As the Sonr ecosystem grows and expands, the value of SNR tokens will accrue in a number of ways. Through the development of new use cases, the controlled release of tokens, and the implementation of staking and vesting mechanisms, Sonr aims to create a strong and stable token economy that benefits all stakeholders. The SNR token will be used to facilitate a range of functions within the Sonr ecosystem, including staking, payment for verification services, access to premium features, interchain security, and wider Cosmos ecosystem interaction. By providing tangible benefits to token holders, Sonr aims to foster an engaged and committed community that is invested in the long-term success of the platform. The token value accrual section details how SONR token's value will be determined and sustained over time. This could include discussions on the token's inflation rate, deflationary mechanisms, and how SONR tokens can maintain long-term value.
Mechanisms for Growth
- Staking Rewards: Secure the network and earn rewards by staking tokens to support validators
- Platform Services: use various services within the Sonr ecosystem, such as identity verification and data storage
- Developer Incentives: Reward developers for building and maintaining applications on the Sonr platform
- Ecosystem Grants: Fund projects, partnerships, and research initiatives that contribute to the growth and development of the Sonr ecosystem
Value Capture
Sonr's token value is designed to accrue through a variety of mechanisms as the ecosystem grows and expands. The value of SNR tokens will increase as demand for them rises due to their utility in the ecosystem. SNR tokens will be used for staking, payment for verification services, access to premium features, interchain security, and wider Cosmos ecosystem interaction. As more users, developers, and businesses integrate Sonr's decentralized identity solutions, demand for the token will grow due to its utility within the ecosystem.
Additionally, the controlled release of tokens, the implementation of staking and vesting mechanisms, and the development of new use cases will all contribute to the token's value accrual. 0.05% of each transaction fee is directed to the Sonr treasury, providing a sustainable source of funding for future platform improvements, ecosystem growth, and governance initiatives; 99.5% goes back to the validator. A portion of fees collected from transactions and services will be allocated to the Sonr treasury, enabling ongoing investment in ecosystem growth and supporting token value stability.
Finally, Sonr plans to implement a strategic buyback process, whereby a portion of the treasury funds is used to purchase Sonr tokens from the open market, effectively reducing the circulating supply and demonstrating the project's ongoing commitment to its growth and success. By providing tangible benefits to token holders, Sonr aims to foster an engaged and committed community that is invested in the long-term success of the platform.
Supply Side Management
Sonr plans to strategically manage the supply of its SNR tokens to balance inflation and incentivize long-term participation in the ecosystem. The token supply will be subject to a predetermined emission schedule designed to control inflation and promote commitment to the platform's success. Token allocations will be subject to vesting schedules and lock-up periods, ensuring a steady and controlled release of tokens into the market while promoting commitment to the platform's success.
Through these supply-side management mechanisms, Sonr aims to create a strong and stable token economy that benefits all stakeholders, while promoting long-term engagement and commitment to the platform's success.
Staking
Sonr's validators are subject to a linear vesting schedule, ensuring a gradual release of their rewards over time. This approach promotes long-term commitment and alignment of interests, contributing to the overall stability and security of the network. The clear path for the underlying application for staking is utilizing a Delegated Proof of Stake (DPoS) validation mechanism. Down the line Sonr will provide IPFS storage nodes, and governance participation in the staking model.
On Sonr we will be leveraging a delegate stake mechanism in order to optimize buy-in for users in the network. It imposes an excess opportunity cost if slashing is implemented.
Validator Nodes for Cosmos ASB
Sonr is a Cosmos powered blockchain which is powered by a TenderMint validation mechanism. The default consensus for TenderMint is DPoS and works with our current ABCI implementation for Transaction Verification. DPoS is a twist on Proof of Stake consensus that relies upon a group of delegates to validate blocks on behalf of all nodes in the network . Witnesses are elected by stakeholders at a rate of one vote per share per witness . Coin age is irrelevant. All coins that are mature will add the same staking weight (usually 1 in the wallet hover display) Results in stable, consistent interest only for active wallets and only with small inputs.
Incentives
- Staking Rewards: Token holders can earn staking rewards by participating in securing the network, driving engagement and promoting long-term commitment.
- Validator Incentives: Validators are rewarded for their contributions to the network's security and reliability, encouraging responsible behavior and attracting high-quality validators.
Disincentives
- Slashing Penalties: Validators who act maliciously or fail to maintain the network's integrity may face slashing penalties, discouraging bad behavior and ensuring overall network health.
- Vesting Schedules: Token allocations to team members and early investors follow a linear vesting schedule, discouraging short-term profit-taking and aligning interests with the long-term success of the Sonr ecosystem.