Question 1

What is OVL?

Accepted Answer

OVL is the protocol token of Overlay Protocol: it serves as the collateral basis for protocol trading and is also used for protocol governance decisions. Holding OVL does not represent equity in a company or constitute a promise of fixed returns. “Collateral basis” means it is connected to the settlement mechanism for protocol trades; “governance token” means it can be used for protocol-level decisions. These two uses do not mean that every holder will automatically participate in trading or receive governance outcomes.

Question 2

How does OVL function in protocol trading?

Accepted Answer

OVL serves in Overlay as the collateral basis supporting trading positions. Official materials state that when traders profit, settlement pays traders in additionally minted OVL, so trading outcomes can affect the token quantity. This is not a fixed-income mechanism: minting occurs when the relevant trade is settled at a profit. The protocol also includes a burn mechanism, so OVL should be understood as having a supply that changes with protocol settlement, rather than as a static token quantity.

Question 3

Why can OVL's supply change?

Accepted Answer

OVL is not a fixed-supply asset. Official materials state that 88,888,888 OVL existed at creation; profitable trader settlements mint additional OVL, while the protocol design also includes a burn mechanism. Therefore, supply should be understood by separately considering the quantity at creation, subsequent minting, and subsequent burning. Official materials also mention a stated “maximum quantity” of 10 million to meet requirements of certain launch partners, but explicitly state that this does not mean supply will be increased to that amount; this wording should not be treated as a fixed supply cap.

Question 4

How was OVL initially allocated?

Accepted Answer

OVL's initial allocation was: 42% ecosystem, 9% airdrop, 8% marketing, 28% strategic partners, and 13% Overlay Foundation. The ecosystem and airdrop together account for 51%; official materials describe the ecosystem as including the DAO, IDO participants, R&D and reserves for future upgrades, and community programs. These percentages describe the initial allocation recipients; they do not mean that every category enters circulation at the same time. To assess the composition of tokens that may be available at a given point, the release schedules for each category must also be considered.

Question 5

What is OVL's lockup and unlock schedule?

Accepted Answer

Official materials state that the team and investors had no liquid tokens at launch; the related insider tokens were first locked for 1 year, then began to unlock linearly after 1 year, with the overall issuance schedule completed over 4 years. The strategic partners category mainly consists of investment partners, while the Foundation category includes the team, advisors, and early supporters. Releases also occur in stages: relatively few tokens unlock during the first 6 months; community-token unlocks increase mainly from month 6 to month 12; another phase runs from month 12 to month 24, after which community tokens continue to release over the following two years. Locking, the start of unlocking, and completion of release are different stages; allocation percentages cannot be directly treated as immediately circulating supply.

Question 6

How does OVL's supply mechanism relate to usage risks?

Accepted Answer

OVL's quantity is affected by two opposing mechanisms: profitable trader settlements may mint OVL, while the protocol's burn mechanism reduces OVL. The actual supply change depends on the combined result of these settlements and burns over a period of time. Therefore, protocol activity cannot be directly equated with a rise or fall in token price. Even if supply decreases, price still depends on market demand for OVL, liquidity, and overall market conditions; traders participating in the protocol also bear the risk of their position outcomes, and the OVL mechanism does not guarantee returns from trading or holding the token.

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