Version 0.1 — 2025
The Equilibrium Protocol is a cryptocurrency architecture designed to counteract extreme wealth concentration. It uses a dual-token system:
- Token A — burned to create new wallet identities (Sybil resistance + economic identity cost).
- Token B — the primary economic asset, but every transfer must pass through a WealthWallet, a smart-contract account that applies progressive friction based on wallet balance.
All friction fees flow into a Faucet Pool, which periodically distributes value to low-wealth users. Whale activity thus subsidizes universal basic income for small users, while large on-chain concentrations become progressively expensive to move.
Equilibrium does not eliminate wealth; it imposes a gravitational drag on large positions to promote wider distribution.
- Introduction
- System Overview
- Token A
- Token B
- WalletFactory
- WealthWallet
- Faucet Pool
- Tokenomics
- Game Theory
- Implementation
- Governance
- Risks
- Conclusion
- Appendices
Most cryptocurrencies replicate the structural inequality of traditional finance: wealth compounds, whales dominate governance, and late entrants face steep barriers. The Equilibrium Protocol introduces economic mechanisms that discourage hoarding and reward broad participation.
The system does not rely on politics or trust. Wealth-balancing incentives emerge from on-chain mathematical rules:
- Large wallets incur proportionally higher friction.
- Fees from wealthy actors automatically fund small accounts.
- Wallet creation requires token burn, limiting Sybil attacks.
The result is a self-adjusting economy that naturally resists extreme wealth concentration.
The protocol contains four core components:
- Token A — burned to create new wallets
- Token B — wealth token with enforced friction
- WalletFactory — deploys WealthWallet contracts
- Faucet Pool — redistributes whale fees to low-wealth owners
flowchart TD
User((User)) --> EOA
EOA --> |Burns Token A| Factory[WalletFactory]
Factory --> |Deploys| WW[WealthWallet]
WW --> |Holds| TokenB(Token B)
WW --> |Friction Fee| Faucet((Faucet Pool))
Faucet --> |Drip| User
Token A provides the economic cost of identity. To create a WealthWallet:
- The user burns Token A.
- The WalletFactory verifies the burn.
- A new WealthWallet is deployed.
- Prevents infinite wallet generation
- Increases cost of Sybil attacks
- Creates economic tradeoffs for whales trying to split holdings
- Flat: every wallet costs the same
- Linear: cost increases as more wallets exist
- Exponential: increasingly expensive to expand identities
- Governance-adjustable: parameterizable cost
Token B is the main economic asset of the protocol. It cannot be transferred directly.
Transfers must always pass through a WealthWallet contract.
This ensures the progressive friction rules are enforced universally — cannot be bypassed by EOAs or off-contract movements.
The WalletFactory handles:
- Burning Token A
- Deploying new WealthWallet contracts
- Tracking owner → wallet mappings
- Providing anti-Sybil identity consolidation for the faucet
sequenceDiagram
User->>TokenA: burn(A_required)
TokenA-->>WalletFactory: Burn event
WalletFactory->>User: WealthWallet address
WalletFactory->>Registry: record owner → wallet
The WealthWallet contract manages Token B and calculates friction for every action.
Every action (send/withdraw/move) must compute:
fee = F(balance, amount)
Fee is paid in Token B and transferred to the Faucet Pool.
| Type | Formula | Notes |
|---|---|---|
| Linear | fee = a·amount + b·balance |
Simple, predictable |
| Logarithmic | fee = k·log(1 + balance/scale)·amount |
Smooth progressive drag |
| Exponential | fee = amount·(balance/scale)^p , p>1 |
Hardcore whale deterrent |
flowchart LR
Start[Start Transfer] --> Bal{Check Balance}
Bal --> Fee[Compute Progressive Fee]
Fee --> SendFee[Send Fee → Faucet Pool]
SendFee --> Net[Send Net Amount → Recipient]
The Faucet Pool receives all friction fees and distributes them to low-wealth participants.
A user is eligible if their total Token B across all WealthWallets is below:
smallBalanceCap
Each claim interval (“epoch”), the eligible user receives:
drip = baseDrip * povertyFactor
povertyFactor = (cap - totalWealth) / cap
flowchart TD
FaucetPool((Faucet Pool)) --> |Distribute per Epoch| Eligible[Eligible Owners]
Eligible --> User1
Eligible --> User2
Eligible --> User3
Below is the spreadsheet-ready CSV table.
Paste into Google Sheets → Import CSV.
Category,Variable,Value,Notes
Token A,Initial Supply,1000000,Fixed or adjustable
Token A,Inflation,0%,Optional future change
Token A,Burn Cost Base,10 A,Cost to create wallet
Token A,Burn Cost Growth,0.05 A per 1000 wallets,Optional scaling
Token A,Use Case,Identity creation,100% burned
Token B,Initial Supply,100000000,Primary asset
Token B,Inflation,1% yearly,Optional emission
Token B,Friction Type,Logarithmic,F(bal, amt)
Token B,Friction Scale,1000 B,Scale constant
Token B,Friction Multiplier,k = 0.02,Controls curvature
Faucet,Eligibility Cap,200 B,Max wealth to get drip
Faucet,Epoch Duration,24 hours,Daily UBI drip
Faucet,Base Drip %,0.1%,Percent of pool per claim
Faucet,Poverty Factor,Linear,Drip ∝ povertyFactor
Faucet,Per-Owner Cooldown,24 hours,One claim/day
Faucet,Anti-Sybil,Per EOA identity,Wallets consolidated
WealthWallet,Fee Destination,Faucet Pool,Closed-loop
WealthWallet,Wallet Limit,None,But friction discourages concentration
Governance,DAO,Optional,Parameter-only
Governance,Treasury,0%,No protocol-owned funds
Governance,Parameter Control,k, cap, burnCost
- Receive passive income
- Low/no friction on movement
- Encouraged to stay active
- Faucet improves retention and participation
- Operate friction-neutral
- Not reliant on faucet
- Stable everyday experience
-
Can exist, but movement becomes costly
-
Fees directly subsidize the bottom
-
Optimal strategy:
- fewer moves
- strategic fragmentation vs burn costs
- optimized balance footprints
A steady state with:
- Many medium wallets
- Actively circulating small wallets
- Discouraged large concentrations
- Lower Gini coefficient than typical crypto assets
Recommended base:
- EVM rollup (OP Stack, Arbitrum Orbit, Polygon CDK)
- WealthWallet + Faucet as system contracts
- Token B transfers restricted to authorized wallet contracts
- WalletFactory enforces A-burn per identity creation
Minimal governance:
- Adjust friction parameters
- Adjust faucet parameters
- Adjust burn cost
No treasury. No protocol-owned assets.
- Wealth fragmentation strategies
- Custodial wallets bypassing friction
- Faucet farming if parameters mis-tuned
- Token A speculation affects identity cost
- Perceived similarity to progressive tax systems
- Regulatory scrutiny depending on jurisdiction
Equilibrium proposes a cryptocurrency where:
- Wealth has progressive drag
- Whales indirectly fund small users
- Identity creation has a real cost
- Distribution is encouraged by the protocol itself
- No central authority redistributes funds
It is not designed to eliminate inequality — but to counterbalance concentration forces that all other cryptocurrencies ignore.