The Sonr platform has implemented a sophisticated token handling and treasury process designed to ensure the stability and sustainability of the SNR token. This process is critical in managing the economics of the Sonr ecosystem and ensuring its long-term viability.

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Key Economic Processes

Buyback Process for Non-SNR Payments

When payments are made in currencies other than SNR, the Sonr system initiates a buyback process. This approach involves using the received non-SNR currency to purchase SNR tokens from the open market. This mechanism supports the demand and market value of SNR tokens and ensures a consistent influx of SNR into the system, reinforcing its utility and circulation within the ecosystem.

Contribution to SNR Fee Pool

The SNR tokens acquired through the buyback process are contributed to the SNR fee pool. This pool plays a pivotal role in the ecosystem, as it is utilized for various operational purposes, including network transaction fees, rewards for validators, and other ecosystem incentives. This continuous replenishment of the fee pool ensures the smooth operation and sustainability of the network’s economic activities.

Allocation to the Treasury

Half of the unvested tokens, representing 50% of the total, are allocated to the Sonr treasury. This treasury acts as a strategic reserve, supporting the long-term objectives of the Sonr ecosystem. Funds from the treasury can be utilized for various purposes, including development initiatives, marketing efforts, community growth, and other activities that align with Sonr’s strategic goals and contribute to the overall growth and success of the platform.

Scaling Inflation Rewards

To ensure the equitable distribution of incentives and maintain a balanced economic model, Sonr has implemented a system where inflation rewards scale relative to the authentic growth of its user base. This approach means that as the number of genuine users on the platform increases, so do the inflation rewards. This scaling mechanism aligns the incentives with actual platform usage, fostering an environment where growth in the user base directly contributes to the overall health and stability of the token economy.

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Validator Incentives

Validators play a pivotal role in the network, responsible for processing authentication requests and maintaining the blockchain’s integrity. They are incentivized through a task claiming process based on a first-come-first-serve mechanism and are remunerated via transaction fees and token rewards. This incentive structure ensures the high performance and reliability of services within the network.

Task Claiming

Validators select tasks from the Order Stack on a first-come-first-serve basis, ensuring a fair and efficient distribution of work.

Delivery and Payment

If a validator successfully delivers a service request, they proceed to the payment process. The payment is provided with a vesting schedule, aligning the validators’ incentives with the long-term health of the network.

Slashing Conditions

In instances where a validator fails to deliver on a service request, a slashing condition is triggered. This condition serves as a deterrent against poor performance and ensures the reliability of services within the network.

Consequences of Failure

Failure to deliver a service results in the slashing and burning of the validator’s staked SNR tokens. This punitive measure reinforces the commitment of validators to fulfill their tasks diligently and efficiently.