribution is paid out in NIRV and ANA, as all protocol fees are paid in these two tokens.
prANA holders have the power to influence Nirvana’s governance through voting. Here’s how it works:
Example prANA voting on the Nirvana ballot
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:
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.
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.
The projected returns for prANA yield are based on the value of prANA and the rate of emission.
The formula is:
For an example, let:
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:
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.