The first article that has been unveiled last week —LINK Ecosystem Principles– covered three causes to failure in terms of the previous crypto-asset projects’ usability, LINK’s three ecosystem principles to resolve those problems, and the Ecosystem of LINK dApps. As an extension of the previous article, today’s article will discuss LINK’s distribution methods and plans.
| LINK Distribution: Contribution Mining
Numerous projects have distributed large quantities of tokens to a small number of investors for the purpose of financing. The scale of token investments and sales achievements have also been used to assess project outcomes. However, the LINK Network does not distribute LINK for financing; rather, the LINK Alliance distributes LINK to its most active users as compensation for activities that contribute to the ecosystem. This approach to distribution creates three types of differentiated value.
1. Avoidance of the Excessive Token Network Effect
The LINK Network issues LINK on the basis of how many active wallets exist in the network and how much of the key currency (LINK) is distributed and used (payment & staking). With this structure — where a token is distributed according to the actual network activity level and growth, without artificial value inflation — the network’s value increases along with the growth of the ecosystem.
2. Formation of Network Value
Instead of adding to the expense of development through token sales, the LINK Network secures global users for the network by allocating LINK to LINK Alliance members and setting up LINK’s internal service functions. Global users acquire LINK from the diverse dApps of the LINK Alliance even as they experience those dApps. This means that the LINK Network rapidly distributes wallets worldwide, and that LN can be rapidly adopted not only by existing crypto-asset investors but by regular users as well.
3. Fair Provision of Opportunity
In the LINK network, a variety of people around the world, even those without initial capital, can acquire the value and authority of the LINK Network through their contribution activities (labor) on the internet. Thus, anyone can acquire and use LINK with the service that they enjoy using, which means that a wide range of people around the globe has the opportunity to receive LINK fairly, without regard for nationality, assets or time zone.
| LUCAS (LINK User Contribution Assessment System)
LUCAS is a system that assesses the contribution level of participants in the ecosystem to determine the amount of rewards they should receive. The current version of LUCAS calculates the contributions of each LINK Alliance dApp based on the number of active wallets (users), the transaction amounts within each dApp (LINK transactions) and the quantity of LINK from staking*.
It then determines the contributors’ LINK allocations by revising that amount according to the volume of LINK ecosystem activity and the contribution levels of each dApp in the ecosystem. Currently, there is a limit on the amount of allocation that one dApp can acquire. LUCAS ensures an appropriate currency supply is maintained for the network’s actual value, without over-expansion, enabling the healthy growth of the LINK ecosystem.
*Staking: The act of locking down the LINK held in a wallet. LINK undergoing staking cannot be transferred to another wallet, however, it can be directed to a desired dApp or other wallet, based on the benefits may be provided. In addition, after a user chooses to unstake LINK, a certain period is required before it can be transferred.
| Distribution of User Reward
LINK allocated to the LINK Alliance dApp is only used for user rewards, and is paid to users according to the policy of each dApp. In order to prevent fraudulent acts that may arise in the process of reward distribution, LINK Alliance dApps must comply with the reward distribution guidelines set forth by the LINK Secretariat.
| Plans for Distribution
1. User Rewards (Up to 80 million LINK)
User rewards will be issued based on user-contribution activities to LINK Alliance dApps. The rate of user reward issuance will be determined by the growth of the LINK ecosystem’s internal value, based on the LUCAS (LINK User Contribution Assessment System). To manage and regulate the circulation steady, the ecosystem coefficient within the LUCAS is adjusted so that LINK can be distributed over a minimum three-year period from its initial issuance date even when the network’s value surges exponentially. Vice versa, when the network value does not increase rapidly, the lead time for minting 80 million LINK will be extended constantly.
2. Reserves (Up to 20 million LINK)
Reserves are allocated for ecosystem expansion, and will be used by the LINK Secretariat for, including, but not limited to, LINK ecosystem operational expenses (including, without limitation, R&D and infrastructure expenses), dApp acceleration, marketing the LINK Network, etc. Reserves will only be issued after public announcements are made in advance through official communications channels.
LINK issuance is limited to 100 million over three years from the beginning of issuance, and is to increase by 5% annually thereafter. The actual amount of issuance will be determined by the value of the LINK ecosystem. The LINK issuance limit is allotted at a ratio of 8-to-2 for the purposes of user rewards and reserves, respectively. The total LINK issuance limit is 1 billion while the LINK ecosystem is maintained, with a maximum issuance limit of 800 million LINK for user rewards and 200 million LINK for reserves.
Today’s article went through LINK’s distribution method and distribution plan. LINK Team will continue to pursue the growth of LINK Ecosystem, by avoiding inconsiderate currency issuance, and by maintaining the circulation calibrated at the real value.