You might be asking 🤨, how the challenge rewards are calculated and what they are used for. This is one of the questions that our community and customers are constantly requesting us to explain, so we decided to collect all the knowledge and explain it from a high-level point of view in this blog post.
The KAI token, as a Social Token, apart from being the community currency, was devised by us to serve as a recognition and gamification mechanism to incentivize our innovators to engage recurrently on our initiatives.
The rewards, as a TAIKAI mechanism to recognize innovators and backers for their contributions in TAIKAI public challenges, are distributed to participants at the end of each challenge using a static math algorithm using the challenge voting results as a foundation for the calculation.
Before we started to devise the mechanism we identified the main requirements for a fair math algorithm:
With the premises defined above, we put in place a mechanism on TAIKAI that runs after a challenge is closed that involves 2 steps: calculation and distribution.
The calculation step is the step complex and we will try to explain it in the following sections.
At the end of each challenge, the algorithm rewards the best 10 projects or the challenge project finalists if the number of finalists is less than 10 projects. The project's rewards will be distributed in proportion to the amount of KAI received by the project and based on the final balance.
Only the KAI tokens invested on projects are used to reward the projects, so if a jury or an innovator does not use the whole balance to vote on projects, that portion of KAI is collected by TAIKAI and does not count for the rewards.
For each project is calculated the project reward assigned to it using its final balance and as a proportion of its final balance on the top awarded projects.
As it could be verified by the previous equations, the projects with more final balance will be eligible to receive more KAI awards and distribute more rewards for its backers and project members.
Let’s use an example where we have 4 projects and 3 of them are finalists.
On the table below you can find the final balances achieved at the end of the challenge:
Then we calculate the reward that is going to be distributed to the “Foofle” project members and backers.
TotalAwards = 12 000 + 23 000 + 10 000 + 2 000 = 47 000 KAI TotalRewardedProjects = 12 000 + 23 000 + 10 000 = 45 000 KAI ProjectReward(foofle) = 47 000 * ( 12000 / 45 000 ) = 12 533 KAI
With the project rewards calculated from the previous formulas, we will distribute 90% to the project members and 10% to the project backers.
After calculating each project reward, 90% of it, which we called the project innovator reward, is divided by the number of project members. This division will ensure a fair division since we don’t have at this moment enough information to measure single contributions made by each member.
Imagine that the “Foofle” project has 3 members:
RewardPerMember(foofle) = (12 533 * 0.9) / 3 = 3759 KAI
When the innovator is part of multiple top projects it will receive a reward as a sum of his innovator project rewards.
A project backer will receive rewards based on the amount of balance invested on the project as a fraction of the total invested funds on the project at the end of a challenge. This is similar to an investor’s equity in a project. If a backer represents 50% of the total votes, the backer will receive 50% of the backer rewards calculated previously.
Let’s continue to use the “foofle” project example, and list all the investors and its backed amount:
|Backer||Backed Amount (KAI)|
The reward that Alice is going to receive for being a backer on “foofle” is:
Reward(alice) = (12 533 *0.1) (6 000 / 12000) = 626 KAI
When the rewards are calculated the rewards distribution kicks in, and all the reward_backer and reward_member transactions are submitted to the blockchain updating the user’s global balances once the transaction gets confirmed on the blockchain.
A reward_member transaction is generated to transfer the funds to the user's global wallet allowing him to spend the KAI funds and feed his ranking points.
A reward_backer transaction is generated to transfer the funds to the backer’s global wallet at the same time it increases its backer and global ranking score.
As a result of all rewards assigned to the users during their participation in TAIKAI challenges, a global leaderboard is presented to showcase the best TAIKAI community heroes. Any user, to climb up the ranking ladder, is encouraged to participate frequently and create projects that seduce the juries.
In order to differentiate the contributions made by a user we decided to present to our users the following rankings:
Innovator Ranking: a standing table that displays the top 100 innovators ordered by the number of innovator rewards received.
Backer Ranking: a standing table that displays the top 100 backers ordered by the number of backer rewards received.
Global Ranking: a standing table that displays the top 100 users ordered by the number of rewards (innovator+backer) received
The Top 100 leaderboards are updated on TAIKAI after any reward is assigned to a backer or an innovator and your score is always cumulative, so you don't lose points if you spend or transfer your tokens to other users.
Still have doubts about how it works? Drop us an email at [email protected] and we clear out all the doubts you may have on the process.
Feedback is also welcome 😎