$TEC Token Infrastructure & Utility Report

šŸ§­ TEC Strategy & Governance
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Introduction

In December of 2023, the Token Engineering Commons migrated its $TEC token infrastructure from Gnosis Chain to Optimism Mainnet. This was a strategic decision that intended to bring greater visibility, easier access, and stronger alignment with the work of the TEC.

After a year and a half, we are taking a moment to begin a discussion and to evaluate the Token Infrastructure. The migration is complete, weā€™ve implemented a new ABC page, and the fundamental infrastructure for the TEC economy has been deployed. However, there are still important questions that remain. How strong is the $TEC token economy? Where are the pain points and vulnerabilities? What parts of the system are working as intended and which areas are lagging behind? More importantly, what are the next steps that will allow us to evolve, adapt, and grow the value of this token and the Commons it represents?

This document serves as an initial diagnostic report and a strategy proposal designed to help $TEC token holders understand the current architecture and participate in decisions that will shape the next chapter for the $TEC token economy.

$TEC Supply & Distribution (July, 2025)

Before we can evaluate how $TEC is functioning in markets or funding mechanisms, itā€™s important to start with the fundamentals. The token supply, holder base, and asset backing form the foundation of the economy we are trying to manage. This section provides a snapshot of the $TEC tokenā€™s current footprint, including its supply metrics and the structure that gives it intrinsic value.

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Token Holders

Tracking the number of token holders is one of the clearest indicators of community growth and network reach. Each unique holder represents a potential contributor, user, or advocate who has a stake in the TEC and may engage in governance, participate in funding, or help expand the ecosystem. A healthy and steadily growing holder base reflects confidence in the projectā€™s mission and infrastructure, while sudden drops or concentration in a few wallets may signal risk or disinterest. Monitoring this metric over time helps us assess adoption, decentralization, and readiness for broader participation.

While the majority of $TEC tokens are held by the top 100 token holders (90% of all $TEC), the token holder growth chart reveals a clear trendline of consistent adoption post-migration. Notably, the transition to Optimism did not disrupt participation, but rather it expanded the distribution of $TEC and attracted new wallets to the ecosystem. [This is a false representation, see comments below]

As the number of token holders continues its path, it becomes increasingly important for TEC to maintain an active relationship with this base. Moving forward, we intend to develop clearer channels for engaging with holders more regularly, sharing key updates, and inviting participation in governance activities.

Augmented Bonding Curve (ABC)

With a basic understanding of the tokenā€™s distribution, we can now explore the core mechanism that governs its issuance and redemption through the Augmented Bonding Curve. This section outlines how it works, the funding itā€™s generated to the Common Pool since migration, and why the tribute system is central to its design.

The Augmented Bonding Curve (ABC) is the primary financial mechanism behind the $TEC token infrastructure. It is a programmable price curve that governs token minting and redemption. Users buy $TEC at a rising price, and sell $TEC back to the curve at a decreasing price. For each buy and sell a small percentage of value is routed to our collective treasury, the Common Pool. The Common Pool funds the TECā€™s infrastructure, grants, and operations.
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Reserve Pool

Every $TEC token minted through the Augmented Bonding Curve is backed by a share of our reserve asset, which is currently held in $rETH, a liquid staking derivative of Ethereum.

$rETH is a volatile, yield-bearing asset, and is a departure from our wxDAI reserve asset backing the ABC on Gnosis Chain. Our current reserve asset tracks the price of ETH and it accrues staking rewards over time. This means the Reserve Pool not only fluctuates with the broader crypto market, but also grows passively. As the reserve appreciates, so does the underlying value of $TEC.

This setup makes $TEC more than just a governance token. It functions as a synthetic ETH-linked asset with built-in exposure to Ethereumā€™s staking economy. Itā€™s a powerful design, but one that comes with risk. Volatility in the price of $ETH, and the security of $rETH is inherited by $TEC, and maintaining trust in the token requires active awareness for both price and security.

Ultimately, the Reserve Pool is what ties $TEC to real economic value. It anchors the token to a productive asset and gives us a foundation to build a more resilient and regenerative economy for the Commons moving forward.

Common Pool & Reserve Pool (July 2025):

Currently, the Common Pool holds ~200k in assets including DAI, rETH, and TEC. The current breakdown of the Common Pool and Reserve Pool are listed here:

Pool Value Assets
Common Pool $207,215.42 154,214.17 DAI; 16.63 rETH; 1,587 TEC
Reserve Pool $42,775.13 13.32 rETH

As we move forward with our funding proposal for H2, we should look into moving some of our Stables into productive assets like rETH, and stETH to caputre the upside of potential value accrual to $ETH in the coming year.
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ABC Tributes

To fully understand the impact of the bonding curve, we need to look at tributes. Tributes are designed incentives that feed the Common Pool, which creates economic sustainability for the Commons. The purpose and importance of setting tributes within the $TEC economy is critical to long-term viability.

Current Tribute Parameters

Entry Tribute: 2%
Exit Tribute: 12%
Total Tributes to the Common Pool since Migration: $25,235 (ā‰ˆ 7.89 rETH)
Tribute Split: 92.3% from Exits (7.29 rETH) / 7.7% from Entries (0.60 rETH)

Tributes are a core feature of the $TEC token economy, built into the mechanics of the ABC. On the surface, they function like transaction fees where small percentages are taken during token buys and sells and routed to the Common Pool.

Tributes also serve a strategic governance function. They act as soft incentives or disincentives, influencing how and when people interact with the bonding curve. A low tribute encourages onboarding and exit. A high tribute discourages short-term flipping and speculative dumping, but creates friction in onboarding. By adjusting these parameters, the community can shape the economic behavior around the token.

Currently, the majority of funds entering the Common Pool are driven by sell pressure into the ABC. The imbalance between funds derived from Entry and Exit Tributes within the ABC shows that the ABC is primarily functioning as an exit ramp rather than a sustainable entry point for new participants. However, this isnā€™t necessarily negative. The Common Pool is accruing funds from both sides, and during this time of contraction and stagnation, a high exit tribute has limited the amount of exit in our economy. The current tribute percentages need future revision, but the current strategy is to maintain them until secondary market liquidity is optimized and we begin to enter a period of expansion where we can once again lower the exit tributes.

Secondary Market on Velodrome

To evaluate the secondary market on its own terms, we need to look closely at the data. How much volume are we seeing? What is the slippage? Are these pools serving our users or creating friction? The following section offers a detailed assessment of liquidity on Velodrome, the implications of using non-ETH pairs like OP and GIV, and why a shift to a TEC/ETH pair may be necessary if we want this market to function effectively.

Two pools were created post-migration within Velodrome:

Pair TVL Volume Slippage Risk
$TEC/$OP $4,211.79 $62,325.73 ~12%
$TEC/$GIV $677.00 $10,510.19 Nearly Unusable

The TEC/OP pair handles the majority of activity, but even modest trades face double-digit slippage due to shallow liquidity. The TEC/GIV pool, while mission-aligned, lacks depth and price stability.

The price chart below shows the increasing volatility and divergence between buy/sell prices from LPs, especially after the migration. Our current Liquidity is insufficient to handle the transactions we are seeing. Without proper liquidity depth, the market becomes irrational, and users get penalized for interacting with $TEC on open markets. This is something we should address immediately.

ABC vs Secondary Market: Market Architecture Conflict

While the ABC offers a structured and mission-aligned approach to funding the Commons, it doesnā€™t operate in a vacuum. Since our migration to Optimism, weā€™ve also introduced a parallel liquidity route through Velodrome that offers public visibility and ease of use. However, maintaining both systems introduces tension.

One of the most unique and complex aspects of the $TEC token infrastructure is that we are currently operating these two very different types of markets simultaneously.

On the one hand, we have the ABC, which is the official entry and exit point for $TEC issuance and redemption. It is tightly integrated with our Common Pool and was designed to serve the economic goals of the TEC. Every interaction with the ABC generates funding for the Common Pool through tributes. It is not just a trading interface, but our primary funding mechanism.

On the other hand, we also operate a Secondary Market through Velodrome, a native DEX on Optimism. This market offers a familiar and user-friendly interface, fast execution, and visibility on token aggregators and dashboards. It gives us access to a broader public market and removes friction for casual traders or newcomers to the TEC economy.

At first glance, it might seem beneficial to offer both. But in practice, this dual-market setup has introduced real tension into the system. The two markets are competing for volume, but only one of them generates funding for the TEC. The secondary market draws in most of the trade volume because it is easier to access, but every trade that happens on Velodrome is a missed opportunity to earn tribute revenue for the Common Pool.

At the same time, the bonding curve charges a 12 percent exit tribute, which feels steep to many users, especially when token utility is still limited. For those trying to sell $TEC, the choice becomes either high slippage on Velodrome or high tribute fees on the bonding curve. In both cases, the user loses, and the token suffers.

Running two competing markets without a clear arbitrage strategy or coordination mechanism is leaving value on the table and in some cases, pushing users away entirely.

The key question is whether these two markets can complement each other, or whether we need to consolidate into one system that better serves both our funding goals and our user experience. This section lays out both sides of the tradeoff and frames the options we should consider.

Market Mechanism Benefits Drawbacks
PAMM ABC Generates funds to CP via Tributes Poor UX, low discoverability
SAMM Velodrome High Visibility and good UX. No revenue to Commons, suffers from slippage.

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Recommendations:

To address this, we propose three possible paths:

Option A: Close ABC to Public, Activate DAO Arbitrage

In this scenario, we would seek to close access to the Augmented Bonding Curve to the public, and establish an ACL for specific internal organizational wallets to use the ABC interface. This would mean all $TEC transaction volume would be on the secondary market. The TEC Organization would have sole arbitrage rights between markets and we could set Entry and Exit Tribute %'s to optimize for arbitrage gains and control of token supply. This would allow for us to generate funds for the Common Pool while bolstering our secondary market liquidity.

Requirements:

  • Bolster secondary market with sufficient liquidity.

  • Create ACL for ABC access

  • Lower Tribute %'s between 1-3% for both entry & exit.

  • Create an Arbitrage Bot between the markets that can be managed with low admin capacity.

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Option B: Eliminate the Secondary Market
In this scenario, we would simply remove all secondary market liquidity, and force all transaction volume for $TEC to be routed through the ABC interface. This would mean that anyone interested in partciipating within the $TEC economy would need to acquire rETH, and purchase $TEC through the ABC.

Requirements

  • Sunset the Velodrome pools by removing the liquidity.

  • Set Tributes to modest 4-6% on each side.

  • Modify our custom UI to make further improvements for the ABC experience

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Option C: Maintain dual-market structure, and gradually increase liquidity.
In this scenario, we maintain our secondary markets pools, making them more efficient over time. We also keep the ABC open to the public, and allow for open access to arbitrage between markets. This means we maintain the status quo more or less and seek to add more funds to the secondary market in hopes that it resolves the tension between markets.

Requirements:

  • Bolster secondary market with sufficient liquidity over time.

  • Maintain current Tribute %'s.

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We propose migrating all current liquidity into a single TEC/ETH pool, and setting a clear target:

$15,000 minimum in TVL to bring slippage between 3-5%.

ETH is the most widely held asset in the ecosystem, and pairing TEC and ETH will:

  • Improve routing across DEX aggregators

  • Strengthen price discovery

  • Make $TEC more accessible to users outside the immediate community

For both Option A & C, we will need to take a structured approach for expanding and optimizing secondary market liquidity.

For Option A, we would need to provide this liquidity immediately as it would be the sole market for $TEC. For Option C, we can slowly build up the amount of liquidity over the next year.

The question is not whether we should have both markets, but whether we can manage them effectively.

Option A requires the Coordination team to serve as an active arbitrage agent and to manage the economy. Doing so provides a lot of benefits including our ability to control the supply of $TEC in a more granular way. Option A also requires costs to expand secondary market liquidity and to change the ABC smart-contract parameters.

Option B simplifies things entirely, but makes it largely inaccessible to new users. Users must acquire rETH prior to the purchasing of $TEC, and cannot take advantage of token routing mechanics within Velodrome.

Option C maintains the status quo with proposed iterative improvements. This option keeps both the ABC and Secondary Markets, keeps arbitrage open to the public, but faces the same limitations regarding driving funds to the Common Pool.

Pathways to Token Utility

The question of liquidity and price is important, but itā€™s only part of the equation. What ultimately determines the health of a token economy is whether people are using the token in ways that matter. Utility is what drives volume, creates reasons to hold and exchange the token, and generates meaningful economic flows through the bonding curve. This section explores the emerging utility paths for $TEC within our current initiatives.

In the coming months, we will have several promising opportunities to create new forms of utility and bring new life into the $TEC economy. Each of these represents a small but important exploration in possible pathways where $TEC utility can generate demand.

TEC Publishing Initiative

We are building a community-curated publication focused on token engineering, coordination, and regenerative crypto systems. $TEC could serve as the medium for tipping authors, voting on featured articles, or accessing curated content.

Virtual Conference and Events

We plan to host a virtual conference, with panel discussions, and talks from leading voices in different Web3 verticals. Tickets can be priced in $TEC, and speakers can be compensated directly in the token. This creates multiple transaction paths that route through the ABC and generate tribute income for the Common Pool.

TEC Grants Program Integration

As we evolve our grants program, we are exploring models where $TEC can be used to vote on proposals, delegate stake to project teams, or even unlock grant milestone payments through staking mechanisms. This not only deepens engagement but also introduces a layer of token-enabled accountability in funding decisions. The grant program will be the first area in which $TEC will have meaningful token utility, and we will begin to build our program around it.

Longer-Term Utility Experiments

There are also opportunities to embed $TEC in future coordination experiments. For example, we could develop reputation systems where $TEC is staked as a form of social signal, or create peer review and credentialing layers that require $TEC to access or validate knowledge. We could build ReFi-style coordination games, funding challenges, or bounties that require $TEC as an entry point. The potential is wide open, but it needs to be intentional.

The key point is this: utility is not something we wait for, but something we design. And now that the token architecture is functional, we are in the right position to begin prototyping small, high-impact use cases that get the token moving. Every time $TEC is used in a meaningful way, it reinforces the legitimacy of the token and creates more opportunities for tribute-based funding to flow into the Common Pool.

Closing Reflections

This report is not the end of the conversation, but the beginning of a much deeper one. Weā€™ve outlined the current state of the $TEC token infrastructure, the strengths and friction points in our design, and the strategic decisions we now face. But where we go from here depends on the collective insight, creativity, and participation of our community. If you hold $TEC, you are a stakeholder in this system. We invite you to engage with these recommendations, challenge the assumptions, offer new ideas, and help shape the next chapter of the TEC economy. Whether itā€™s improving market architecture, expanding token utility, or rethinking our liquidity strategy, your input matters.

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gm @natesuits , thanks for this report on the token economics of $TEC.

I have a couple of concerns with how items are presented here, and some further questions that should be answered before any further proposal goes through.

- Token Holders. As per the shared dashboard chart, the number of token holders peaked in May of 2024, at 800 holders, and has since decreased at a steady rate, not c. 700. Note that such a chart also counts dust accounts, so the decrease has been even sharper. What could have triggered that drop, what was attempted in the last eighteen months to pivot, and why has that metric not improved in any of the attempts from the Core Team? Were there any internal changes that caused this trend shift from slow growth to regression?

- Total Supply. Similarly, and despite generally stable ETH price, and the positive yield, the TEC token has tanked in price, and now sits at around 0.20 USD. Given the 1.2M $TEC in circulation, and the current DAO assets of $250K, it seems like the market is no longer pricing any potential upwards pressure on the token, and it is instead simply reflecting the underlying funds (207K + 42K)/1.2M = 0.208 USD collateral per TEC token. This is an important signal: is it not a good time to ask the community whether to move forward, to close down the $TEC token gracefully, or to use remaining funds to directly fund TE projects in a leaner format than what is currently proposed (in effect, to close down the token, and move remaining assets to fund TE?).

- PAMM Action. Similarly, it is evident from the ABC that purchases have not been large, and since the move to OP, the token has mostly suffered sales beyond purchases directly by the Core Group. Again, why is this? This article does not report the numbers credibly, nor then propose any credible paths to overcome this:

  • TEC Publishing has gone on for a while, yet not shown results on growing $TEC;
  • Grants Rounds generally have put downward pressure on the token, as there is insufficient circular demand for the asset;
  • Virtual conferences are great to increase community engagement, but they cannot be credibly monetized in the way mentioned above). The TEA ran multiple brilliant events, but these should run on other sponsors rather than a monetization system that reduces the number of participants without raising much insofar as revenue is concerned.
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I have some further thoughts on the second half of the article.

- PAMM and SAMM reflections. I think this report misses out some important details into how such a system would really work.

  • Option A would more credibly be carried out with a PAMM-SAMM bot, such as the one developed inside the BCRG, so that liquidity can be automatized given the bounds of the tax. This, could be combined with a concentrated liquidity position set by the DAO within entry and exit tax bounds, can maximise liquidity with the little capital left in the treasury. Further still, a Uniswap-V4 hook could be created to automatically mint TEC tokens and rebalance the pool whenever liquidity is depleted. Manual operation here seems very unresponsive. (this would be much better suited with a TEC-rETH pool, for simpler bot operation).

  • Option B is unenforceable, and itā€™s very heavy handed to block transactions on the secondary market. What would occur by removing TEC-OP pool funds, however, is simply even poorer SAMM liquidity, and general confusion by users.

  • Option C makes the most sense here, but I donā€™t see where liquidity would come from. To give exit liquidity to holders seems like a silly endeavour, when we could currently buy back all $TEC tokens at current market price.

Last, there really has to be a sense of scale in understanding this. Given the remaining funds in the DAO, historic token movement, and the current entry and exit taxes, the potential for this mechanism is to make ~5K-10K USD (10%-20% of the current reserve) until the token goes to zero.

Really, I donā€™t see the point in delving so deeply in the $TEC market mechanics; a respectful closedown and ceremony makes the most sense to me, before the token continues falling.

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Hey @Rex Thanks so much for taking the time to engage so deeply with the report. I really appreciate the seriousness with which youā€™re evaluating the current state of the $TEC economy, and I think your comments help surface the very real questions that many token holders may be wondering as well. Iā€™ll respond to each of your main points below, aiming to clarify where I can and offer some additional perspective on where we stand, and why we still believe thereā€™s a meaningful path forward.

Youā€™re right to call out the drop from 800 to 745 holders. That peak in May 2024 marked a high point post-migration, and while weā€™ve seen some contraction since then, I wouldnā€™t classify it as a sharp regression. And youā€™re right again that this metric includes dust wallets, which is why we present it as a snapshot of distribution and reach, but not a goal in itself. I apologize for presenting this in a manner that reflects growth. I will leave a note on that section to reflect this.

If we are to look at this objectively, we probably have around 200 wallets with credible holdings, but itā€™s difficult to determine how many wallets with credible holdings we started with since migration, or how many people have fully exited since migration.

Youā€™re spot on that the current market price of $TEC largely reflects its underlying value, and I actually think this speaks more to the tokenā€™s design than its failure. $TEC has never positioned itself as a speculative asset, as itā€™s tightly coupled to a productive reserve (now rETH).

You raise a fair question: is it time to sunset the token or take a leaner path? Iā€™ll be clear here, thatā€™s always an option available to token holders, and if a proposal passes that expresses the will of the community to wrap things up, the core team will absolutely respect and help facilitate that transition. But thatā€™s not something weā€™re currently proposing. Not because of pride or self-preservation, but because we still believe TEC is adding value in real ways.

Over the last 18 months, weā€™ve operated on minimal resources (weā€™re currently a 3-person team, one part-time) and maintained the TEC presence, funded projects, built new infrastructure (new ABC page and Aragon instance), and laid groundwork for utility. Iā€™m honestly not sure how much leaner we can go without extracting away from the mission entirely.

Iā€™m not entirely sure what you mean by ā€œCore Groupā€ in this context. Anyone is welcome to exit the $TEC token economy at any time and for any reason and there are no restrictions or special privileges. That said, the fact that some of our longest-standing contributors and early supporters continue to participate is a testament to their ongoing alignment with the TECā€™s mission and the value they still see in this work.

As for credible paths to creating token demand, the initiatives weā€™re preparing including TEC Publishing, our Grant Program, and a Virtual Conference, represent new territory we havenā€™t yet explored in terms of integrating utility. This past 6 months, we have explored the different areas where token utility could be implemented with the most effectiveness. The details of our paths to utility will be outlined in the next funding proposal (which will be posted this week). Among them, the Grants Program is the most developed and, in our view, the most promising.

Youā€™re clearly well-versed in the mechanics here, and your points are valid, especially around the bot developed inside the Bonding Curve Research Group. This PAMM-SAMM bot is already operating in our market, and currently benefits from our current design, as it requires extreme volatility to overcome a 12% exit tribute in order to arbitrage effectively. Iā€™m just not sure how our current approach helps bolster our secondary market liquidity in any way.

Would a DAO-operated version of this bot with 1% tributes be more efficient? I think so. The point isnā€™t to discredit the current setup but to emphasize that centralizing arbitrage under the TEC, with governance oversight, could give us better tools to manage liquidity and tribute flow intentionally rather than leaving it to private actors.

In response to Option B, eliminating the secondary market is heavy-handed, I agree. Not because itā€™s technically impossible (TEC is the only meaningful LP provider) but because it would make interaction difficult for new users. Weā€™d need to rethink our UI and tribute design entirely if we went that route. Itā€™s a tradeoff between simplicity and accessibility. I wanted to just present the option as a possibility.

As for Option C, I agree itā€™s the most feasible, but your question remains: where would the liquidity come from? Thatā€™s the challenge. We have some strategies in mind (possibly pairing with rETH or ETH rather than OP, or using the Common Pool to support tighter LP bands), but this will require clear prioritization and governance support in the next proposal.

The notion that we ā€œcould just buy back all $TEC at market priceā€ is technically true, but also misses the broader mission. If our only metric was minimizing treasury bleed or maximizing ROI for token-holders, then yes, closing down now might seem rational. But TEC was always more than a token economy. Itā€™s an attempt to build token-based public goods infrastructure, something very few projects have managed to do sustainably. And despite the skepticism, I do believe our current Token Infrastructure holds the potential for thatā€¦more so than any other project based on inflationary tokenomics or speculation.

Yes, our current market cap reflects the value backing. But that doesnā€™t mean TEC has no valueā€¦ or the price will crater because of it. It just means the token hasnā€™t yet realized its full utility. Weā€™re trying to build pathways for that utility to grow, through Grants, Publishing, Events, and more. If those fail, we should definitely reassess. But we are still providing value to the ecosystem, and we believe itā€™s still too early to write this experiment off.

Final Thoughts

I genuinely welcome this kind of critique, and we need it. This report isnā€™t a proposal to continue at all costs. Itā€™s an honest audit of where things stand, what weā€™ve learned, and what pathways might still be available.

If token holders want to sunset the token, they can propose it. And if thatā€™s the direction the community chooses, the team will step back with respect and care.

But until that moment, weā€™ll keep showing up, because we still believe in what TEC represents, not just as a token, but as an evolving ecosystem for supporting, educating, and contributing to the adoption of cryptoeconomic systems.

Thanks again, Rex, for pushing this conversation forward.

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To answer some of your questions above, @natesuits:

It is important to note that during this period, grant payouts in $TEC were also introduced. In effect, this implies that during the last semester, the flight of original token holders was faster that purchase, especially if we compare pre-migration to post-migration statistics.

This behaviour was actually not intended afaik - the token was, and always has, represented a multiplier of the reserve assets given by the speculative support of the TEC; and not directly proportional to the common pool itself.

The Core Group was the internal nomenclature we always used in the reduction of multiple working groups to what once was Sampo. At one point it was renamed Coordination Team.

In my opinion, there has been a full market cycle to try to try to bootstrap the existing $TEC token. I would suggest for there to be a wider, open community call to discuss on whether to maintain the ABC; or whether it would be better kept to shut down the common pool and focus on the core competency of the TEC: to help advance token engineering.