Introducing the New eQUAD Token Economics
Enterprise-focused tokens have often struggled to gain significant traction. There are two main reasons behind this.
First, many projects were unable to develop compelling products with the funds raised during their ICO. In this sense, the blockchain industry is not different from the traditional startup world, where 90 percent of new ventures fail.
Second, the economics of these enterprise-focused tokens are often not very well-designed, lacking connection to the products and, therefore, actual utility.
In the last two and a half years, Quadrant Protocol focused on the first issue. We’ve built several new product suites advancing the Big Data industry, some focusing on data-as-a-service, some enabling robust data analytics, and others empowering users with more control over their privacy. We are happy to report that three of the four big projects outlined in our latest roadmap update are now ready to launch.
It is time to focus on the second problem: token economics.
The Use of eQUAD in Quadrant’s New Products
eQUAD plays a central role in all of Quadrant Protocol’s new products, creating real-world demand for the token as a utility.
Data Smart Contracts: Platform Licensing Fee
Our Data Smart Contract initiative, dubbed “Project Kimotsuki,” is now live on the Quadrant Chain.
Companies who purchase data on the Quadrant Platform utilize Quadrant Protocol’s Data Smart Contracts and will need to pay a licensing fee amounting to 3 percent of the value of the services rendered. We have been collecting these fees since August 1, 2020 from Quadrant Global, whose services include offering data subscriptions to dozens of enterprise clients.
Starting this January, Quadrant Platform will begin executing these contracts utilizing 80–100 percent of these licensing fees to purchase eQUAD from the open market. The monthly ratio depends on Quadrant Platform’s expenses, which include maintaining the Quadrant Chain, development and server costs, and gas fees on the Ethereum main chain, but at no point will be less than 80% of the license fees.
All the eQUAD purchased from the open market will be deposited in the Ecosystem Development Fund, earmarked for financing the advancement of the project. These tokens will be effectively locked and taken out of circulation until the community decides which initiatives will further accelerate the growth of the eQUAD ecosystem. These may include grants for projects using the Quadrant Chain, events sponsorship, marketing campaigns, etc. The community members will have final say in how eQUAD will be allocated. Expect details about the Ecosystem Development Fund later in 2021.
In the first three weeks of January, 1,114,585 eQUAD had been acquired from the open market for equivalent of the licensing fee revenue of August 2020. Our goal is to reconcile the licensing fees and the token purchases on a monthly basis. The exact timing and size of these purchases depend on factors including total licensing fees collecting, Ethereum network congestion and therefore gas prices, etc.
Consent Management Platform: Gas Fees and Staking
Consent management is the process of tracking user opt-in and opt-out when it comes to data processing. It is becoming critical for businesses as privacy regulations like GDPR and CCPA transform the data monetization industry.
Realizing this market need, early last year we started working on “Project Cape Canaveral,” a consent management smart contract suite capable of recording and tracking user consent on-chain. We expect it to reach the beta testing phase later in January and go into production in February.
Utilizing these smart contracts, Quadrant Global is launching the world’s first blockchain-based consent management platform, QCMP. It is a turnkey solution for mobile developers, who can simply drag-and-drop the QCMP SDK into their applications and maintain compliance with privacy laws.
These QCMP-enabled mobile apps log every consent-related interaction (new user registration, opt-in, opt-out, etc.) on the Quadrant Chain; therefore, they need gas. The Quadrant Chain uses QUAD for gas, an internal token always pegged 1:1 to eQUAD.
QCMP and any other products using the Quadrant Chain need eQUAD. Quadrant Platform users then deposit these eQUAD, which can be converted to QUAD to cover gas. This is a use case that creates utility for the token.
The actual demand for eQUAD depends on the success of QCMP and other products using Quadrant Protocol’s consent management smart contracts. It is reasonable to assume that a single mobile app user triggers around 1.05 transactions (1 for the initial registration and a bit more on average for opt-outs). For example, if QCMP gets added to 100 mobile apps with 100,000 users on average, that would trigger 10.5 million transactions. Today, a single transaction on the Quadrant Chain costs around 1.5 QUAD.
All these gas fees are to be distributed between Guardian Nodes.
Guardian Nodes execute the consent management smart contract calls by maintaining the Quadrant Chain, and they are compensated with 100 percent of the gas fees. However, to ensure the stability of the network and prevent malicious behaviour, Guardian Nodes also need to lock a significant amount of eQUAD. This effectively creates a staking mechanism, depending on the utilization of the smart contracts.
The Quadrant Chain is a syndicated Proof-of-Authority instance of Ethereum. Security of these nodes is paramount, and running them require significant technical skills, network infrastructure, and hardware investment.
Therefore, we will reach out to industry players, large exchanges, and staking-as-a-service providers to set up and maintain the Guardian Nodes. One option we are looking into is that people holding eQUAD can stake through these entities.
We expect the consent management smart contract revenue stream to start in April, with the first Guardian Nodes coming online later in Q2.
Geolancer: User-Generated Data Revenue Stream
With the rise of entirely new business models like ride-sharing and food delivery on a scale never seen before, accurate and up-to-date Points-Of-Interest (POI) data is in high demand.
We have ambitious plans for 2021 to tap into this market as a data provider with a new mobile app, Geolancer, which we are ready to launch in a few weeks. With the app, users (Geolancers) can earn eQUAD by simply walking around in their cities and adding and verifying POIs like restaurants, convenience stores, and more.
Selling POI-as-a-service, we will use half of the revenue to finance application development and operations and use the other half to purchase eQUAD on the open market and distribute it to the Geolancers as rewards.
While adding Points-of-Interest can be done by any user, the right to verify POIs, which comes with a higher reward, requires Geolancers to lock some of these eQUAD in the app.
We expect the Geolancer revenue stream to start in April.
A Recap: eQUAD’s Token Supply
As the use cases described above represent a significant change in our token model, it is important to discuss eQUAD’s token supply.
At the ICO, Quadrant Platform minted 1 billion eQUAD, and ~524 million of these tokens are currently in circulation. The rest is locked in several addresses as company reserve (~200 million), network and partner incentives (~100 million), unsold tokens from the public sale (~90 million), and team and advisor allocation (~86 million). The current allocations with always up-to-date numbers can be tracked on CoinGecko.
The majority of the ~476 million non-circulating tokens remain locked for the foreseeable future. Parts of the network and partner allocation (~100 million) may enter into circulation, however, these tokens can only be used to incentivize exchanges and other players (Big Data industry bodies, universities, etc.) setting up Guardian Nodes.
Summary
The team at Quadrant Protocol comes from a variety of backgrounds, including successful startups and large multinational companies. Quadrant is not our first venture. We’ve learned that only a laser-focused product approach can create a sustainable business, and we feel confident about our upcoming launches.
We are also confident that we’ve found a token model that is unique amongst enterprise-focused projects, creating true market demand for eQUAD as a utility token.
2021 will be an exceptional year both in the blockchain and Big Data industries, and we are thrilled to be at the forefront of it.
