# $NONCE Tokenomics

### Overview

NONCE serves as the protocol's universal proof of computing power, with its issuance and distribution strictly pegged to the actual mining contributions of each Agere. The entire mechanism is structured in two layers:

* Issuance Layer: This determines the amount of NONCE that each Agere system can generate within a settlement period, with the total supply linked to the value of the output.
* Distribution Layer: The NONCE produced by a system is then allocated to participants in proportion to their contributed shares, ensuring fairness and transparency.

Through this dual-layer design, NONCE both accurately reflects the value of computing power output and ensures equitable distribution to every provider.

### Issurance Logic

For a given Agere system $$Agere\_i$$, the total supply of NONCE for the system during a settlement period is:

$$
NONCE\_{i} = R \times K\_{i} \times \sum\_{j} D\_{i}^{j} \times Shares\_{i}^{j}
$$

The parameters are defined as follows:

* $$R$$: The Inflation Rate Control Factor, which is used to regulate the long-term issuance pace of NONCE. This value is consistent across all Agere systems.
* $$K\_i$$: The Agere Adjustment Coefficient, which compensates for discrepancies in the value of computing power across different algorithms and/or hardware.
* $$D^{j}\_{i}$$: Represents the amount of work corresponding to a single Share submitted by miner *j*.
* $$Shares\_{i}^{j}$$: The total number of valid Shares submitted by all miners (*j*) in the system during the given settlement period.

{% hint style="success" %}
To use Bitcoin as an example, where calculations are based on the network-wide difficulty (D), a single Share effectively represents $$D \times 2^{32}$$ hash attempts. Consequently, the expression "$$D^{j}\_{i} \times Shares\_i^{j}$$" serves as a precise quantification of the actual hash power contributed.
{% endhint %}

This formula ensures that the total NONCE supply is anchored to the actual hash power output, while maintaining value comparability across different algorithms.

### Distribution Logic

Although the total issuance of NONCE is determined by the aforementioned formula, its distribution among miners is based on their share of actual work contributed (Shares).

When a block is mined, the total NONCE amount corresponding to that block, $$NONCE\_{i}$$, will be distributed as follows:

$$
NONCE\_{j} = NONCE\_{i} \times \frac{D\_{i}^{j} \times Shares\_{i}^{j}}{ \sum\_{j} D\_{i}^{j} \times Shares\_{i}^{j}}
$$

### Characteristics of the Distribution Mechanism

* **Smoothed Incentives**

The NONCE that miners receive is directly proportional to their long-term contributed computing power, rather than their short-term success in finding a block. This design effectively eliminates the "luck factor."

* **Decentralized Trust**

Miners can independently calculate the amount of NONCE they are due based on the proportion of Shares they have submitted. This removes the need to rely on unilateral reports from a central scoring node, thereby reducing trust overhead.

* **Incentive Transparency**

The records of all Shares and the rules for distribution are public and transparent, allowing anyone to verify the allocation results.

### Complete Process Example

* Issuance Layer

  Based on the cyclical output and the network-wide difficulty, the Monroe Agere system calculates a total issuance of 30,000 NONCE.
* Distribution Layer

  Within this cycle, Miner A submitted 10,000 shares, and Miner B submitted 20,000 shares, for a total of 30,000 shares.
* Reward Calculation
  * Miner A receives: $$30,000 \times \frac{10,000}{30,000} = 10,000$$ NONCE
  * Miner B receives: $$30,000 \times \frac{20,000}{30,000} = 20,000$$ NONCE
* Outcome

  The rewards correspond precisely to the actual hashrate contributed, ensuring fairness.

### Design Advantages

* Reflects True Output: The total supply of NONCE is anchored to the network's actual output and difficulty, preventing artificial inflation.
* Fair Hashrate Allocation: Rewards are strictly proportional to the hashrate contributed, eliminating any potential bias from the mining pool.
* Decentralized Verification: Miners can independently verify their rewards without excessive reliance on trust in the node.
* Adaptable to Multiple Algorithms: The system supports a unified valuation of hashrate across different algorithms and hardware through the use of the $$K\_{i}$$ coefficient.

### Exchange and Price Anchoring

Upon the completion of NONCE issuance and distribution, the system injects the target cryptocurrency produced during the same period into a single-sided liquidity pool to establish an exchange relationship between the two.

* **Price Anchoring Mechanism**&#x20;

&#x20;       Within a single cycle:

$$
Price\_{i} = \frac{M\_{i}}{NONCE\_{i}}
$$

&#x20;       Where:

1. $$Mi​$$ represents the quantity of the target cryptocurrency produced in that cycle.
2. $$NONCEi​$$ represents the total amount of NONCE issued for that cycle.

Therefore, the price relationship between the cryptocurrency and NONCE is determined by the system's actual output ratio, protecting it from external manipulation.

* **Liquidity Injection**

  At the end of each settlement cycle, the system injects the cryptocurrency and NONCE produced during that period into the single-sided pool, creating a sustainable source of liquidity.
* **Functional Roles**
  * Pricing Reference: Provides the market with a price benchmark based on actual hashrate output.
  * Instantaneous Exchange: Allows miners and users to freely exchange the cryptocurrency and NONCE within the pool, reducing exit costs.
  * Value Loop: Transforms NONCE from a "proof of hashrate" into a "proof of value," enhancing its economic significance.
