Disclaimer: Please note this article was accurate to the best of my knowledge at the time of writing. This information should not be used as a reference source to make any investment decisions (as is the case with all my articles). The Quant team have removed multiple references surrounding tokenomics of the QNT token, including the original tokenomics paper, the Overledger Network for community paper (which you can find an copy on a 3rd party side here ) and archive of removal of medium articles written by Quant surrounding tokenomics can be found here). For clarification around any topics you should seek clarification from other sources rather than rely on any information found in this article.
An updated, more in-depth version of this article can be seen below:
This is Part Seven in the series looking at Quant Network, where we look at Quant’s Ecosystem they want to build around Overledger, the QNT token including its utility, and Quant Network’s treasury which will be their own payment processor to convert FIAT to QNT.
Part one can be found here and a link to the other parts can be found at the bottom of this article.
Quant’s vision is to build an ecosystem around Overledger, allowing for developers and Enterprise to innovate, create value and build game-changing multi-chain applications for users and their customers. They plan to foster innovation by directly incentivising developers with an App Store model akin to Apple and Google stores but instead for Blockchain enabled Multi chain applications (MApps).
The success of the App store model is clear to see, the latest estimates say there are 12 million mobile app developers worldwide and the total number of developers is expected to reach 14 million by 2020. With around 6 million apps currently listed on the App stores and with a total number of mobile app downloads in 2017 being around 197 billion. The number of smartphone users is forecast to grow to around 2.5 billion in 2019, with just over 36 percent of the world’s population is projected to use a smartphone by 2018.
Quant Network will be giving Developers the choice of using the best business model for their MApp, in line with the market’s expectations via any of the following four revenue models:
- Freemium Model. In this model, users don’t pay to download or use the MApp. But they can pay to get access to additional sets of features.
- Paid Model. In this model, users pay once to download the MApp and use all of its functionality. No additional charges will apply.
- Subscription Model. In this model, users pay for a (daily/monthly/annual) subscription to use the MApp.
- In-App Model. In this model, users are able to download the MApp for free (or at a cost) but are charged when they use in-app functionality. Developers independently decide how much to charge users for their apps.
The QNT token is regulated by FINMA as a utility token which are intended to provide digital access to an application or service. Access to the Overledger Operating System is only possible through the use of QUANT (QNT) tokens, i.e. QNT tokens must be provided to Quant Network in exchange for an annual licence or platform fee. The price of the access will be a fixed FIAT amount and the number of tokens needed will vary depending on the price of the token at the time of purchase.
Every user who wants to use a MApp or a Developer or an Enterprise who wants to develop MApps needs to hold QNT tokens. Without QNT you can’t connect to Overledger and MApps won’t run. It’s the same as a license key people have to hold to access the ecosystem and run applications. Same as Apple with Apple ID — which is linked to keys on your Apple device to access the App Store and run iOS apps. Or Office365 and how they license their products.
The wallet storing QNT is your identity, the private key is your password and with the license fee you are assigned a BPI key. This key is used to access the Overledger Ecosystem for your MApps and users etc.
When you buy a license, the tokens are taken out of circulation. They have an approach to lock them into a smart contract until the license expires, then it needs to be renewed. The other approach is to take them out of circulation and move them into the Treasury. Licenses then can be renewed each year.
The full details are being finalised and will be released with the treasury this later this year.
The launch of the Quant Treasury will automate and facilitate the licensing, consumption and usage of QNT for developers, enterprise and users. It will allow Enterprises / Developers and users to purchase licenses in FIAT currency which then gets converted to QNT tokens. This means Enterprises don’t have to deal with buying directly from Exchanges and can purchase them in a way that is compliant.
The token Utility is split between the Enterprise and non-enterprise version of Overledger and the utility of the QNT token can be seen below:
Enterprises will need to obtain an annual license to develop applications on Overledger. Enterprise license fees will be determined on the basis of:
- Number of Users
- Number of Employees
- Types and number of applications (internal. external, native applications or web-based etc)
- Volume of Overledger transactions
In addition to the license fee, a platform fee calculated as a percentage of the license fee in QNT will be payable
Payments for read and write to Overledger will need to be made in QNT based on a FIAT value, for example if the read and write equate to $10/month, the equivalent will be paid to the Quant Treasury which will also handle the conversion of FIAT to QNT.
As Enterprises will have larger volumes of usage, the following payment options will be available:
- pay as you go
- pay in arrears
- pay in advance (pre-pay)
- unlimited usage
- number of users
Quant Network will be releasing enterprise add on services which provide additional features which can also be consumed as middleware. These will be released with updates to Overledger for Enterprise to utilise.
Developers will need to obtain an annual license to develop applications on Overledger through the purchase of QNT tokens equivalent to a fixed FIAT amount. The developer wallet will in turn be authorised to access the platform for the length of the license period (i.e. annual) as well as develop, sign and publish applications. This is like how developers have to pay $99 to be able to developer for Apple IOS.
Payments for read and write to Overledger will also need to be made in QNT based on a FIAT value, for example if the monthly read and write equate to $10 a month, the equivalent will be paid to the Quant treasury using QNT, however the price will be variable and adjusted to market supply and demand.
Additional features and services can also be consumed as middleware. These features will be released with updates to Overledger as part of the roadmap.
Developers may choose to monetise their applications and will have the options to use the treasury as a payment processor to charge a subscription, a recurring price, a one off price or an in-app fee. This can be charged in FIAT or other digital currencies such as QNT.
End Users will also need to hold QNT to be able to run mApps and access the Overledger ecosystem. The license key will expire annually and must be renewed using only QNT. This is a similar approach to the Apple App store. It’s a marketplace, where you pay Apple £1000 for an iphone which has the keys in the device to access the app store and run and use ios apps. Rather than purchase the phone the license is acquired to access the ecosystem. (Note please don’t take this as each user needs to spend £1000 a year to access the platform as that is not the case, it is just an example showing how Apple charge for access to the platform by selling the phone with the keys)
In preparation to scale their technology they are expanding Overledger gateways to access multiple permissioned and permissionless blockchain networks. Overledger gateways are hosted as part of their multi-cloud strategy to optimise network latency providing enterprises, developers and users choice to use the closest gateway. Gateways are hosted by Quant Network and partners but also by Enterprises within their private/public cloud instances or corporate networks.
To help encourage the expansion of their gateway networks, they are looking to provide users the opportunity to host their own public Overledger gateways to drive volume and applications to multiple permissionless blockchains. To help facilitate, they are exploring the use of dual utility tokenomics in order to earn revenue for the amount of volume used in hosted gateways.
QNT is an ERC20 token on the Ethereum Blockchain. Whilst it is on the Ethereum blockchain, it is blockchain agnostic so can easily swap to any other blockchain. Ethereum was chosen due to it being the mostly used blockchain with well established integration for wallets and Exchanges.
The team completed a burn of 9,545,765.950989192 QNT due to the ICO not selling out due to difficult conditions at the time. The details of which can be located here as well as detailing why the amount shows different on Etherscan (although there is also a notice on Etherscan as well to inform them of the new total)
The total supply of QNT is 14,612,493 (rounded to the nearest QNT token). This is split into the following:
- 9,964,259 — Amount sold to the public during the ICO
- 2,649,493 — Is for the company reserve and used for Research and Development, Facilities, Infrastructure, Legal / IP, Marketing, Exchanges
- 1,347,988 — is for the company founders
- 650,753 — is for the company advisors
Unlike many other tokens there are no new QNT tokens minted and the supply is fixed at 14,612,493. Some blockchains such as Cosmos for example have the ATOM token which is used for staking on the Cosmos hub which is designed to be hyper inflationary in that the Total supply increases by a minimum of 7% and a maximum of 20% each year to incentivise people to stake their tokens.
Many don’t consider inflation when looking at the total supply (many don’t even look at the total supply and just look at the circulating supply — taking Ripple as an example it has 41 Billion circulating supply out of its 100 Billion total supply, meaning an additional 59 Billion will be entering the market.)
To show this on a graph this is what 20% inflation each year would look like for the total supply of the Cosmos ATOM token:
This next one shows what would happen to the market cap if the price of ATOM stayed at £5 for 10 years. (Market cap increasing from 1 Billion to over 6 Billion with no increase in the price per ATOM
Or another way to look at it is if the Market cap stayed the same at 1 Billion over 10 years the value of ATOM would drop from £4.23 to £0.68 (-83.92%).
Fiat currency also has its own inflation of around 3% a year so if you also take that into account over 10 years the value of ATOM would drop from £4.23 to £0.50 (-88.18%)
Quant total Supply will stay the same, but due to increase demand and tokens being locked in when purchased, the circulating supply will decrease.
Example of how QNT value may rise
To show how QNT may increase in value, let’s take a simplified example. Please note that the figures used here are just for an example and do not reflect what the actual license costs will be.
To keep it simple i will be making the following assumptions:
- I will only be looking at part of value for QNT — specifically just the Enterprise license fees. For simplicity i am ignoring all the other uses for QNT — platform fees, Developer fees, user fees, Consumption, purchase of Mapps etc.
- Enterprise licenses are only based on number of employees which each cost £100 a year per employee.
- All Enterprises purchase at the same time for the year (normally Enterprises would join at different times throughout the year)
- The number of employees licensed is for all the enterprises involved. So say 100 Enterprises join the 1st year each having 1000 employees to make it 100,000 total employees that would need to be licensed across all for the 1st year. Considering Quant have been in talks with numerous companies which alone have more than 100,000 employees but, in this example, I am just using 100,000 across all companies that join for the year.
- The number of additional employees licensed increases by 50% each year as the platform grows
- The price is determined by assuming that 5,000,000 tokens are taken out of circulation (This is a lot — Over half of the existing supply and over a third of the total supply)
So assuming the price of QNT is £2 then to purchase £10,000,000 worth of QNT would require 5,000,000 QNT to be purchased. This is locked in for 12 months and taken out of the circulating supply (in this case reducing the circulating supply by half to 4,777,256 QNT
Year 2 comes around and an additional 150,000 employees working for various enterprises are licensed and the existing 100,000 employees renew their license meaning that the total FIAT value of licenses needed to be purchased is £25,000,000. The price is determined by Demand and Supply, so assuming that 5,000,000 tokens taken out of circulating supply is how this is achieved the price would need to rise to £5 (25,000,000/5,000,000)
As the platform grows, more and more FIAT value of licenses is required due to the increased number of employees that need to be licensed across all the enterprises. Increase in demand combined with circulating supply decreasing due to being locked in will result in a price increase of QNT.
Please note this is just taking into account only the enterprise license fees, and ignoring the additional tokens that would be required to cover the platform fees, Developer fees, user fees, Consumption, purchase of Mapps etc.
The license fee is based on a fixed FIAT value of £100 per employee in this example, that remains the same and is not affected by the price of QNT, whether its £2 or £2,000,000 per QNT. The equivalent QNT tokens would be purchased based on the FIAT value and QNT has 18 decimal places.
By having a fixed FIAT value to purchase licenses makes it easier for Enterprises, Developers and Users to plan costs in advance without having to worry about the volatility of the cryptocurrency price. The treasury also means that Enterprises don’t need to have to purchase QNT at exchanges and can just pay in FIAT to the Treasury which will then purchase the equivalent QNT on their behalf automatically.
Quant Token is listed on the following official exchanges:
In Part Eight I will be looking at how Quant Network is providing all the tools necessary to enable Enterprise Mass adoption of blockchain technologies.
Part One — Blockchain Fundamentals
Part Two — The Layers Of Overledger
Part Three — Verification and the Tokenisation of data
Part Four — Features Overledger provides to MAPPs
Part Five — Creating the Standards for Interoperability
Part Six — The Team behind Overledger and Partners
Part Seven — The QNT Token (This Article)
Part Eight — Enabling Enterprise Mass Adoption