Disclaimer: Please note this article was accurate to the best of my knowledge at the time of writing. I have not been following developments or invested in Quant for a while now and 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.
This is part of a larger article which has been split into three parts: (Click on the links below to jump to the relevant section)
1. Token Value beyond Speculation
A look at EY’s formula to derive the valuation of crypto assets and discuss how value can be calculated based on fundamentals — Total Addressable Market Size / Obtainable Market Share for the Product / Service, Token Velocity, Token Supply Metrics, QNT Token Distribution.
2. Token Utility (This Section)
Details of the QNT Token Utility — Licenses, Overledger Network, Gateways, Platform Fees, Add-On Services, Users licenses, Community Treasury with Layer 2 Payment Channels, Consumption Fees, Marketplaces, Open Source Connectors, Combine any Blockchain and API based system to create new products, Multi-Chain Oracles, Gateway Staking, Signing of Transactions and more.
3. Why Quant has the potential to be an incredible long-term investment
Summary of why Quant has the potential to be an incredible long-term investment with links to twitter threads for more info as well as related articles. Topics covered include — Market Size Quant is Targeting, Benefits of interoperability compared to other platforms, Partnerships, Meetings and Discussions with Central Banks, Governments, Importance of SIA, Globally recognised Standards, Network of Networks, Building the foundation for a new Internet which is secure and inherently trustworthy, Collab with MIT, US Gov, Intel, Juniper Networks, Payment Companies and Telecoms to create Open Digital Asset Protocol, Token Velocity, Token Supply, The Team, Sustainable Business Model and a Summary.
To be able to use the platform, developers, gateway operators and enterprises have to purchase annual licences. Licenses are paid in FIAT, which the Quant Treasury then converts to the equivalent amount of QNT. This means enterprises don’t have to worry about purchasing QNT directly from exchanges as the treasury handles that for them. An Overledger Network Oracle will be providing the pricing for USD to QNT conversion.
The QNT purchased for the annual licenses are locked up in layer 2 payment channels for 12 months, thereby reducing the circulating supply and token velocity of QNT, whilst granting developers access to the system. After 12 months, the license expires and the locked QNT is moved to the QNT Treasury. To continue to be able to access the system the developer must renew their license, repeating the process, resulting in QNT being locked up for a further 12 months. This creates a constant yearly demand for QNT and as the platform grows exponentially, so too will the number of licenses required to be purchased each year.
Quant Overledger is an Enterprise DLT operating system, that connects to any DLT and Application Programming Interface (API) based systems providing scalable interoperability. It exposes their combined functionality through a single API and allows coordinated transactions and business processes to happen across all the connected DLTs and API based systems.
In order to leverage all their DLTs assets together, organisations can license and run Overledger for internal use and deploy it on-prem or in their own cloud instance. A single API for application development provides all the functionality of all the DLTs they have deployed, with Multi-chain Smart Contracts extending current DLT Smart Contract functionality across all the connected DLTs.
Developers will be able 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. Further information about the licenses can be found here.
Overledger Network Enterprise License
Overledger Network for Enterprise also allows organisations with an appropriate business model and controls to make its own in-house DLT assets available to partners, group organisations and third-party developers, and make revenue from the use of those assets in a secure trusted ecosystem of the Overledger Network.
Any number of organisations running Overledger can connect and do business across their DLTs by connecting their Overledger Gateways, either privately or through the Overledger Network for Enterprise, to create trusted, private business platform across and between their industries. The Overledger Network ecosystem can connect to all the DLTs, globally, that organisations need to do business, and present them in a single API, with a vibrant marketplace of applications and with the simplicity and ease of use of today’s Internet — with the trust, privacy and security that only distributed ledger technology can provide.
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
Overledger Network Gateway Operator License
Enterprises wishing to offer others access to their in-house DLT functionality or data, whether partners or on the open market, Overledger Gateways are the solution. Overledger Gateways connect public or private DLTs to the Overledger Network, making their assets available (with full control, at a price you set) to applications, both in-house or on the marketplace. With Overledger Gateways, customers can also connect new public DLTs to Overledger Network, or offer connectivity to existing public DLTs, and gain transactional revenues
Community members can also run gateways to earn a percentage of transactions that pass through their Gateway to resources they make available. If you already host blockchain nodes and participate in different networks, you can complement your node infrastructure with Overledger Network Gateways and also earn QNT transaction fees on top of your blockchain node rewards and earnings.
Through open source connectors (explained later in the article) developers and operators will be able to add any type of data sources and resources to their gateway connector and advertise them to the rest of the network. By having unique data sources, resources on the Overledger Network, all requests of that resource will be linked directly to your Gateway to be the designated Gateway for that particular service.
In addition to the license fee and developer license approach, enterprises also have to pay a platform fee calculated as a percentage of the license fee in QNT. QNT will be obtained and managed through the Treasury by Quant Network on behalf of the client at a given day’s rate.
Quant will be releasing enterprise add-on services which provide additional features and services which can also be consumed as middleware. These will be released with updates to Overledger for Enterprise to utilise.
End Users will also need to hold QNT to be able to run mdApps 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)
The community treasury is a Multi-Chain Decentralised Application (MDAPP) operating in a trustless manner with the use of Layer 2 unidirectional payment channels. This enables scalability of payments for transaction fees in QNT, with the vast majority of transactions being performed off-chain instantly, with only minimal transactions being done on-chain such as the opening and closing of channels and random reconciliations). This means despite QNT being an ERC20 token, it doesn’t matter about Ethereum’s low tps or high ETH fees.
The community treasury’s role is to handle QNT payments ﬂowing from users to the gateways in such a way as to disincentivise faulty behaviour from any user or gateway, and to do so in a manner where it can be held accountable to any observer.
Each payment channel created will hold a certain amount of QNT funded by the creator of the channel and the channel is set to expire after a declared time period after which all unclaimed QNT can be reclaimed by the channel creator. The creator of the channel can increase the amount of QNT and adjust the timeout period for the channel. The receiver in the channel can claim a certain amount of QNT from the channel when certain conditions are met such as provide proof they have received an off-chain transaction sent to them by the creator. You can read more about the community treasury here, here and here.
Consumption fees are paid for usage of Overledger as well as to gateways for performing functions as part of Overledger Network. As QNT is on the Ethereum blockchain, the community treasury uses uni-directional payment channels to vastly increase transaction throughput as well as minimising transaction fee cost.
The payment channels require a lockup of QNT in order to be used. The more QNT locked up and the longer for, the cheaper QNT transaction will be as more transactions are sent off chain. Thus, reducing the token velocity compared to other platforms used for transaction fees and that longer and bigger QNT lockups would be beneficial for the QNT market price.
Enterprises and Developers will need to pay for reads and writes to Overledger. Developers will need to make payment in QNT based on a FIAT value whilst enterprises will pay in FIAT which then gets converted to QNT through the treasury. As enterprises will have larger volumes of usage, there will be multiple payment options for:
- pay in arrears
- pay in advance (pre-pay)
- unlimited usage
- number of users
The community treasury allows developers to pay gateway owners QNT to use their resources. Each developer has a uni-directional payment channel open to the community treasury, the community treasury has a uni-directional payment channel open to each Gateway, and the community treasury is responsible for routing payments between the developer and gateway channels.
A gateway will earn a fee in QNT for every function request correctly processed before the response timeout limit. These fees will accumulate in a Treasury to Gateway payment channel, the total of which can be claimed whenever required.
Users will each need to deposit an amount of QNT that will be used to pay fees to gateways for processing functions. This deposit will be used to fund a payment channel between the user and the community treasury. Any fees that haven’t been spent when the channel times out / is closed will be returned to the user.
The user also has to deposit a small amount of QNT to cover the cost of any penalties for raising incorrect disputes. This dispute deposit is not expected to be large but is used to disincentivise a user from raising many unnecessary disputes and is returned if no unnecessary disputes are raised.
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 Decentralised Applications (MDApps).
Quant Network will be giving Developers the choice of using the best business model for their Multi-chain Decentralised Apps, 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 Multi-chain Dapp. But they can pay to get access to additional sets of features.
- Paid Model. In this model, users pay once to download the mdApp 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 mdApp.
- In-App Model. In this model, users are able to download the mdApp 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.
Overledger Network Marketplace
The Overledger Network Marketplace is an ecosystem where data holders and service providers, can advertise and sell services, data, APIs and any other off-chain or on-chain integration or resource you can connect to your gateways for the ecosystem to consume. Quant are building the Marketplace directory and front-end to start listing services. The Gateway’s service or data is then published to the rest of the network to build applications (mdApps) with and for users to consume and use.
You, as the data owner and gateway operator, set the price and the rules for the use of the data or service. You can set the transaction fee in QNT for each service, transaction, or event for consumers to buy from you in QNT. This payment of your service or data is managed through the payment channels in the Treasury where you are paid directly to your wallet through the Treasury as the intermediary between buyer and seller. The Treasury facilitates all the transactions between parties and takes a percentage of the transaction as fees.
Members of the Overledger Network ecosystem, will be able to buy and consume services, and data with payments handled by the Overledger Network Community Treasury, further increasing the demand for QNT, and locking more in payment channels.
Open Source Connectors
Quant will be releasing open source connectors so that developers can connect any blockchain or API to Overledger Network and be part of the Network of Networks. Based on globally recognised standards that Gilbert founded — ISO TC 307 and which 57 countries are working towards, this model can be reused to connect to distributed databases, big data providers, APIs and any type of service a gateway wants to provide.
The integration of open source connectors to the Overledger Network will provide organic ecosystem growth. The increased variety of data sources and services will lead to more complex multiple chain apps being developed, which should, in turn, drive further connectors to be developed.
Pick and Mix — Combine any blockchain and API based system to create new products
DeFi on Ethereum enabled DAPPs to easily interoperate with each other and be combined to build exciting new products. This combing of multiple projects together is exactly what Overledger has set out to achieve from the start with Multi-Chain Decentralised Applications. Rather than being restricted to combining projects within a single ecosystem like Ethereum, Overledger enables developers to utilise multiple different blockchains to tailor-make their application to take full advantage of the benefits of each of the blockchains without having to compromise on a single one, as well as integrate with any API based system (Pretty much everything has an API nowadays). Treaty contracts enable smart contracts across multiple blockchains to take this to another level.
The idea of combining apps goes far beyond just DeFi, this is what the future of all applications will be, interacting with Supply Chain, Decentralised Identities, Financial platforms, healthcare, IOT, as well as interacting with non-blockchain networks. All in a scalable interoperable way, following globally recognised standards and without imposing restrictions on the underlying blockchains or adding additional overhead / latency / bottleneck.
The Overledger Network will enable developers to select their favourite blockchains and API services and combine them to build exciting new products with scalable interoperability.
Data providers can sell their off-chain data and make it available to the entire Overledger Network ecosystem by running an Overledger Gateway. Unlike other oracle solutions, it signs the data at source with bank grade security, ensuring it hasn’t been tampered in transit, whilst enabling access to be controlled in a private and scalable way. Off-Chain aggregation by querying multiple gateways using multiple sources means value gets transferred to the data providers rather than being lost by paying extortionate gas fees to miners, enabling frequent updates for accurate price feeds rather than at infrequent time intervals.
As an example, a gateway operator decides to integrate this off-chain data for historical USD/GBP FX rates and is selling the data for 1QNT for each day’s rates. All participants of the ecosystem will be able to see the listed service and data offered to buy and consume. Overledger Network participants can see the advertised data and service, and consume it directly from the Gateway, paying the Operator the price for the data, handled by the Treasury through payment channels. Driving further demand for QNT and more locked in payment channels.
You can also run cross-chain oracles to serve the Overledger and wider DLT ecosystem by creating MDAPPs that can operate as oracles across networks aimed for enterprise, institutional and developer oracle needs.
Gateway Operators will have to lock QNT (Stake) to be able to process requests within Overledger Network. The more QNT that the operator stakes, the more requests the gateway is authorised to handle. If the gateway returns faulty data / malevolent behaviour, then the deposit gets slashed as punishment to incentivise correct behaviour.
Staking is also required for helping prioritise gateway operators when there are multiple gateways who can transact the same resources. The gateways that have staked more QNT with the Treasury, will be ranked in terms of priority by the algorithm to determine who will receive the transaction request.
As volumes of QNT are going to be locked up, Quant are exploring options with new partners and looking at introducing QNT Staking for Gateway operators to opt-in to a staking service, facilitated by the Treasury to make better use of stationary QNT, where your locked-up license will be able to earn staking rewards facilitated by a regulated 3rd party. This will lead to more QNT being locked up and taken out of circulating supply and further reducing token velocity.
Signing of Transactions
To enforce confidentiality and integrity, QNT are used to validate with the option to sign and encrypt every transaction that flows through Overledger. Every enterprise client, developer, user, and application (mdApp) validates each transaction using their QNT linked to their mdAppID and bpiKey. — No transactions can flow through Overledger without being securely validated by QNT. — No 3rd party can view or tamper with transactions and their contents, including Quant when signed and encrypted.
Plus, even more utility is being planned in the near future
To Continue the article and see Why Quant has the potential to be an excellent long-term investment see this article
For additional reading I strongly recommend David W’s articles
A deeper look into the Quant Network Utility Token (QNT) valuation dynamics and fundamentals
The reasons why Quant Network (QNT) will rise to the Top of the crypto sphere in the coming months
The potential of Quant Network’s technology to capture value from the structural shift in the World’s assets and machine-related data/value transfers
As well as the below articles and others under my profile.
Quant’s Token Utility Paper / Overledger Network for Community
Overledger and Overledger Network for Enterprise
The Network of Networks, Scalable Interoperability to Unleash the True Potential of Blockchain
How the Overledger Network Community Treasury powers the Network of Networks
What is a blockchain operating system and what are the benefits? Introducing Overledger from Quant Network.
Wall Street 2.0: How Blockchain will revolutionise Wall Street and a closer look at Quant Network’s Partnership with AX Trading
Large Enterprise Adoption of Blockchain is happening, enabled by Quant Network’s Overledger
As well as an 8 Part Series taking an in-depth look at Overledger starting with Part 1