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The token of the Nodle Chain is NODL.

In this section, we go through the economics of the NODL token, its function in the Nodle Network, and the supply and demand dynamics.

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.

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 2018, 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”. 

NODL token holders will be eligible to participate in governance proposals and vote on them as ownerhsip of the Nodle Chain is given back to the community.

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:

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 Token Issuance 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:

Currently, the Nodle team controls this treasury. In the future, parts of it will be transitioned under the control of a Nodle DAO responsible for driving future evolutions of the network.

The token issuance aims to reward edge nodes, operators, and collators. At each reward event, the NODL freshly minted is distributed among participants as follows:

Nodle tokens can be used as:

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.

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.

The 12.6 billion remaining tokens are periodically issued to reward edge nodes (smartphones running the SDK), network operators (agents operating the network and the oracles ensuring edge nodes behave properly), and collators for their participation in the network.

Initially the infrastructure needs to be built. A limited supply entails scarcity, which gives competitive advantage for first movers to participate in building the supply for the network. When the network gets built, there is competition on the supply side, as the network builders are fighting for the subsidy.

Once the infrastructure is built and operational, there needs to be demand for the infrastructure to remain valuable. If the demand is not able to compensate for the subsidy, the network did not achieve its goal. As demand for the network grows stronger, the issuance will slowly decrease until rewards from the demand side take over to incentivize network participants. 90% of tokens will be issued nine years after the start of the Nodle parachain in May 2022, whereas the final tokens will be issued five years after.

The token Issuance follows an S-curve defined per the formula:

Where:

The S-curve for the issuance of coins ties to a normal distribution of tokens over the course of the issuance as shown here:

Both curves draw three different phases:

It’s worth looking at the reward per node in different growth scenarios to understand the sustainability of the model. For the network to be successful, it needs to provide geospatial availability where the demand is, which will widely evolve over the lifetime of the network.

For example, for the asset tracking smart contract, most assets will come from the logistics supply chain, with a high density of smart devices to be tracked in urban areas, in hubs such as commercial harbors, or in controlled environments such as construction sites.

These sites will require a high density of nodes to capture the required data, while other areas will work with a best-effort network. Consumer use cases (such as geolocalized airdrops of NFTs) will not require geospatial incentivization at all. For that reason, in the first phase of the network, the purpose of the rewards will be to incentivize a broad coverage of urban zones, which growing demand will then naturally shape.

With this model in mind, and taking into account a conservative range for a BLE antenna (30 m in urban dense areas, although in rural areas it can go up to 200 m), we want the network to be able to incentivize enough nodes to cover all urban areas on Earth at least once a day. The market will then shape this idealistic target, as all areas are not equal from the standpoint of the demand.

The number of daily active nodes is actually higher than the number of smartphones connected daily to the Nodle network, because statistically, the Nodle SDK will run as several distinct nodes on the same smartphones, in case the smartphone runs several apps embedding the SDK (for example, the Nodle Cash app and another partner app). We estimate the target is then in the vicinity of 300 million smartphones. As a reference, leading mobile advertising networks claim they can reach more than 2 billion smartphones daily.

At any given time, average rewards for edge nodes will depend on the size of the network. For reference, we can highlight three hypothetical scenarios for network growth leading to 300 millions daily active nodes, and project what it means in terms of reward for individual nodes:

In each scenario, the supply of NODL at each reward event remains fixed (on top of which the Nodle project has reserves to adjust rewards, and demand will also fund edge nodes). Based on the size of the network, the reward per node will vary. Whether these rewards match minimal edge nodes expectations (for example competing with monetization they expect from other mobile monetization options) will depend on the price of the token.

For edge nodes, the purpose of the rewards is to incentivize the nodes to be:

• Available, meaning they are online and prepared to take on smart missions
• Capable, signifying they possess the necessary activated sensors to carry out passive missions
• Well-located, in other words, they are situated in a location conducive to performing smart missions and where the density is optimal to meet network requirements and ensure effective operation.

We mark Hk=80 the pool distributed between edge nodes at each reward calculation event. The individual reward h(n) attributed to each node n will be computed as:

 Where:

f is a balancing function enabling the network to arbitrate his needs to incentivize more activity, new capabilities, or a broader coverage.

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Note: Changing the balancing function would require a consensus vetted by the community. As of July 2023, rewards are calculated every 15 minutes and allocated to edge nodes every 4 hours.

Time-availability Factor

For a given reward calculation event, each node will be rewarded proportionally to its uptime since the previous reward calculation event. Between two reward calculation events (which as of July 2023 is a 15-minute window), the window is divided into a number of 90-second slots.

Each slot is allocated an equal share of the total reward available Hka. For any slot, a node is considered available (or up) if it performed at least one Nodle-related activity, such as a Bluetooth scan, fetching a configuration, or uploading data. An oracle will then evaluate which nodes participated in the slot and distribute the rewards equitably between active nodes during that slot.

Geospatial-availability Factor 

Compared to traditional telecommunication networks, the Nodle network is unique in the way it incentivizes moving nodes and provides ad-hoc and best-effort connectivity. The rewards formula is then designed to incentivize reliable network coverage as well as physical exploration and movement, on top of deterring farms of devices located in the same area.

The Nodle network can be represented with hexagonal tiles with an average hexagon edge length of 66m, which corresponds to a resolution of level 10 in the h3 specification.

At the time of writing, the geospatial-availability factor is calculated based on:

• Area covered, which is represented by a number of visited H3 tiles.
• Node density in covered H3 tiles. It is estimated that 4 distinct nodes inside an H3 tile of level 10, is the optimal number and therefore it is the number that is best rewarded as a whole.

The geospatial-availability factor per covered H3 tile is calculated as defined in the table below. If a node has covered multiple H3 tiles between two reward calculation events, then all individual factors for each H3 tile are sum up to get the final value of the factor for the node.

Number of Nodes in H3 Tile	Factor per Node	Total Factor in H3 tile
1	1	1
2	0.8	1.6
3	0.6	1.8
4	0.5 (i.e 2/4)	2
5	0.4 (i.e 2/5)	2
6	0.333 (i.e. 2/6)	2
7	0.28 (i.e 2/7)	2

Bluetooth-availability Factor 

One of the main purposes of the Nodle network is providing connectivity for Bluetooth devices, that's why the Bluetooth-availability factor is designed to ensure that each node is rewarded fairly according to:

• the time during which it provides Bluetooth connectivity, and
• the range of devices it can provide connectivity to

As of July 2023, there are two Nodle SDK builds for iOS, that can be integrated by a Nodle Service Provider (NSP) - one provides capabilities to scan and connect all Bluetooth devices, another - only iBeacons. It is up to the NSP to decide which one to integrate, but the build with wider capabilities will require additional Bluetooth permission to be granted by the node.

Exact values of the Bluetooth-availability factor are provided in the table below.

Bluetooth availability	Bluetooth-availability factor
Bluetooth not available	0.05
Bluetooth available to scan iBeacons only	0.2
Bluetooth available 1 time	0.5
Bluetooth available 2+ times	1

Capabilities Multiplier 

The capabilities multiplier is linked to the node's ability to carry out tasks. A node with the capacity to undertake active missions, meaning one whose owner can be notified to perform specific tasks, holds more value for the network compared to a node that can only undertake passive missions. This factor underscores the importance of interactive participation and diverse functionality within the network. The value of the capabilities multiplier for a fully-capable node is 1, and it will be 0.5 for the node, which cannot execute active missions.

Compartmentalization Per Region

It’s likely different regions of the world will see network deployment at different paces. As edge node operators and publishers (typically mobile apps) deploying the nodes will typically operate at a country level, there is a sizable risk for rewards to become biased towards a specific region.

For example, if a super-app in a highly populated country deployed the SDK before the network reaches its maturity phase, it would reap most issuance rewards for the years to come, thus decreasing incentives to build coverage elsewhere.

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Note: There is consequently an option, not activated at the moment, for the network to compartmentalize the rewards per country. Activating this option would require a consensus vetted by the community.

This compartmentalization is designed as a way to level opportunities across regions independently from the strength of the economy of a given country. Each country will be allocated a number of coins at each issuance event in proportion to their share of voice in the global population.

This mechanism separates rewards by country, so that first joiners in any given region can be rewarded for their higher incremental utility than new nodes in already populated regions. For example, the US represents 4.25% of the global population.

Hence at any given reward event, nodes in the US will reap 4.25% of rewards. Unattributed rewards will be shared among participants in other countries.

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