Profit Split

Profit-Based Funding

A core principle of CDX tokenomics is that buybacks and staker yield are funded from platform profit, not gross revenue. This distinction is critical for sustainability.

How It Works

Platform Revenue
       ↓
  Operating Costs
  (Infrastructure, Team, Development)
       ↓
     PROFIT
       ↓
┌──────┴──────┐
↓             ↓
Buyback    Staker
& Burn     Yield
(CDX)      (USDC)

Why Profit Matters

Principle	Explanation
Sustainability	Platform remains viable long-term
No Debt Financing	Distributions backed by real earnings
Aligned Incentives	Token holders benefit when platform succeeds
Transparency	Clear relationship between performance and rewards

Profit Calculation

Component	Location
Profit Calculation	Off-chain (standard accounting)
Distribution	On-chain (transparent, verifiable)

Profit is calculated using standard business accounting practices, then distributed on-chain for full transparency and verifiability.

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The Profit Split

The allocation between buybacks and staker yield dynamically adjusts based on CDX market price:

CDX Price	Buyback & Burn	Staker Yield
Below $1	70%	30%
$1 and above	30%	70%

Why This Design?

When CDX is Below $1

Action	Effect
Heavy buybacks (70%)	Reduces circulating supply
Price support	Consistent market purchases
Accelerated path	Drives toward $1 threshold

When CDX is At or Above $1

Action	Effect
Higher yield (70%)	Rewards long-term stakers
Milestone reward	Recognizes collective achievement
Stake incentive	Encourages maintaining positions

The Yield Flip

The transition at $1 is called the Yield Flip:

Below $1:  [████████████████████░░░░░░] 70% Buyback / 30% Yield
Above $1:  [░░░░░░████████████████████] 30% Buyback / 70% Yield

This creates a self-balancing system that optimizes for current market conditions.

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100% Burn Policy

All CDX purchased through buybacks is permanently burned:

Principle	Implementation
No Treasury Accumulation	Tokens don't sit in a DAO wallet
No Future Selling Pressure	Team can't dump bought tokens later
True Deflation	Supply decreases permanently
Verifiable	All burns recorded on-chain

Burn Mechanism

Step	Action
1	Platform generates profit
2	Designated portion allocated to buybacks
3	CDX purchased from market
4	Tokens sent to burn address (irrecoverable)
5	Total supply decreases permanently

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Buyback Execution

How Buybacks Happen

Parameter	Details
Executor	3/7 multisig (Conclave contractors + Cod3x Foundation)
Timing	Ad-hoc (prevents front-running)
Method	DEX aggregator on Base network
Alternative	OTC deals with >5% discount
Transparency	All buybacks visible on dashboard after execution

Multisig Structure

Parameter	Value
Threshold	3 of 7 signers required
Composition	Conclave contractors + Cod3x Foundation members
Timelock	None (slippage management requires flexibility)

Why No Timelock?

Challenge	Timelock Problem
Slippage Management	Can't respond to market conditions
Front-Running	Creates predictable execution windows
Capital Efficiency	Reduces effectiveness of buybacks

Execution Methods

Aggregator Purchases

Aspect	Details
Platform	DEX aggregator on Base
Timing	Ad-hoc to prevent gaming
Benefit	Best available price across DEXs

OTC Deals

Aspect	Details
Threshold	Minimum 5% discount to market price
Use Case	Larger purchases where DEX slippage is high
Benefit	Guaranteed favorable pricing

Why Ad-Hoc Execution?

Scheduled buybacks can be gamed:

Attack	How It Works
Front-Running	Traders buy before known buyback times
Sandwich	Sell immediately after
Value Extraction	Drains value from the system

Ad-hoc execution prevents this by making timing unpredictable.

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Transparency Dashboard

All buyback and yield distribution data is publicly visible:

Data Point	Visibility
Buyback History	Date, amount, price, transaction hash
Burn Verification	On-chain proof of token destruction
Yield Distributions	Per-period USDC allocated
Profit Metrics	Platform performance indicators
Cumulative Burns	Total CDX removed from supply

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Key Takeaways

Principle	Summary
Profit, Not Revenue	Only actual earnings fund tokenomics
Dynamic Split	Allocation optimizes for market conditions
100% Burns	No treasury hoarding or future sell pressure
Ad-Hoc Timing	Prevents front-running, maximizes efficiency
Full Transparency	All actions verifiable on-chain
3/7 Multisig	Secure but flexible execution

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FAQs

Q: What counts as "profit"?

Revenue from credits, subscriptions, and fees minus all operating costs including infrastructure, team, and development.

Q: How often do buybacks occur?

Profit is determined every 14 days. Buyback timing varies intentionally within each cycle. The dashboard shows all historical buybacks.

Q: What if an OTC deal is available?

OTC deals are only executed if they offer at least 5% discount to market price, ensuring buybacks always get favorable pricing.

Q: Where can I verify burns?

All burns are recorded on-chain at the burn address. Links available on the transparency dashboard.

Q: How is the $1 threshold determined?

Manual processing at each 14-day deposit cycle. Will transition to automatic oracle-based processing if the system is well received.