Economic Impact Analysis

Economic impact analysis

Deflationary pressure calculation

Example scenario: 10 proposals per month, 1,000 $ARITECT pool each.

Successful proposals (estimated 60% pass rate):

• 6 proposals × 1,000 pool × 10% burn = 600 $ARITECT burned.

Total monthly burn: ~600 $ARITECT from governance activity (successful proposals only).

Annual impact: ~7,200 $ARITECT burned through governance alone.

Burn formula:

Δ$ARITECT_burned = Σ(P_success) × pool × α

Where:
  P_success = proposals that pass vote (σ ≥ 0.60)
  pool      = reward pool per proposal
  α         = burn rate = 0.10 (10%)

┌───────────────────────────────────────────────────────┐
│              REWARD POOL DISTRIBUTION                 │
├───────────────────────────────────────────────────────┤
│                                                       │
│  Pool = 1,000 $ARITECT                                │
│                                                       │
│  ┌───────────────────────────────────────────────┐    │
│  │ Author (30-50%)  │ Voters (60%) │ Burn (10%)  │    │
│  │     300-500      │     600      │    100      │    │
│  └───────────────────────────────────────────────┘    │
│           │                 │             │           │
│           ▼                 ▼             ▼           │
│        Proposer          Voters      ∅ (destroyed)    │
│                                                       │
└───────────────────────────────────────────────────────┘

Note: Rejected proposals burn veARITECT (governance tokens), not $ARITECT. This maintains deflationary pressure on the economic token while penalizing low-quality proposals through governance power loss.

Community incentive structure

For proposal authors:

• Successful proposals yield 30-50% of $ARITECT reward pool depending on bond amount.
• Successful proposals grant +200 to +500 veARITECT governance power (scales with bond).
• Bond (100-500 veARITECT) unlocked on any community vote outcome.
• Bond burned only if rejected by dev team (spam prevention).
• Monthly loss cap (20%) prevents governance bankruptcy.

For voters:

• 60% of $ARITECT pool distributed to all voters when proposal passes.
• +100 veARITECT for every vote cast (regardless of outcome).
• No penalty for voting — participation is always rewarded.
• Controversy multiplier rewards participation in contested votes.
• Inactivity decay (-5%/month) incentivizes consistent participation.