The Nodle Economy
The token of the Nodle Chain is Nodle Cash, and its symbol is NODL. The Nodle Chain is a Polkadot parachain. In this document we go through the economics of the NODL token, its function in the Nodle Network and the supply and demand dynamics.
The Nodle network aims to achieve two goals:
- To create an economic and technical layer that enables smartphones to be rewarded for performing work. This means leveraging the existing infrastructure of smartphones to execute applications, such as a decentralized edge computing platform, a crowdsourced sensing network, or rewarding users to perform tasks without a middle man.
- To become a force of democratization for the crypto space, i.e. distributing a crypto token to a large number of participants.
A Swarm Network of Smartphones
Edge Nodes provide connectivity in the physical world and processing related to this connectivity. A smartphone is "in the world." Unlike a computer in a data center, a smartphone can be anywhere - in the countryside or the middle of a city.
The Nodle network takes advantage of four things:
- A smartphone is a computing machine: it is, in many cases, as powerful as a laptop computer. It can run processes at the "edge." In many parts of the world, the smartphone is the most powerful computing machine a person owns.
- A smartphone is connected and can access many different networks: Wi-Fi, LTE, Bluetooth, and NFC.
- A smartphone has many sensors: camera, microphone, accelerometer, gyroscope, and GPS, with new sensors regularly being added.
- There is typically a one-to-one relationship with its owner, that is a smartphone belongs to a single person.
A Force for Democratization
The smartphone is the most commonly distributed technology ever invented. As of 2021, the number of smartphone users was 6.378 billion, according to Statista. This translates to about 80% of the world's population. There are few things in computing as simple as downloading an app and running it - it’s what smartphones are built to do.
On the Nodle network, participants are not given "free share" - rather they are rewarded for a service they provide, or more precisely, for a service their smartphone offers. You can compare it to cloud platforms: cloud providers create an infrastructure that can be "rented" by developers. Amazon, Google, and Microsoft are getting paid by developers for the cloud platform service they provide. In the Nodle network, the participants, i.e., the Nodes running the piece of code inside the Nodle SDK, get rewarded in Nodle Cash (NODL) for their service. So, in this case, the infrastructure is the swarm of smartphones.
The NODL token solves the cold start problem. In the regular economy, venture capital, investment banking, and sometimes subsidies from the State come together to finance technological projects until they can reach economic sustainability. In the case of cloud platforms or telecommunication networks, the provider has to make the initial investments. In crypto-economies, the token plays that role. The Bitcoin network incentivizes miners to deploy a decentralized mining infrastructure offering a service: securing a monetary network. The Nodle network incentivizes smartphone owners to run a connectivity infrastructure.
Nodle token usage
A Utility Token
NODL is a utility token. NODL represents a quantification of the utility provided by edge nodes to network users. This utility will be an evolving notion as both technical capabilities are shared by the edge nodes (for example, in case of a smartphone: sharing bandwidth and computation capability) and the nature of devices connected through those edge nodes.
At inception, the main utility shared through the network is connectivity for smart devices. As such, NODL can be seen as first as a quantification of the value of the bandwidth, and the value of renting the computing, storage, and bluetooth capability of the smartphone.
The NODL token is then used to reward Nodle network participants, to allow consumers to use the services provided by the network, and to exchange value between users through transfer.
In the first phase, participants are mainly rewarded through minting of the token. This minting or issuance phase is detailed in “The Token Issuance” section of this document. In a second phase, participants will be directly rewarded for reaping bounties attached to smart missions ordered by entities intending to leverage the network for their own use cases. The rewards collected through bounties will gradually outstrip rewards from the issuance, as demand for services built on top of the network strengthen.
In the mid-term, i.e. before the end of 2023, it is expected that the NODL token will take two new roles: governance and staking.
A Governance Token
NODL token holders will be able to use their tokens to vote on significant changes to the Nodle Parachain, such as system-wide upgrades, protocol changes, or new features. The voting protocols and overall governance system are still to be defined.
A Staking Token
The Nodle Parachain is secured through a delegated Proof of Stake consensus mechanism on Polkadot’s shared security model. Good actors are rewarded by this mechanism with yield, while bad actors lose some of their stake through slashing.
Third parties such as token holders or businesses will be able to run a “collator node” (sometimes mistakenly called a validator node), provided they satisfy minimum staking requirements. The Nodle Parachain will then choose the top collators and allow them to produce blocks for it. Collators will share a pool of rewards sourced from protocol and transaction fees; rewards will be dispatched based on how valuable each collator has been (i.e. how many blocks they produce). If a collator misbehaves or does not satisfy its minimum service requirements (for instance, it was offline when it was supposed to be producing blocks), it will be slashed and lose some of its staked NODL.
Token holders will also be able to delegate their tokens to support other collators. In such cases, rewards and slashes will be applied to the delegators on the pro-rata of their stake.
Nodle Token Economic Concepts
The maximum supply of the NODL token is 21 billion, no additional tokens can be minted once the protocol reaches this number. Nodle was originally built on another chain in 20181, where approximately 8.4 billion tokens were minted, it was then migrated to a native Nodle Chain in 2020. The rest of the tokens constituting the max supply will be minted according to the predictable mechanisms described in section “token issuance”. 1: Original stellar blockchain can be tracked here: https://stellar.expert/explorer/public/asset/NODL-GB2Y3AWXVROM2BHFQKQPTWKIOI3TZEBBD3LTKTVQTKEPXGOBE742NODL
In the early stages of the Nodle Chain, approximately 8 billion Nodle cash was minted and attributed to reward, incentivize the team and early investors; as well as to create a treasury aimed at financing and driving the growth of the network and its ecosystem. The first participants received tokens as part of the network rewards incentives.The rest of un-mined tokens will be minted through the issuance mechanism described in the dedicated section. The following is a snapshot of the Token Allocation upon migration of Nodle Cash to its Native blockchain in 2020.
The treasury will serve a number of objectives:
- Incentivize third party developers through grants to accelerate and drive the development of the network. Such grants will be allocated for building services on top of the network (such as asset tracking services, digital witnessing, geo-localized NFTs…), building infrastructure for the token ecosystem (gateways, interactions with smart missions, explorers, statistics, hardware wallets, corporate wallets, governance dashboards, security modules…), or to subsidize early usage of the network (in hackathons, or for subsidizing IoT startups to utilize the Nodle network, or to subsidize the use of B2C apps using the network such as the Nodle cash app.
- Create awareness around Nodle and its ecosystem in order to stimulate usage, sustain value of the coin, and to educate users, developers and businesses
- Secure a reserve for the DAO: more about that below.
At first, the Nodle team controlled this treasury. It is now controlled through the Nodle governance council of token holders. In the future, it will be transitioned under the control of a Nodle DAO responsible for driving future evolutions of the network.
Market capitalization and token supply
The market capitalization or “market cap” of a crypto network is computed by multiplying the “token supply” and the “token market price”. As the token is not yet listed, and does not have a market price, there is no single market cap, fixed by an open market on an open exchange. Although market capitalization is thus not relevant at this stage, it is important to highlight the token supply and its dynamics in coming months and coming years.
Different projects and communities may take unique approaches to evaluate the token supply of a crypto network. In the case of Nodle, the consensus is to use the circulating supply. Circulating supply represents tokens that are free to be traded, exchanged or used on the network. Non-circulating supply includes:
- Unmined tokens:tokens yet to be issued by the chain
- Locked funds: tokens purchased by investors under a contract locking the tokens for an agreed period of time and tokens that have been allocated by the Nodle company to key people, but are kept in escrow until they execute the vesting period contracted. While they are not circulating, the tokens cannot be used to participate in the Nodle economy, which means they don’t provide utility to the network. A utility token represents units of value being exchanged on the marketplace. Market capitalization should thus take circulating supply into consideration.