Economic Model

The FACT token lies at the core of Orcfax's economic model. To access Orcfax feeds, consumers (e.g. dApps, smart contracts) must use $FACT for payment. While consumers can also use ADA, these payments are exchanged for FACT tokens, creating a positive feedback loop that boosts demand for the FACT token.

Since consumers pay for on-chain publications, an increase in consumers leads to more publications, driving up the demand for the FACT token. The generated $FACT payments are distributed to entities crucial for network operation and security: Orcfax Validators and the Orcfax network.

Initially, with a relatively low number of consumers and publications after the decentralized network launches on mainnet, validators and the Orcfax network will receive compensation through the 'Validator Rewards Allocation'. This allocation, constituting 50% of the total FACT token supply, rewards Validators and the Orcfax Network. The amount of FACT tokens per publication from this allocation will decrease over time. As more consumers start using Orcfax oracle feeds, the increasing FACT payments from these customers will compensate for the reduced emission from the Validator Rewards Allocation, and will eventually replace them completely.

Though other FACT holders aren't involved in operating and securing the initial version of the validator network (V1), the community has decided to allocate a small portion of FACT rewards to be used as rewards for FACT holders willing to lock their tokens. The estimated APY for doing this is 3-8%. These rewards will partly come from the Validator Rewards Allocation and partly from the FACT fees paid by consumers.

Orcfax intends to transition to a delegated model (V2), allowing all FACT holders to delegate their tokens to their chosen Validator, enhancing network security and getting rewarded for it.