Test Rewards Design

Overview

Participants in the Test Network conducting tests are entitled to both financial and non-financial incentives. This section elucidates the ways in which users can earn financial rewards in the form of QXT tokens.

Rewards pools

Two main reward categories exist: standard testing and custom testing. Each category is funded separately, and while the beneficiaries might overlap, they are not identical. Custom testing reward recipients constitute a subset of the larger group of standard testing reward recipients. There is no reward pool for airdrops as their distribution to Test Network participants aligns with Qualoo's marketing activities and roadmap.

Standard testing rewards pool

The standard testing rewards pool receives allocations from two sources: the ecosystem rewards allocation and client revenue accrued from standard products. Initially, the ecosystem rewards allocation predominantly fuels this pool, but client revenue will take precedence as demand escalates over time.

Ecosystem rewards allocation

The release of the ecosystem rewards allocation is steered by two factors:

• Baseline release: This is based on a simple exponential decay model with a three year half-life.

• Scaling factor: This factor, which takes the ecosystem's growth into account, is applied on top of the baseline.

The scaling factor adjusts rewards downward initially when the number of network participants is low. As the ecosystem expands, the release schedule factoring in the scaling factor converges to the baseline release schedule.

Client revenue (Standard Products)

Client revenue paid to Qualoo is employed to fund ecosystem rewards, influenced by multiple underlying mechanisms:

• Client cashflow: Specifically it is client payment flows received by Qualoo within a period of time (e.g. month) that drive this portion of rewards

• Rewards Replenishment: Upon receiving payment from clients, a predetermined percentage of revenues are redistributed into the ecosystem. This percentage can never be lower than 10% but can be adjusted upwards.

• Secondary Market Token Purchase: This shared revenue is then used to buy tokens on the secondary market, which are allocated to various ecosystem benefits:

  • Staking Rewards: Some tokens are set aside for staking rewards (approximately 80%)

  • Token Rewards: These tokens contribute to the Standard testing rewards pool.

Custom testing rewards pool

The custom testing rewards pool is exclusively financed by the revenue clients provide for custom tests. This pool is not singular; it consists of several sub-pools, each differentiated based on the respective custom tests.

Here, the Network Allocation Factor plays a role, wherein a specified portion of the revenue is shared with the Test Network participants involved in those tests. This allocated revenue is used to purchase QXT tokens on the secondary market, which are then added to the Custom testing rewards pool.

Distribution of rewards to network participants

Standard testing rewards

On a regular basis, rewards are made open for network participants to claim. The guiding principle is that participants should be compensated based on the value they contribute to the network. Therefore, several factors influence individual allocations for standard testing rewards:

• Location: High-priority and underserved regions receive greater rewards.

• Test Node Type: Fixed Test Nodes receive larger rewards than Mobile Test Nodes.

• Data Submissions: Users consistently submitting data more frequently earn more rewards.

• Connectivity Test Types Performed: More challenging tests (e.g., bandwidth) are given higher rewards.

• Ecosystem Participation: Active participants in the ecosystem (e.g., long-term stakers) receive enhanced rewards.

Each month, each Test Node is given a performance score reflecting its contribution and offered guidance for future improvements. Users who fail to meet a minimum participation threshold will not be eligible for token rewards (e.g., a user whose Test Node submits only one set of test results in a month). Participants with high performance scores have an added advantage that they have a higher likelihood to be chosen for custom testing rewards.

Custom testing rewards

Fewer factors are taken into account when allocating tokens for custom testing. Rewards are mainly distributed based on Test Node type, the number of data submissions, and the types of connectivity tests performed.

Token rewards prior to token generation event (TGE)

Test Network participants can earn rewards prior to the TGE. In this case, they receive interim QXT tokens (QXTi), which can be used to mint QXT on a 1:1 ratio after the TGE.