Dynamic Rewards Calculation
Token release in Monthly Vesting
The model provides for a monthly release of tokens, distributed linearly for providers rewards. This release comes from a limited pool of tokens, called Lending Reward in tokenomics.
To reserve a portion of these tokens for future rewards, a percentage is set aside in a vault, ensuring a reserve for the future after all $NEOV tokens have been issued.
$NEOV Price Variations
To protect against the potential volatility of the market, we're going to set up a calculation that allows us to allocate more or fewer tokens per Go depending on price fluctuations, based on $0.064 (public launch price at TGE).
Price Above Target : If the $NEOV price is above the target, the number of tokens per Go decreases, as fewer tokens are required to provide an attractive reward.
Price Below Target : If the price is below the target, the number of tokens per Go increases, meaning more tokens are distributed per Go to maintain operator attractiveness.
Vault Adjustment Mechanism
This vault percentage (set at e.g. 30%) can be adjusted monthly based on network demand, numbers of providers and variations of the $NEOV price.
Variables Affecting Vault Percentage
Network Size (Go): If the total Go usage on the network increases, a smaller percentage is allocated to the vault, favoring immediate token distribution.
Number of Providers: With a higher number of providers, more tokens are distributed instead of being stored. Conversely, if the number of providers decreases, the vault percentage rises.
$NEOV Token Price Variation: The vault percentage also adjusts in response to the potential volatility of $NEOV’s price. If the $NEOV price falls very significantly, then the share of tokens held in the vault will decrease considerably in order to continue to attract providers despite a fall in the token price.
Distributed Tokens
Each month, the number of tokens issued is reduced by the vault rate (percentage of tokens set aside in the vault). The remaining tokens after this deduction represent the total rewards available to be distributed among providers for that month.
Rewards calculation
Once the total rewards available for distribution are determined, the token reward per Go can be calculated:
This gives the precise reward rate for storage usage, aligning provider incentives with network demand.
Scenarii
To show providers how rewards fluctuate according to network usage and token price, here are some hypothetical scenarios:
Scenario 1 - Network and price growth
Month 1: 10 To used, 100 providers, token price stable, 30% reserved in the vault, meaning 70% of tokens are distributed, around 544.444 tokens per Go.
Month 12: Assuming a linear 5% growth in network size and provider count, with a 3% monthly increase in token price, the reward per Go would be 321.448 tokens.
Scenario 2 - Price decrease but network growth
Token price decreases by 3% monthly, but the network continues to grow by 5%.
Month 12: Reward per Go rises slightly to 322.78 tokens, as a lower price requires broader distribution to maintain attractiveness.
Scenario 3 - Network growth with declining numbers of providers and price decrease
Network grows by 5%, but providers decrease by 1% monthly, with a 3% monthly price decline.
Month 12: Reward per Go decreases to 317.417 tokens, as a larger vault reserve is maintained to support future rewards.
Scenario 4 - Price dump and network usage also, but numbers of providers increases
Network usage decreases by 5%, providers increase by 15%, and token price falls by 4%.
Although tokens per Go increase, the total distributed amount is low due to reduced network usage.
This system ensures that token price volatility have a limited impact on rewards, thanks to the dynamic adjustment. Network size and storage demand remain the key factors, promoting reward stability regardless of token volatility.
The incentive structure relies on a balanced management of provider numbers and storage volume demand to attract providers quickly and expand network size.
Last updated