> For the complete documentation index, see [llms.txt](https://docs.bitplanet.ai/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.bitplanet.ai/introduction/emissions-rewards-explained.md).

# Emissions Rewards Explained

This page explains how BPL inflation rewards are distributed to AI creators, Applications, and contributors in simple terms.

## The Big Picture

Bitplanet mints new BPL tokens through inflation (e.g., 8% annually). These tokens are distributed to:

1. **Stakers/Validators** - Securing the network (50%)
2. **AI Ecosystem** - Creators, Applications, and contributors via x/brahma (50%)

This page focuses on how the AI ecosystem portion is distributed.

## The Three-Step Distribution

BPL emissions flow through **three sequential steps**:

```
┌─────────────────────────────────────────────────────────────────────────┐
│                         BPL EMISSIONS FLOW                              │
└─────────────────────────────────────────────────────────────────────────┘

                    Daily BPL Inflation
                           │
                           ▼
              ┌────────────────────────┐
              │   50% to Stakers       │───► Validator/Delegator rewards
              │   50% to AI Ecosystem  │
              └───────────┬────────────┘
                          │
                          ▼
                  AI Ecosystem Pool
                          │
╔═════════════════════════════════════════════════════════════════════════╗
║ STEP 1: Split by Market Cap (Gem Supply)                                ║
║         Each AI gets a share proportional to its gem market cap         ║
╚═════════════════════════════════════════════════════════════════════════╝
                          │
          ┌───────────────┼───────────────┐
          ▼               ▼               ▼
      AI Alpha        AI Beta        AI Gamma
       (60%)           (30%)          (10%)
          │               │               │
          ▼               ▼               ▼
╔═════════════════════════════════════════════════════════════════════════╗
║ STEP 2: Split by Role (Fixed Percentages)                               ║
║         Creator: 50% | Application: 30% | Contributors: 20%              ║
╚═════════════════════════════════════════════════════════════════════════╝
          │
          ├──► Creator (50%)
          │
          ├──► Application (30%)
          │
          └──► Contributors (20%)
                    │
                    ▼
╔═════════════════════════════════════════════════════════════════════════╗
║ STEP 3: Split Contributors by Proof of Contribution (Cores)             ║
║         Each contributor gets their share based on Cores earned         ║
╚═════════════════════════════════════════════════════════════════════════╝
                    │
          ┌────────┼────────┐
          ▼        ▼        ▼
       @user1   @user2   @user3
        (50%)    (30%)    (20%)
```

## Worked Example

Let's walk through a concrete example with simple numbers.

### Setup

* **Daily BPL inflation:** 10,000 BPL
* **Siphon to AI ecosystem:** 50% → 5,000 BPL
* **Three AIs exist:**
  * AI Alpha: 6,000 gems (60% of total market cap)
  * AI Beta: 3,000 gems (30% of total market cap)
  * AI Gamma: 1,000 gems (10% of total market cap)

### Step 1: Split by Market Cap

| AI       | Market Cap Share | BPL Allocation               |
| -------- | ---------------- | ---------------------------- |
| AI Alpha | 60%              | 5,000 × 0.60 = **3,000 BPL** |
| AI Beta  | 30%              | 5,000 × 0.30 = **1,500 BPL** |
| AI Gamma | 10%              | 5,000 × 0.10 = **500 BPL**   |

### Step 2: Split by Role (for AI Alpha)

| Role         | Split | BPL Amount                   |
| ------------ | ----- | ---------------------------- |
| Creator      | 50%   | 3,000 × 0.50 = **1,500 BPL** |
| Application  | 30%   | 3,000 × 0.30 = **900 BPL**   |
| Contributors | 20%   | 3,000 × 0.20 = **600 BPL**   |

### Step 3: Split Contributors by Cores (for AI Alpha)

AI Alpha has three contributors with the following Core holdings:

| Contributor | Cores     | Share    | BPL Reward               |
| ----------- | --------- | -------- | ------------------------ |
| @user1      | 500       | 50%      | 600 × 0.50 = **300 BPL** |
| @user2      | 300       | 30%      | 600 × 0.30 = **180 BPL** |
| @user3      | 200       | 20%      | 600 × 0.20 = **120 BPL** |
| **Total**   | **1,000** | **100%** | **600 BPL**              |

### The Complete Formula

For any contributor, their daily BPL reward is:

```
Your BPL = Daily_Inflation
         × Siphon_Rate (50%)
         × AI_MarketCap_Share
         × Contributor_Pool (20%)
         × Your_Core_Share
```

**Example for @user1:**

```
@user1's BPL = 10,000 × 0.50 × 0.60 × 0.20 × 0.50 = 300 BPL/day
```

## Key Concepts Explained

### What is Market Cap?

An AI's "market cap" determines its share of BPL emissions. The metric evolves in two phases:

**Current Implementation (Pre-AMM):**

```
market_cap_metric = gem_supply
```

Where `gem_supply` = total ERC-1155 Gem tokens in circulation.

**Future Implementation (Post-AMM):**

```
market_cap_metric = rolling_average[ (W1 × gem_supply) + (W2 × gem_market_cap) ]
```

Where:

* `gem_supply` = ERC-1155 totalSupply (count of gems)
* `gem_market_cap` = AMM\_price × gem\_supply (actual market value)
* `W1, W2` = governance-adjustable weights
* `rolling_average` = smoothed over 30-90 days

**Why this design?**

Using a weighted combination of supply AND price (once AMM exists) mitigates manipulation:

* **Supply alone**: Harder to game (requires burning Cores), but doesn't reflect market sentiment
* **Price alone**: Vulnerable to pump-and-dump on thin liquidity
* **Weighted combination**: Governance can tune the balance to minimize manipulation while reflecting real value

The 30-90 day rolling average further smooths volatility and prevents short-term spikes from capturing disproportionate rewards.

### What are Cores?

Cores represent **proof of contribution** to an AI. They're earned by:

* Creating the AI
* Training/improving the AI
* Referring users
* Generating revenue
* Other contributions defined by governance

Cores are **burned 1:1 to mint Gems**, so they represent historical contributions to the AI's development.

### Why This Order?

The order matters:

1. **Market Cap First** - Ensures successful AIs (measured by user engagement/gem holdings) receive more rewards
2. **Role Split Second** - Ensures all stakeholders (creator, app operator, contributors) are incentivized
3. **Cores Third** - Ensures contributors are rewarded proportionally to their actual contributions

This creates alignment: contributors want their AI to succeed (higher market cap), and the market values AIs with strong contributor ecosystems.

## Comparison: Two Mental Models

### Model A: "Market Cap × Cores" (Correct)

```
@user1's reward = AI's share (from market cap) × user1's contributor share (from Cores)
               = 60% × 20% × 50%
               = 6% of AI ecosystem pool
```

### Model B: "Cores × Market Cap" (Also Correct - Same Math)

The multiplication is commutative, so the order doesn't change the result. However, the **conceptual flow** is:

1. First, the AI as a whole earns rewards based on market cap
2. Then, that reward is split among creator, app, and contributors
3. Finally, the contributor pool is divided based on Core holdings

## Summary Table

| Step | Determined By           | Purpose                        |
| ---- | ----------------------- | ------------------------------ |
| 1    | Market Cap (Gem Supply) | Reward successful AIs          |
| 2    | Fixed Split (50/30/20)  | Balance stakeholder incentives |
| 3    | Core Holdings           | Reward actual contributors     |

## Parameters (Governance-Adjustable)

| Parameter             | Default | Description                                                                             |
| --------------------- | ------- | --------------------------------------------------------------------------------------- |
| `siphon_percentage`   | 50%     | % of inflation to AI ecosystem                                                          |
| `creator_split`       | 50%     | Creator's share per AI                                                                  |
| `application_split`   | 30%     | Application operator's share                                                            |
| `contributor_split`   | 20%     | Contributors' pool share                                                                |
| `max_ais_for_rewards` | 500     | Max AIs eligible (by insertion order)                                                   |
| `W1`                  | 1.0     | Weight for gem\_supply in market cap calculation (current default; meaningful post-AMM) |
| `W2`                  | 0.0     | Weight for gem\_market\_cap (AMM price × supply) (current default; meaningful post-AMM) |

## Further Reading

* [Inflation Mechanism](/advanced-topics/token-economics-technical/inflation-mechanism.md) - Technical deep dive
* [Reward Distribution](/advanced-topics/token-economics-technical/reward-distribution.md) - Claiming process
* [Core Tokens](/advanced-topics/token-economics-technical/core-tokens.md) - How Cores work
* [Gem Tokens](/advanced-topics/token-economics-technical/gem-tokens.md) - How Gems work