Token Distribution and Payment Flows

Data payments serve as a fundamental incentive mechanism through which data uploaders directly compensate node operators for network utility. When a file is uploaded to the Network, it will be broken down into multiple small chunks, with each chunk assigned its own network address based on its content. These chunks will then be stored in a group of nodes whose network addresses are close to the respective chunk. Since the chunk hash is randomly distributed over the address space, data payment will be random and evenly distributed at scale.

As the network scales, the likelihood of a node receiving data payment increases linearly with its uptime. Nodes that don’t contribute to the protocol will be ignored by neighbouring nodes, thereby excluding them from the reward mechanism. These mechanisms resemble Proof-of-Uptime and Proof-of-Correctness models employed by other decentralised protocols to encourage desirable participant behaviour.

Initially, 85% of the payment is allocated to node operators, while the remainder replenishes the Network Royalties Pool, intended to foster ecosystem growth. As the network matures, it will transition towards automatic distribution of Network Royalties to the builders based on the KPIs of the projects, effectively replacing the funds managed by the Foundation.

Furthermore, the data payments are designed to include a burn mechanism, through which a portion of the data payment can be permanently eliminated if necessary to manage the token supply as the Network matures.