SORA Validator Reward Token: $VAL

SORA

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SORA

6 min readNov 27, 2020

TL;DR

VAL tokens are a new token in the SORA economy that are used to reward validators
The total supply of VAL will start at 100 million and go down over time, because VAL will be burned with every transaction on the SORA network
VAL token holders can group together in DAO structures and vote to allocate liquidity on Polkaswap; the liquidity they allocate comes from half the margin in the SORA token bonding curve

VAL・𒋾・波流

VAL is the validator reward token for the SORA Network, used to reward those that stake XOR as part of the Nominated Proof-of-Stake consensus algorithm. VAL is a deflationary token that gets burned with each transaction on the SORA network. A portion of the burned tokens is then re-minted and distributed to validators and stake nominators, in accordance with the reward rules.

As XOR is becoming a token that has forward FX-rate guidance, a new token will be added to the ecosystem that captures value related to ecosystem growth and use. This token is called VAL and is a validator and staking reward token that incentivizes validators to join the SORA network, as well as nominators to nominate the validators with their XOR. Economically, this also adds the ability to determine long and short sentiments, as the market and price trends for VAL can reveal the preferences of market participants.

VAL will be free-floating in price and limited in supply. With each transaction in the SORA network, a small amount of VAL will be burnt, making the limited supply of VAL deflationary in nature.

Elastic Rewards

VAL tokens will be given to validators and nominators as a reward for staking. They are also a token for those who are bullish about the use, but not the price of XOR. Unlike validator/staking reward tokens on other blockchain platforms, VAL tokens will be deflationary by nature and also will adjust elastically with the use of the SORA network:

Half of XOR used in SORA network transaction fees will be used to buy back and burn VAL tokens
Half of the margin of the SORA token bonding curve primary market will go to VAL DAOs (described below), 10% of which is used to buy back and burn VAL tokens; the remaining 90% of the XOR tokens will be voted on by the VAL DAOs to allocate to liquidity pools on Polkaswap, nominate to validators, or subsidize citizenship for VAL DAO members
New VAL tokens will be minted to reward validators and nominators for the SORA network; rewards start at 90% of VAL burned within a 24-hour period and decreases daily, down to a flatline of 35% after 5 years.
10% of the amount of VAL tokens burned within a 24-hour period will be minted every day and given to the SORA Parliament

Example: Let’s say the buyback and burn from transaction fees for a day resulted in 10,000 VAL being burned. If the daily reward is 80%, then 9,000 new VAL tokens will actually be minted, out of which 8,000 VAL will be given out proportionally across all the validators and nominators, and 1,000 VAL will be given to the SORA Parliament.

The “buyback and burn” concept is a key concept to understand. What it means is that XOR will be used to buy VAL on Polkaswap from the XOR-VAL liquidity pool. Then the bought VAL are just de-minted (burned), permanently reducing the supply.

Once a day, a percentage of the amount of VAL burned in the last 24 hours will be reminted, based on the reward amount. Because the reward amount decreases over time and is less than the amount burned, the supply of VAL will go down each day. There is also an allocation to the people who held XOR at the snapshot date (Ethereum block 12225000, Apr-12–2021 11:30:09 AM +UTC) until they receive the approximately 84 VAL per XOR held. These rewards are not available immediately and are instead vested over an indefinite period of time, likely many years. These users will receive their tokens based on how many VAL are burned every day in the SORA Network.

As shown in the diagram below, VAL Reward XOR Holders (purple area) receive 0% at launch, and the percentage increases linearly up to 55% after 5 years. The VAL token will not be deflationary until all XOR holders have entirely received their VAL.

In addition to receiving half of the SORA network transaction fees, half of the margin of the SORA token bonding curve primary market (10%) will go to VAL holders, such that 1% will be used to buy back and burn VAL from Polkaswap and 9% will be used to provide liquidity to trading pairs on Polkaswap.

Liquidity Democracy

In addition to the buyback and burn of VAL tokens, VAL token holders will also be rewarded with PSWAP tokens for providing liquidity on Polkaswap. A large part of the margin of the token bonding curve (XOR) will be given to VAL token holders to vote and decide how to use it. Because there are many VAL tokens to start with, each VAL token has the authority to allocate only a small fraction of the XOR from the token bonding curve.

To make things more interesting, VAL token holders will be able to form DAO structures to pool their voting power together and allocate XOR to liquidity pools on Polkaswap in more interesting ways. Each DAO will be able to set rules for entering/exiting the DAO as well as rules about how to reach a consensus to allocate their XOR.

The PSWAP rewards from providing liquidity will be shared with each DAO that added the liquidity, so there is an incentive to provide liquidity for trading pairs that are expected to have large transaction volumes. Additionally, all VAL holders will benefit from added liquidity to Polkaswap because more liquidity will drive more users to the SORA network.

About SORA NEO, Polkaswap, and Fearless Wallet

SORA NEO (New Economic Order) is a new economic system aimed at creating a supranational, decentralized central bank (DCB) with built-in tools for decentralized finance (DeFi). The SORA network implements a new way of parachain architecture on the Polkadot and Kusama network, with the capability to bridge external blockchains (like Ethereum) to the Polkadot ecosystem. One of the DeFi applications that will run on the SORA network is Polkaswap, a non-custodial liquidity aggregator cross-chain AMM DEX designed uniquely for the Polkadot ecosystem with boundless liquidity through one of a kind Aggregate Liquidity Technology (ALT) with the security and convenience of a DEX.

Fearless Wallet is a mobile wallet designed for the decentralized future on the Kusama and Polkadot network, with support for iOS and Android platforms. An awesome user experience, fast performance, and secure storage for your accounts. The Fearless wallet will integrate Polkaswap for easy, decentralized swaps of assets.