Friday FAQs #7

7 min readJul 1, 2023


Sometimes Friday FAQs get answered on Saturdays and that’s OK.

Look! Up in the sky! Is it a security? Is it a commodity? No! It’s a token!

This past week a report commissioned by the UK government declared that digital assets (coins, NFTs, smart contracts) do not fit the common law’s two current categories of personal property.

Rather than being classified as “things in possession” or “things in action” the report suggested they are a “third thing” and will require additional expert advisory prior to formalizing regulatory frameworks.

While this does little to resolve digital assets’ conceptual quantum superposition, it’s at least a tacit admission from a Western G7 nation that blockchain offers novel value worth proper sorting out.

Live footage of Schroedinger’s Coin. The Nobel is in the mail.

So three cheers to the Brits, one for each of the property categories their government is willing to entertain.

In their honor, today we’ll share token thoughts with one long answer, one medium, and a “third thing.”

Long Answer: What is the purpose of the $PAKT token?

h/t those considering signing ourSAFT

Pakt seeks grow an ecosystem of high-value connections running on an OS co-created by high-value builders, because —

The quality of our connections determines the quality of our lives.

Unfortunately, when significant new value is created middlemen swarm like locusts. And when middlemen get their grubby paws on value they tend to extract wealth without offering superior value in return, hollowing out the engine that generated the new value in the first place until the ecosystem collapses under its own structurally unsound weight.

Pakt protects against this parasitic capture by hard-coding our incentive architecture to eliminate middlemen and funnel the value gains from their exclusion back to the builders in the form of $PAKT.

Unlike middlemen, when Fido gets his paws on your value he at least repays you by being a good boi

Pakt has three processes for getting $PAKT directly into builders’ productive hands:

  1. Build Bonuses
  2. Builder Grants
  3. Subnet Rewards

[Editor’s Note: The following is paraphrased from Pakt’s tokenomics. It gets a bit dry, unless you’re obsessive incentive architects like us, in which case, tie on a bib because here comes the gravy]

Build Bonuses

Pakt considers any party who has smart contracted real world value via Pakt’s non-custodial escrow wallets a “builder” — their collaboration strengthens Pakt’s ecosystem. As such, we seek to incentivize this behavior with Build Bonuses.

The Build bonus process is straightforward:

  1. When a smart-contract executes to release value from Pakt’s non-custodial escrow wallet, it represents a portion of all value transacted on Pakt.
  2. Every 10 minutes, all revenues earned by Pakt through platform usage fees or validation rewards are traded into decentralized partner exchanges to purchase $PAKT (for the purposes of ecosystem rewards) and $AVAX (for the purposes of growing Pakt’s validator set)
  3. A percentage of those tokens are returned to the “builders” as Build Bonuses, based on the ratio of their transaction’s weight in the total transactions over that 10 minute period across the Pakt ecosystem. The formula is as follows:

Where k is the percentage allocated from Pakt ecosystem revenues towards Build Bonus rewards.

To stimulate early adoption, this percentage will start at 100% and decrease based on Pakt ecosystem growth, but never dip beneath 34%. Thus, proportionally speaking, early adopters will earn more $PAKT Build Bonuses, but all Pakt users at any point in time who conduct valued transactions will earn $PAKT Build Bonuses.

What does this look like in practice? Consider the following scenario:

  • Jane and Bob are early adopters, one of the first 1,000 builders on Pakt
  • Jane and Bob complete a job worth $10k
  • During the 10 minute time period in which their smart contract executed, $100,000 in total smart contracts executed across all of Pakt, leading to $1500 (hypothetical) in fees funneled into the $PAKT buying mechanism
  • At the time of the sale via a partner exchange, $PAKT is $0.10
  • This results in 15,000 $PAKT purchased for Build Bonuses
  • Out of which Jane and Bob each earn 750 $PAKT = .5(10,000)/10000)*1.00*15,000]

Builder Grants

Pakt has allocated 12.5% (125,000,000 $PAKT) of its 1 billion tokens to be used for builder grants. This is equal to the tokens allocated to Pakt’s treasury, signifying Pakt’s commitment to co-creating its OS for On Chain Connection with the most elite Web3 builders from across the globe.

The emission schedule for both the Builder Grant pool and Subnet Rewards pool tap the wisdom of the Greeks, specifically Zeno’s most famous paradox: the philosopher noted that if you leapt halfway to a wall, stopped, then leapt halfway, stopped, and repeated until infinity, you would never truly reach the wall.

Poor blue fella, leaping for all eternity. Looks exhausting. Apparently good for the glutes though.

Following Zeno’s framework, both the Builder Grant Pool and the Subnet Rewards pool decrease every “month” (defined as four weeks to keep calculations tidy) by a hard-coded percentage. This will decrease the pool’s holdings over time at a decelerating rate, gradually asymptoting rather than reaching zero. Due to this simple yet powerful math, there will always be more $PAKT to be issued to Pakt’s community of builders or subnet validator/delegators.

The Builder Grant Pool releases 2.5% per month. Get it while it’s hot. Which is forever.

As is evident, the grant program is front loaded to attract builders to the Pakt ecosystem in its critical early days, but there will always be a pool of resources for the Pakt community to award to builders to attract them to build on Pakt.

It should be noted, the grants program will launch after Pakt’s ecosystem reaches one thousand (1000) active users, most likely drawn from developer communities across the globe, per our initial go to market push. This will help protect against early allocations being awarded to grant hunters incapable of executing their builds rather than true builders seeking to add lasting value to the ecosystem.

Lastly, all grants will be managed via a Pakt Fair Open Access Market.

As a result, grant recipients’ will receive lasting reviews on their profiles based on their performance.

Outright fraud will be clawed back through Pakt’s Issue Resolution system (more on this coming soon), as the “completion portion” of grants will be held in Pakt’s non-custodial escrow wallets until full satisfactory delivery of the work or expiration of schedule.

Subnet Rewards

Pakt will initially launch its “OS for On-Chain Connection” on the Avalanche C-Chain. However, as we scale, Pakt will spin up a high-throughput subnet. Otherwise C-chain activity could impact our transaction costs, dampen adoption, and open our flanks to a fork before establishing first mover advantages on behalf of the growing community.

If these bug-eyed critters are familiar to you, you know why subnets are essential.

Pakt’s subnet rollout is as follows:

  1. Launches as fully private operated on nodes owned by Pakt
  2. Expands to a private permissioned with validation partners
  3. Upon achieving critical mass where tokenomics ensures the subnet would be resistant to attacks, fully decentralizes into a permissionless subnet.

At launch, there will be no need for subnet rewards, as all nodes will be owned by Pakt. Once Pakt’s subnet expands to a private permissioned it will begin to pay rewards in $PAKT to both validator and delegators.

In Pakt’s view, subnet validators and delegators are also “builders” of Real Value for the Pakt ecosystem and are rewarded $PAKT accordingly.

There are three sources for these rewards:

  1. Pakt Subnet’s gas will be paid in $PAKT
  2. 33% of ecosystem revenues are earmarked for subnet rewards
  3. The Subnet Rewards Pool which comprises 20% (200,000,000 $PAKT) of total token issuance
The Subnet Rewards Pool releases 1.5% per month.

Again, as can be seen above, subnet rewards are designed to provide both an immediate boost and long-lasting incentives to robustly grow the Pakt ecosystem.

Medium Answer: What is your stance on Stablecoins?

h/t to international builders including our own developers

To borrow a banger tweet from the head of Ava Labs DeFi and DevRel —

We could not be more bullish on the future of stablecoins serving as the primary low-cost, high-trust, digital connector for international payments and programmable value. Why? Because we use USDC nearly every day.

And just this week, Pakt has linked up with stablecoin gigachad innovators in both Europe and Africa. From our conversations, we’re positive that the killer app is accelerating towards breakout capability.

That said, our bullishness comes with a grain of salt the size of the Rock of Gibraltar. While Web3 is at long last beginning to mature into technology safe for mainstream usage, some bad apple stablecoin innovators weren’t operating fully in good faith (to put it lightly).

This is the size of the grain of salt to take when discussing Web3 innovation

If you are going to build or invest in Web3 we highly highly recommend Googling stablecoins past and present and adjusting your ambitions accordingly.

Brief Answer: What’s been your best crypto investment?

h/t to normies during a bull market


The more you know,

The Pakt Crew




The OS for On-Chain Connection. Winner of the first Avalanche Creates Pitch Contest.