The $LITVM Token: Powering the LitVM Ecosystem

$LITVM is the native token of the LitVM ecosystem. Functioning far beyond the likes of a conventional utility token, $LITVM is a finely tuned mechanism designed to coordinate activity between the economic, governance, and strategic layers of the LitVM ecosystem so as to make them function as a cohesive unit. From DAO participation to ecosystem development, revenue sharing, and yield opportunities, $LITVM plays an integral role creating, exchanging, and distributing value across the LitVM ecosystem.

The $LITVM token exists to give users, builders, and ecosystem participation meaningful opportunities to contribute to the growth of the ecosystem. By holding and/or staking $LITVM, community members gain access to governance rights, on-chain incentives, and protocol revenue. Whether you’re a DeFi user, a developer, or a long-time Litecoin OG, $LITVM ensures you’re not just using the tech – to the contrary, you’re a core community member with a meaningful stake in its past, present, and future.

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Foundational Token Utility: $LITVM’s Use Cases

$LITVM’s functionality is best distilled to a set of 6 fundamental use cases – the primary scenarios where $LITVM incentivizes voluntary contribution and facilitates exchange throughout the ecosystem.

DAO Governance and Participation Incentives

At the most basic level, $LITVM powers governance. Via the Litecoin DAO, token holders and/or stakers have the right to participate in democratic decision-making processes that affect everything from parameter changes to strategic funding initiatives. Also important, the governance process introduces its own set of incentives. Active participants who vote, propose, and engage in community dialogue will be eligible for rewards, further driving activity and engagement in the Litecoin DAO.

This structure places real power in the hands of the community, turning ecosystem direction into a collaborative process. After the initial ecosystem bootstrapping phase, community consensus regarding the allocation of funds, ecosystem grants, and incentives will be reached by a distributed base of token holders and/or stakers who are materially invested in the outcome.

Sequencer Fee and VaultBridge Revenue Sharing

Beyond governance, LitVM is one of the few Layer 2 platforms that has been explicitly designed to share protocol revenue with its community. LitVM’s first major revenue stream comes from sequencers – parts of a chain’s core infrastructure that are responsible for ordering and batching transactions. In most rollups today, sequencer fees are captured entirely by centralized operators. For example, Coinbase’s Base chain generates significant revenue in sequencer fees without issuing a native token, meaning all value accrues to the company itself. LitVM takes a more decentralized approach, distributing a percentage of all sequencer fees to $LITVM holders and/or stakers and ensuring that those who participate in the success of the protocol also share in its financial upside.

The second revenue stream comes from an embedded integration of VaultBridge, a new primitive from Polygon’s Agglayer architecture. VaultBridge transforms idle bridged assets, such as ETH, USDC, and WBTC, into productive capital by routing them into institutional-grade vaults on Ethereum. Bridgers of assets from the EVM side can choose whether or not to deposit via VaultBridge to earn a passive income on their funds. These vaults generate sustainable yield through low-risk DeFi strategies. Instead of letting bridged funds sit idle in a smart contract, LitVM leverages VaultBridge to deploy that capital, with a percentage of the resulting yield streamed back to the chain and $LITVM holders and/or stakers.

Together, sequencer fees and VaultBridge yields form a novel dual-engine model for sustainable value accrual. Rather than relying on inflationary rewards or inorganic social hype, LitVM transforms core infrastructure usage into tangible, recurring revenue that flows directly to community members. It’s a model that aligns protocol growth with stakeholder benefit, and one that extends $LITVM beyond that of an ordinary governance token into a claim on the economic activity of its network.

Institutional Vault Management Fees

LitVM is also bringing yield infrastructure designed for institutional capital, including vaults aligned with the DNA Fund strategy, whose actively managed products cater to high-net-worth individuals and funds (in addition to retail users). These vaults will charge management and performance fees, a portion of which will be redirected to $LITVM holders and/or stakers.

In practice, institutional activity will create economic benefits for active community members. As these vaults attract capital and deliver returns, they also provide a new layer of value to $LITVM because the system doesn’t rely solely on speculation; it’s designed to be propelled by recurring, non-inflationary revenue flows tied to real financial products.

On-Chain Yield Opportunities

Of course, $LITVM will be supported in a host of on-chain DeFi use cases as well. Token holders can earn yield through a variety of on-chain DeFi strategies, including liquidity provision, lending markets, staking pools, farming programs, and more. These opportunities will evolve over time, but the premise remains simple: users who contribute to the health and robustness of LitVM’s DeFi ecosystem are to be compensated in proportion to the magnitude of their contributions.

Gas Token Optionality

While LTC remains the default gas token for LitVM, $LITVM may also be introduced as an optional gas token for transaction fees in the future. Subject to the discretion of the Litecoin DAO, $LITVM’s expanded utility would confer additional flexibility to transacting users. Naturally, any such shift would materialize in a community-driven manner based on genuine demand, and would ensure $LITVM’s utility would expand naturally in sync with the maturation of the broader ecosystem.

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$LITVM Tokenomics: Modeling for the Long-Term

$LITVM’s tokenomics have been carefully designed to support and facilitate long-term growth. The total supply is distributed across several core segments to balance development, decentralization, and sustainability. Tokens have been allocated as follows:

Token vesting will take place over a 5-year period to ensure that capital is distributed responsibly and sustainably. LitVM’s tokenomics were formulated with specific attention to avoiding incentive misalignment and short-term value extraction. Instead, $LITVM is structured for a slow, deliberate rollout that rewards those who commit to the ecosystem’s long-term growth vision.

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The Litecoin DAO

LitVM’s most significant allocation – over half the total supply – has been reserved for the Litecoin DAO. More than merely a symbolic gesture, the 51% earmark represents a strategic design decision that ensures long-term protocol development, user acquisition, and ecosystem expansion are driven by the community.

The Litecoin DAO fund is divided into multiple sub-pools, with each serving a specific purpose. These include a general DAO fund for protocol expansion, incentives for both LTC and $LITVM holders/stakers, governance and participation rewards, adoption initiatives for the Litecoin and LitVM ecosystem, and a “Shark Tank” fund to back promising builders and early projects. Below is a list of what’s covered under this allocation.

Most importantly, these funds are to be governed by the Litecoin DAO, powered by the community. After the initial ecosystem bootstrapping phase, $LITVM holders and/or stakers will play a pivotal role in determining how capital is deployed through on-chain governance, which proposals are funded, and how the protocol evolves over time.

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‍A Community-Driven Web3 Revolution for Litecoin

As the connective tissue of the LitVM ecosystem, $LITVM leverages meritocratic incentives to intertwine governance, participation incentives, ecosystem growth, and strategic funding. By incentivizing and actively rewarding those who contribute to and participate in its growth and development, LitVM distributes value horizontally – that is, across its community, amongst its contributors, and of course, directly to its holders and/or stakers.

With thoughtfully designed tokenomics, multiple layers of real-world utility, and deep alignment with Litecoin’s broader mission, $LITVM is positioned to become a cornerstone of both the LitVM ecosystem and the evolution of digital silver. It’s a model geared toward participation, powered by incentives, and governed by the people who believe in its future.

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