oTANGO airdrop
TL;DR
The oTANGO airdrop allocatesd 18.3% of the total supply to early users who used v1 and v2 up until the 29th of October 2024.
The airdrop was designed to align incentives between the protocol and early users, and disincentivize short-term farmers. All rules were made public here.
The contract to exercise oTANGO and redeem TANGO will be made available soon.
How it works
oTANGO is an option token for TANGO, inspired from the Bunni docs on oLit.
An option token allows you to redeem the underlying token at a discount. This mechanism aligns incentives among all parties:
It rewards early users who believe in the long-term success of the protocol by giving them tokens at a discounted price.
It allows the protocols to transfer cash gains from short-term airdrop farmers to its treasury.
It incentivises parties to hold the token as the discount becomes bigger with time.
Let’s unwrap this with an example:
Let’s assume the price of TANGO is $0.1. The discount curve shown below implies that 1 oTANGO grants its holder the perpetual right to acquire 1 TANGO at around a 20% discount.
An airdrop farmer can exercise the option to buy 1 TANGO for $0.08 on the Contango smart contract and sell it on a secondary market for $0.10, locking in a $0.02 profit, which is equivalent to a 20% gain.
Please note that the user does not necessarily need to bring the initial $0.08 to lock in a profit: he could initiate a flash loan for $0.08, exercise the option to buy 1 TANGO for $0.08, sell 1 TANGO token for $0.1, repay the flash loan of 0.08$ and lock in the $0.02 profit, all in one atomic transaction.
There's a twist: to further ensure that users are aligned with the protocol growth, the discount to which users can exercise oTANGO to redeem TANGO depends on the price of TANGO itself. The higher the price, the bigger the discount. This way, users are incentivized to hold in the hope of getting a higher discount.
To ensure that the airdrop program doesn’t put pressure below Contango’s seed valuation, the discount is set to 0 when the price is at or below $0.045, which represents an FDV of $45M.
For a token price at or above $1, the discount remains at 75%.
The following chart and table show the discount relative to the TANGO price:
The conversion of points to oTango is fixed at 3x, meaning that for each point users receive 3x oTANGO tokens. More info on the airdrop can be found here.
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