The RAE Token Burn and Mint Mechanism and Its Relationship With Subscriptions

One of the fundamental questions that is posed when observing cryptocurrencies is one that pertains to the inherent value of a token and how it adds value to the ecosystem it resides in. These two aren’t mutually exclusive and often possess a push-pull relationship where the state of one directly influences the state of the other.

Between aspects like tokenomics and utility, all Web3 projects are tasked with the same inevitable and, oftentimes complex, challenge — to craft a token worthy of value. When tokens can be minted without any prerequisites, it is imperative that they derive their value from other areas, and this is where concepts like token economics, utility, distribution, interoperability, governance… and so on, come into play.

But while the value aspect of tokens soaks up most of the spotlight, something just as important gets overlooked, and that is the dynamic relationship between a token’s value and the goal and purpose of the project. While the latter does influence the former, the inverse of that equation also holds true in many cases.

Rokfin and RAE Token

The RAE token plays an integral role within the RAE ecosystem. It is the payment infrastructure that not only powers subscription and collaborative features but is also designed to compensate early adopters for their contribution to the growth of the platform — which is the focal goal and vision of the project.

And that’s where the burn and mint mechanism comes into play.

On the most basic level, burning permanently removes tokens from an already-limited circulation. RAE Token’s max supply is only 34,000,000, the issuance of which is halved every 1,700 minting periods (which is around 4.5 years), starting from 10,000 tokens per period.

The combination of burning and slowing down the minting rate, in conjunction with the growth of the platform, effectively helps manifest and bring about the vision of the Rokfin platform. While that, in and of itself, is a sufficient means of reaching that goal, it is by no means the best.

There’s more to it than a mere burning mechanism.

Every mint requires a burn quota to be met in order for the minting to take place, and the burning process itself is triggered with every act of subscription. Once a user is subscribed (or renews their subscription), the subscription price is immediately converted into RAE Tokens at the current market rate and is queued to be burned.

The subscription price is measured in Fins, which are pegged to the US dollar at $1 per Fin. This is done to account for the fluctuation of the RAE Token price while keeping subscription prices stable. So, regardless of what the token price is, if a subscription is worth $10, for example, $10 worth of RAE tokens are sent to be burned. Therefore, if at the time of subscription RAE Token is worth $20, then 0.5 RAE Token is burned per subscription.

The minting timing is dynamic and is a rolling average of the previous minting blocks’ Fins per day, with a target of minting once per day based on the rolling median of the last 30 mints, allowing it to capture the full value of the RAE Ecosystem’s digital network. By doing so, the protocol ensures that each creator gets the full value proportional to their contribution regardless of how busy or slow that day is.

The algorithm responsible for enabling this process utilizes what is called the Shapley value. For the uninitiated, the Shapley value can be summed up as “the average expected marginal contribution of one player after all possible combinations have been considered.” This, as you might have guessed, is a very useful tool that helps assess the extent to which each content creator has contributed to a platform.

In the case of Rokfin, the algorithm inputs the price of the content and how well it acquires and retains customers based on their subscription and utilization behavior. The utilization behavior used for this process captures the value customers associate with content today, as well as for any content utilized in the past that positively influenced the customer to re-subscribe.

Let’s take a scenario where a creator does lengthy, documentary-style videos once a month. On other platforms where algorithms force creators to upload content frequently, such creators would fall behind those that publish quantitatively more than they do. On Rokfin, although their upload frequency is low and peak views per day begin falling down after publishing, what matters is the net effect their video had on the users. As long as this creator is causing viewers to come to the platform, subscribe, and/or interact with the content and channel, they’re entitled to the fruits of their labor.

This, as you can imagine, is a far fairer and more rewarding system than what most mainstream content platforms provide today. On the content creator side, this encourages and incentivizes creators to produce high-quality and engaging content on a consistent basis, whereas, on the user side, it encourages engagement because it directly produces results and rewards their favorite creators.

Click here to learn more about the burning and minting process.

Rokfin and RAE Token Links:

Website: https://raetoken.org/
Twitter: https://twitter.com/TheRokfin
Telegram: https://t.me/RAEToken
Discord: https://discord.com/invite/raetoken