This document is a work in progress. It is not final and is subject to change.
KCents- The basic Karma Coin blockchain accounting unit.
KCoins ($KC)- The Karma Coin cryptocurrency. One KC equals one million KCents.
Karmachain 1.0 Economic Model
Karmachain 1.0 mainnet was launched on April 21st, 2023 via a 100% fair launch - no pre-minted coins were allocated at genesis time to anyone.
The only Karma Coins in existence are coins being issued by the Karmachain 1.0 protocol as rewards for creating blocks and maintaining the chains data, and coins issued by Karma Mining to Karma Coin App users based on their actions as detailed in this document.
The Karmachain 1.0 ledger will be fully migrated over Karmachain 2.0 as part of the migration from 1.0 to 2.0 at Karmachain 2.0 genesis time. To ensure fairness and to encourage decentralization, no additional pre-minting will be done in Karmachain 2.0 genesis.
Karmachain 2.0 Economic Model
Coin Issuance Model
The coin issuance and supply models are designed to reward both users and validators and to encourage early-adoption of the Karma Coin platform by both of these stakeholders. Team Karma Coin own coins are all generated by maintaining Karmachain 1.0 as a block producer and a validator and were not pre-allocated by the protocol. This ensures that the only coin that team karma coin will have are coins earned by providing the Karma Coin app and chain to users based on level of utility and usage to users.
Coins are issued by the Karmachain 2.0 protocol in two ways:
- Validator rewards
- Karma mining
We call the logic that determines this issuance 'the protocol' in this document.
This issuance model is designed so the vast majority of the coins are issued in the first 20 years of the project post genesis, while still rewarding validators and new users indefinitely many years into the future to match our vision to create a long-term universal token of appreciation. So technically, Karma Coin supply is not capped, however the amounts issued after the first 20 years from genesis are negligible compared to the first 20 years issuance. In other words, issuance exponentially decays.
2.5B KCs will be minted by the protocol over 20 years from KC 2.0 genesis.
After the first 20 years from genesis the coin supply will be 2.5 billion KCs (2.5 trillion KCents). We refer to this amount as 'the supply' in this document.
In the following years, after the first 20 years from Karmachain 2.0 genesis, the only coin issuance by the protocol is validator rewards and signup rewards. These are issued indefinitely into the future. Signup rewards amount to up to 100 million additional protocol minted KCes for each 10 years period after the initial 20 years.
There is no genesis minting for Karmachain 2.0. The only coin in existence at genesis time will be coins minted by Karmachain 1.0 protocol. These coins will be migrated over to the Karmachain 2.0 ledger on genesis time.
630M KCs (~25% of the supply) minted by the Karmachain 1.0 protocol, based on its utility to users as block rewards to validators. These coins will be migrated over to the Karmachain 2.0 ledger on genesis time.
Up to 245M KCs (~10% of the supply) of these coins will be sold to Karmachain 2.0 validators before Karmachain 2.0 genesis time, and will be staked by them in order to receive block producers and validators rewards on Karmachain 2.0.
Up to 375M KCs (15% of the supply) earned on Karmachain 1.0 as validation rewards will be used as the treasury of the Karma coin dev company.
- 500M KCs (20% of the supply) are allocated by the protocol to reward the Karma Coin blockchain validators for providing security to the network for the first 20 years from genesis.
- These are minted by the protocol using a standard exponential decay function which rewards validators that start validating early while still rewarding new validators that join the system over time.
- On the first month from genesis, the total validators' rewards are 10M KCs, Lambda = 0.020036).
- The issuance continues indefinitely using the same decay function. So on the second month from genesis, total rewards are 9.8M KCs and 9.6M on the third month and so on.
- The expected rewards of a validator, depends on the amount of its staked Karma Coin. For example, if a validator has staked 2.5M KCs, and total active validators staking in a given month is 25M KCs, then the validator is expected to receive 10% of the total validators rewards for that period.
- Additional details about the validators rewards issuance model, expevted total rewards since genesis, and the delay function are available here.
- Considering becoming a Karma Coin validator? Contact us to schedule a product demo and to discuss validators economics.
The Karma Coin protocol tokenomics are designed to encourage usage and growth in the early days of the network with the goal of establishing Karma Coin as a global means of appreciation, tipping and payments.
1.375B KCs (55% of the supply) are distributed by the protocol and awarded to users to encourage sign-ups, usage as means of payment and appreciation. We call this Karma mining. Karma Mining includes the following coin issuance:
Signup rewards are designed to solve the cryptocurrency on ramp problem. Upon sign-up, the protocol mints a 10 KC reward to each new user with a verified mobile phone number.
- A total of 300 million KCs is allocated by the protocol for signup rewards.
- A user who gets this reward also gets the
Karma Rewards Winnerspecial appreciation.
- The first 10 million users get 10 KCs on signup.
- The next 200 millions users get 1 KC on signup.
- Users beyond the first 210 million users get a small reward of 1000 KCents on signup. This amounts to perpetual minting of 100 KCs for 1 million new users.
- A total of 300 million KCs is allocated by the protocol for referral rewards.
- Referral rewards are awarded to users who appreciated someone who signed to Karma Coin up to 2 weeks after the appreciation was sent.
- You refer a person by appreciating their phone number using the Karma Coin App.
- You get a referral reward, when your appreciated person signs up on the Karma Coin.
- You can get multiple referral rewards. One for each of your referrals.
- The first 10,000 referees get a 100 Kcs reward when their referral signs up.
- The next 9,900,000 referees get a 10 KCs reward when their referral signs up.
- The next 200 millions referees get a 1 KC reward when their referral signs up.
- Each month period, the protocol mints 10 KCs to up to 500 random users who had appreciated at least two times in that time period, and who didn't previously get this award.
- The appreciation must be received by a Karma Coin user. Appreciations that are sent and not received by the receiver do not count for purposes of this reward.
- Up to 300M KCs are allocated for this reward. When these have been allocated the protocol stops rewarding users with top karma.
- Deterministic randomness is provided from Karmachain.
- The rewards allocation continues monthly until the allocated amount has been distributed.
- During the testnet, the params of these rewards will be different for testing purposes. e.g. every 1 day up to 10 random users from the top 100 users with the highest Karma Score who didn't get the reward get and who have appreciated at least one person in the period.
- 225 million KCs are allocated by the protocol to reward causes such as charities and nonprofits.
- Causes are submitted by users to Karma Coin for inclusion. The submitted causes are vetted in a by team Karma Coin before being added to Karma Coin to ensure that only legitimate non-profits with a provable reputation and a charitable track record get on Karma Coin.
- Karma Coin users discover approved causes in the Karma Coin App and can contribute to them via sending them appreciations.
- Each month, for the first 50 months from genesis, Up 10,000 KCs are distributed by the protocol for matching users charity contributions per month.
- Up to 10 causes that got some funding in that calendar month via users appreciations that didn't get funding in the previous calendar month, are eligible for matching funding by the Karma Coin protocol.
- The protocol matching funding amount to the 10 selected causes is determined by a quadratic funding algorithm, so more value is given to the number of contributors over the contribution amount. This encourages small contributions from more people over large contributions from a small group of whales.
- People who support a cause are encouraged to have as many people contribute to it on Karma Coin in order to increase funding via matching.
- The Karma Coin protocol randomly selects up to 10 eligible causes in case there are more than 10 eligible ones in a month.
- Total matching funding is limited to 10,000 Karma Coins a month, and it is distributed proportionally between the 10 selected causes in case the total of their quadratic matching funding amounts is higher than 10,000 Karma Coins.
Transaction Fees Subsidies
The protocol allocates up 250M KCs as transaction fees subsidies. Fees susedies are minted by the protocol for appreciation and payment transactions and are given to the Karma Coin blockchain block producers. When a subsidy is applied, the user who submitted the transaction doesn't pay the transaction fee from his own balance.
- Only the first 10 transactions per user are eligible for transaction fees subsidies to mitigate spam attacks.
- These intentional design decisions were made to encourage sign-ups, appreciation, and coin usage in the real-world as means of tipping, appreciation and payment.
- After the 250M KCs have been minted for fees subsidies, the protocol keeps minting 1 KCent for each transaction to subsidize the transaction fees of signup transactions. This is required to seamlessly onboard new users. This amounts to issuance of 1 KCs for 1 million new users, so it doesn't change the overall supply significantly in the long term.
User may delete his account at any time by submitting a delete account transaction.
- This transaction will cause deletion of all user data from the chain besides a tombstone of user's phone number hash that is needed to avoid multiple signup rewards on a future sign-up with the same phone number.
- The account balance at deletion time will be transferred to a community treasury account.
- If a user signs up again later using a phone number that was already used previously for a deleted account, then user's will not get any signup reward and its balance after signup will be 0 KC. In this case, the user will need to fund its account from another account in order to pay, tip or appreciate again.
Protocol Minting Summary
A total of 1.875B KCs are minted by the protocol over 20 years from genesis. Minting breakdown
- 300M KCs - Signup rewards.
- 300M KCs - Referral rewards.
- 300M KCs - Karma rewards.
- 250M Kcs - Transactions fees subsidies.
- 225M KCs - Causes rewards.
- 500M KCs - Validators rewards.
After 20 years, the protocol mints small amounts of additional KCs.
- Validator rewards - based on the same decay function used to calculate rewards in the first 20 years.
- Signup rewards - 1000 KCents per signup. 100 KCs for 1 million new users
- Signup transactions fee subsidy - 1 KCent per signup. 1 KC for 1 million signups.
Copyright (c) 2022 by the Karma Coin Authors. This work is licensed under the Karma Coin License.