Content Test - Proof of Content (PoC)

This section is based on the FRQTAL EXPERIMENT paper, "How a complex behavior of tokenomics can give value to users through digital assets," 2021, by Beeto Qeeq.

INTRODUCTION: In this section, we will detail the farming concept generated by our FRQTAL protocol, which we have called "Proof of Content" (PoC). This term reflects the trust deposited by users in unique pieces or keys, called FNFTs (Financial Non-Fungible Tokens), providing access to web3 content from their favorite creators. FNFTs can adopt standards such as ERC-721, ERC-1155, ERC-6551, or any other compatible with the Ethereum Virtual Machine (EVM).

Summary: This proposal explores how our FRQTAL protocol will generate value for holders in an ecosystem that merges three technological worlds: centralized applications, blockchain for value records, and decentralized file storage on local devices. The vision of this experiment is based on the significant correlation between social networks and economic behaviors. The rise of social networks globally, with new individuals connecting to different platforms at an increasingly faster pace, indicates that new economic systems will influence social networks. These technologies not only facilitate communication but also approach to valuable content or products, marketing, and passive income generation for users.

This trend has been observed in recent years with the most powerful social networks wanting to create their own currency in a token format using blockchain technology, the current technology that allows such integration simply and with fewer economic regulations from the countries where these social networks operate. Attempts have been made by social networks to use an existing currency, but none of these options has worked, possibly because the technologies did not originate with that native infrastructure. Understanding each part, not just blockchain, that can make this protocol a successful experiment involves looking at the following components:

• Wallets: Wallets in the protocol can have two distinct characteristics or both simultaneously: ownership by the FNFT holder or the buyer.

• Blockchain: We operate as a subnetwork on AVALANCHE.

• FNFTs and Liquid Price Floor: We will explore FNFTs as units for mining ecosystem coins and associated concepts such as the Liquid Price Floor. The latter involves a controlled release of tokens and establishes a minimum price within a liquidity pool.

• Liquid Price Floor: We will explain why FNFTs and their native economic structure will allow us to set a minimum price. This implies that, economically, during a price drop, we can be sure of what the minimum value limit is.

This section provides a comprehensive view of the structure of FRQTAL and how Proof of Content in the experiment stands as an innovative model that goes beyond the traditional limitations of blockchains, incorporating financial and social aspects to achieve its objectives.

When a wallet creates an NFT in the protocol through the application or web connections, the digital asset, also known as an "asset," is "minted" within the FRQTAL blockchain, a sub-network built with Avalanche technology. It is essential to note that this configuration does not restrict us to exclusively using this protocol, as FRQTAL is designed for the export and import of digital assets.

When the asset is created in any NFT protocol, it is initially an empty asset, meaning it has not yet been loaded with value. Although it possesses all the characteristics of an NFT, it lacks value within our protocol. To acquire value, another user or wallet must perform a purchase transaction, which involves the buyer's capital being packaged into the NFT, turning it into an FNFT (Financial Non-Fungible Token). With this transition, the FNFT activates all functionalities in the ecosystem, and mining begins to operate.

We coined the term PoC or Proof of Content because FRQTAL is designed to add value to creators of ideas or content. When another user freezes, packages, or delegates their value within the FNFT issued by a creator, the trust that the buyer user has in the issuer leads the issuer to own an asset with real value. This asset has two fundamental characteristics. The first and most important is the utility that users exploit in the ecosystem, providing them with the opportunity to view content or receive various types of royalties from the issuer user directed to the buyer user. The last relevant characteristic for this section of the documentation is the one that describes the FRQ mining process for both users.

Liquidity Pool: The capital resulting from the purchase is deposited in the FRQTAL liquidity pool. In the case of the FNFT, its value is incorporated into the public price liquidity, contributing to the increase in value in price charts. This value, once deposited, is generally not withdrawn by users. This behavior is crucial for the creation of the LIQUID PRICE FLOOR, representing tangible value in a price chart. In other words, this floor acts as a minimum support in the economy.

This mechanism provides users with the certainty that there will be no uncontrolled price drops, rug pulls, or capital leaks. The locked liquidity capital in the price becomes a visual indicator, represented on the purple line in the following chart:

Having explained the nature of an FNFT and the destination of the frozen capital, we have designed a reward system that the protocol offers to users for trusting other users and, consequently, in FRQTAL. This farming system provides automatic rewards or airdrops backed by the smart contract, rewarding the FNFT created with 1.5%. This distribution allocates 1% in FRQ to the creator of the asset and 0.5% to the buyer, thanks to the concept of "Co-ownership." This concept implies joint participation in the ownership of the FNFT between the issuer and the buyer. The main purpose of this approach was primarily oriented towards the organic growth of the network, as detailed in the concepts of the experiment (reading the document "FRQTAL EXPERIMENT, how a complex behavior of tokenomics can give value to users through digital assets, 2021, Beeto Qeeq" is recommended for a deeper understanding of its objectives).

In the context of this documentation, it is crucial to understand that this feature distinguishes airdrops from mining. Airdrops are delivered from the farming wallet to the FNFT, and the FNFT distributes them according to the metadata of the property to both owners. The FARMING wallet acts as the container for 50% of the frozen FRQ, and the only way to withdraw the capital from that wallet is by having an FNFT, regardless of the value it holds. The underlying idea was to inherently freeze certain capital within the liquidity pool.