Token Distribution

The SugarBlock token, functioning under a Delegated Proof of Stake (DPoS) mechanism, will facilitate participation and work within the network. To ensure a broadly accessible start, the initial token distribution will emulate other DPoS systems, with a focus on a widely distributed genesis.

• Initial Allocation: At the network's inception, tokens will be allocated to the community, allowing them to stake as Transcoder or Delegator. Some tokens will go to prior contributors of the protocol, and others will be reserved for the ongoing development of the project.

• Ongoing Token Issuance: Post-launch, with new tokens being utilised at each round based on the 'EmissionRate' relative to the existing token supply. This inflation is designed to encourage active participation, as participants earn tokens proportional to their stake, thus protecting them from dilution. However, those not actively participating by staking their tokens will see their share of the network decrease over time due to this inflation.

• Emission Rate Dynamics: The 'EmissionRate' will be dynamically adjusted to target a 'ParticipationRate', aiming for a percentage of the total token supply to be actively bonded. For instance, if the target participation is 50%, mechanisms will encourage half of the tokens to be staked. Adjustments in the inflation rate will influence whether holders prefer to stake or retain liquidity, aiming to reach an economic equilibrium.

Governance:

Governance in the SugarBlock protocol plays a crucial role in three primary areas:

• Fund Management: It will oversee the reallocation or burning of funds that were penalized from nodes misbehaving within the network.

• Network Optimization: Governance will adjust key network parameters to maintain a healthy ecosystem that remains valuable for content broadcasters.

• Protocol Updates: It will facilitate the decentralized implementation of proposed protocol enhancements.

Parameters like 'UnbondingPeriod', 'RoundLength', 'ParticipationRate', and 'VerificationRate' are adjustable through a governance process where proposals can be submitted. These proposals are voted on by transcoders with voting power proportional to their delegated stake, ensuring that changes reflect the network's consensus. Detailed governance specifications are reserved for another document.