# Lecture of KOK Foundation’s CTO Young Choe about KOK Token Economy

**Introduction**

Hello, KOK Members.

Today, CTO of KOK Foundation will inform you the more detail about KOK Platform, especially its token economy.

First, he will briefly explain the characteristics of KOK Platform and give you the full explanation of the adjustments. For your better understanding, he will also explain formula and principle of the platform and strategy to rise the platform price through burning of KOK Token.

**Lecture**

Hi, this is Young Choe again. I like to share my understanding of KOK Platform’s token economy, especially how to mint our KOK Token and how and when to burn KOK Tokens. To understand the whole features of KOK Token economy, we need to know KOK is a platform as well as an ecosystem.

Ecosystem is something live. Usually we said something live follows S curve in the growth pattern. Surely KOK Platform has an ecosystem nature, but also has platform features as well. Platform has the characteristics of exponential growth. Such exponential growth causes monopoly. A winner takes all!

Like a huge company such as Google and Apple, they try to behave like a platform and grow exponentially. KOK Platform, we aim a fair and sharing platform enabled by blockchain and AI technology with participants. It is a very important concept and philosophy for us to become a fair and sharing platform with all stakeholders. In short, such exponential growth is unnatural. It can explode because the resource is limited, causing death eventually. A healthy system cannot grow exponentially. We want to make our KOK Platform to construct a healthy and sustainable ecosystem that grows organically. Therefore, we need to adjust this exponential growth characteristic to stable, sustainable, healthy, and fair mechanism.

As I said, many growth shows these S patterns. An ecosystem can be represented as a big summation of many S curves. We called this ecosystem’s growth characteristics curve. By considering many reasons and philosophy through the discussion of founder, KOK Platform tries to fit our growth characteristics curve in this way. Something grows rapidly at the beginning then converges to the certain equilibrium. It is shown in terms of the circulating KOK Tokens. There are many ways to show our philosophy or the growth. However, in terms of circulating KOK Token, we fitted our characteristic curve to this way. Theoretical maximum amount of KOK Token is 5 billion. Our platform is designed to grow quickly with more participants to the platform for faster growing and expansion. We try to set the amount of circulating KOK Tokens to follow this characteristics curve and then converge to certain number, which is 1.5 billion KOK Token. All equation and formula inside the token economy are to follow our behavior including mining, expanding user basis, and KOK platform price. All those behaviors are to follow this characteristics curve.

There are two knobs that control our KOK Platform price — mining rate and burning. First one is a controlling mint(mining) rate. Second knob is burning KOK Token. Let’s me talk about the first knob, mint rate. By the way I use mint and mining interchangeably. If we allow mint rate, it will grow exponentially. It shows an exponential function of time t with coefficient r. Mining rate is r. and t is time. R is more like an approximated rate. Mining rate varies depending on the staking amount. Let me approximate the different mint rates to one variable. This is the total amount of mint over a period of time. The bigger r, the steeper exponential curve.

On the contrary, the smaller value of r shows the gentler exponential curve. We will adjust the value of r to make the actual circulating amount close to the characteristic curve. The value of r is calculated by the total amount of staking, the number of participants, the cumulative mining amount, and the consumption amount. When the ecosystem is activated and the mining amount is above the characteristic curve, the value of r will be reduced. On the other hand, when there is a limit to liquidity supply due to the slow expansion, the value of r will be increased to facilitate the circulation of KOK Tokens. The halving, which is expected for the end of May, is also a process that will be adjusted by this calculation. Moreover, this adjustment contributes to the increase in the value of KOK by controlling the volume of KOK circulation. This mining rate is the first knob that controls the total amount of circulating KOK Tokens.

I will talk about second knob, so called burning. We have an in-house token economy mathematician. We have worked intensively and simulated to develop token price and mining rate decision algorithm. In summary, we use Alpha-Beta Pruning, that’s more like MinMax algorithm. It will guide to get the platform price with S_min and S_max. Let me describe the formula. m’ is the total accumulated number of KOK Tokens. Staked amount t, time is r — the mint rate. It is summation of vector multiplication.

F is a basis function, a Vector, to reflect all the nature and parameter of supporter and referee.

Smin is minimum average price, and Smax is maximum average price of KOK platform. Platform price is decided as an outcome of zeta function with two min and max. This equation actually helps us to decide two things. Currently we have 0.15 platform price that can become 0.17 or 0.19. We use this formula to decide the platform price. Also, we use this equation to determine the mining rate. The whole goal is to follow the fit circulation characteristic curve closely. The platform price determined through this calculation process serves as a safeguard for the market price and contributes to the expansion of the platform ecosystem. If the price of KOK traded on the exchange is lower than the price of platform, people will try to buy KOK from the exchange and move it to the platform. This will naturally lead to a buying demand, which will rise the market prices. Conversely, if the market price is higher than the platform price, mining and platform participants will eventually increase, which will further expand the platform ecosystem. This leads to a rise of the platform prices in a long-term. This adjustment of the total circulating amount of KOK Token is our decision in order to ensure the better KOK price performance by preventing explosion of minted amount of KOK Tokens.

As I said, minted amount can grow exponentially. Even though we set these r and p, there could be some gap, a divergence from the characteristics curve. Then we need to adjust the total circulation amount. That will be our second knob, burning. Burning is applied to adjust the original characteristics curve. There are two schemes of burning — periodic and institutional. Periodic burning is like this. If KOK Tokens are consumed to purchase items, goods, and services on the platform. Those amount is reserved to be burned. If KOK Tokens are consumed to exchange to other cryptocurrencies for withdrawal, those amount are also reserved to be burned over the period. This kind of burning is periodic burning. If the periodic burning is not enough, we may need to adjust manually. Institutional burning comes when more burning is still necessary. Periodic burning is decided by our money equation. Periodic burning is obvious to understand but the institutional burning is rather complicated. We came out with the burning formula.

We use this burning equation to determine the amount of institutional burning. If periodic burning is enough to converge to the characteristics curve, we do not need the institutional burning. The whole reason behind this complicated equation and adjustment effort is to share the benefits generated from platform with participants, especially with the early participant to build the KOK Platform.

If we grow this way, one point we can each 1.5B coins. As time goes by, we will have more dApps and bigger user basis. Last time I explained Fisher’s currency equation. The value of KOK Token over P is vector of transaction over MV. M is amount of money. V is velocity which represent the change of hands.

Because we will have a huge transaction, obviously we expect a huge growth of KOK coin value. That price is total value divided by 1.5B, while T grows and the number of coin is reduced. That means the KOK coin holders can get huge benefits. Personally I do not see any other reasons the value of KOK Token not to reach 100 dollars in five years. That is my dream. With the increase in transaction and user basis and involvement of more dApps while we still maintain total amount of circulating coins, we will be able to reach the goal. In addition, to achieve this goal, we need to adjust mining rate and burn KOK Token periodically. We will make this dream happen together.

Thank you.

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