Tokenomics and Governance

Most chains run one token that does everything: pays for gas, votes on proposals, and absorbs speculation. LitVM splits those jobs across two tokens, and the split is the clearest expression of what Hard Money Web3 actually means in practice.

Two tokens, two jobs

The reasoning is straightforward once stated. If gas is paid in a token the chain itself issues, then the cost of using the chain is denominated in something the chain's operators control. Every transaction fee becomes an implicit position in the platform.

Paying gas in zkLTC breaks that link. The unit of account is Litecoin, whose issuance schedule nobody on the rollup can change.

zkLTC as the base asset

zkLTC is a fully collateralised representation of LTC, minted by the Grail bridge covered in module four.

Its uses on the rollup are the ordinary ones: transaction fees, collateral in lending markets, the base side of trading pairs, deposits into yield strategies, and the unit moved in cross-chain transfers.

$LITVM: governance and revenue

$LITVM is the coordination token. It has three distinct utilities, and it is worth keeping them separate because they are often conflated.

Governance

$LITVM powers the Litecoin DAO. Holders can vote on protocol parameters and upgrades, propose and approve ecosystem grants, participate in strategic funding decisions, and steer the direction of the chain. Active participants who vote and propose are eligible for rewards, which is an explicit attempt to avoid the governance apathy that afflicts most DAOs.

Revenue sharing

This is the part that distinguishes $LITVM from a typical governance token.

Sequencers earn fees for ordering and batching transactions. On most rollups those fees go entirely to whoever operates the sequencer. On LitVM, a percentage flows to $LITVM holders and stakers.

The framing matters: this makes $LITVM a claim on network activity rather than a claim on future governance decisions. Revenue rises when the chain is used, not when the token is talked about.

Ecosystem access

Priority access to new protocol launches, participation in Litecoin DAO initiatives, and eligibility for incentive programmes.

Where the revenue comes from

Three streams, per the litepaper:

• Sequencer fees. Transaction ordering and batching produces recurring revenue proportional to chain usage.
• Institutional yield infrastructure. Strategy vaults, notably with DNA Fund, charge management and performance fees, and a portion is redirected to $LITVM holders and stakers. The published estimate for these strategies is 7 to 11% APR on spot LTC, with yields accruing in LTC.
• Protocol fees from various ecosystem activities.

The 51% community allocation

Over half of the total $LITVM supply is reserved for the community, prioritising existing Litecoin holders. That allocation covers:

• A grants fund for ecosystem projects
• Usage incentives for Litecoin users
• Staking and liquidity incentives
• Governance rewards for active participation
• A dedicated Ordinals and Runes fund
• The LTC DAO Shark Tank

Whether 51% is generous depends entirely on unlock schedules and who controls distribution, which is a fair question to ask of any project making this claim. The structural answer LitVM gives is the Treasury Board.

Governance structure

The Litecoin DAO

The DAO is the venue for participation. Rights include voting on parameters and upgrades, proposing initiatives, approving grant allocations, and taking part in strategic decisions.

The Treasury Board

Five seats oversee allocation of the community supply:

1. Aztec Amaya, LitVM co-founder
2. Roc Zacharias, LitVM co-founder
3. David Schwartz, Litecoin Foundation Director of Partnerships
4. A community majority opinion seat
5. One additional member, to be announced

How a proposal moves

1. 01

   Initial proposal

   A community member submits an idea for consideration.

2. 02

   Temperature check

   Token holders vote on whether the proposal deserves further development. This filters noise before anyone invests real effort.

3. 03

   Detailed proposal

   Approved ideas return with full implementation detail, budget, and timeline.

4. 04

   Treasury Board vote

   The board makes the final determination on implementation.

Where the token stands today

$LITVM does not exist as a tradeable asset yet. Anything presenting itself as $LITVM before the official TGE should be treated as fraudulent until proven otherwise.

Ways to be positioned when it does launch: follow the official account for early access programmes, take part in testnet activity, and join community campaigns. Existing LTC holders are stated to be prioritised.

What to remember

• 01LitVM runs two tokens: zkLTC for gas and collateral, $LITVM for governance and revenue.
• 02Paying gas in an LTC-backed asset keeps the cost of using the chain denominated in money the rollup does not issue.
• 03zkLTC supply is elastic and tracks bridged LTC exactly, with no issuance policy.
• 04$LITVM holders and stakers receive a share of sequencer fees, making it a claim on network usage.
• 05Revenue comes from sequencer fees, institutional yield vault fees, and protocol fees.
• 0651% of $LITVM supply is reserved for the community, overseen by a five seat Treasury Board.
• 07Proposals move through initial submission, temperature check, detailed proposal, and a Treasury Board vote.
• 08The token generation event follows the testnet, and mainnet follows the TGE plus audits.

Primary sources

• LitVM Docs: $LITVM and $zkLTC
• The $LITVM Token: Powering the LitVM Ecosystem
• Unpacking LitVM's Governance Model
• LitVM Litepaper V1.2, sections 4 and 5

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