SORA Tokenomics

SORA’s economic model is fundamentally different from most cryptocurrency projects. Rather than relying on fixed supply and speculative demand, SORA implements an elastic monetary policy managed by smart contracts—creating a self-regulating economy designed for real-world utility.

This guide covers the three primary tokens of the SORA ecosystem and the innovative mechanisms that govern their supply and distribution.

The Token Trinity: XOR, VAL, and PSWAP

The SORA ecosystem operates with three interconnected tokens, each serving a distinct purpose:

Token	Purpose	Supply Model
XOR	Network utility & governance	Elastic (TBC-managed)
VAL	Validator rewards & security	Deflationary
PSWAP	Liquidity provider rewards	Deflationary

This multi-token architecture separates concerns—network operations, security, and exchange liquidity—creating a more robust and specialized economic system.

XOR: The Network Token

XOR is the native utility token of the SORA network, functioning as the lifeblood of the ecosystem. Unlike Bitcoin’s capped 21 million supply or Ethereum’s post-merge deflationary model, XOR uses an elastic supply that expands and contracts based on economic demand.

XOR Utility

XOR serves multiple critical functions across the SORA ecosystem:

Transaction Fees

All network operations require XOR for gas fees. 50% of fees are burned, and 50% go to validators.

Governance

XOR holders can participate in SORA Parliament decisions and post bonds for citizenship.

Liquidity

XOR is the primary trading pair on Polkaswap and other SORA-based exchanges.

Staking

Users can stake XOR to secure the network and earn rewards through nominators.

XOR Fee Mechanics

When you pay transaction fees in XOR:

50% is burned — Permanently removed from circulation, creating deflationary pressure during high activity
50% goes to validators — Compensating those who secure the network

This burn mechanism ensures that network usage creates genuine demand for XOR while rewarding those who maintain the infrastructure.

XOR Supply Management

Rather than a fixed or algorithmically inflating supply, XOR’s circulation is managed by the Token Bonding Curve (TBC), which we’ll explore in detail below.

The Token Bonding Curve (TBC)

The Token Bonding Curve is SORA’s most innovative economic mechanism—a smart contract that manages XOR supply without human intervention.

What is a Token Bonding Curve?

A bonding curve is a mathematical function that defines the relationship between a token’s price and its supply. In traditional markets, supply and price are determined by human actors making individual decisions. The TBC automates this process:

Price = f(Supply)

As more XOR is purchased, the price increases along a predetermined curve. As XOR is sold back to the curve, the price decreases. This creates:

Predictable pricing — No sudden whale dumps or manipulation
Always-available liquidity — The curve itself is always a counterparty
Reserve backing — Purchases build reserves that back the token’s value

When you buy XOR from the TBC:

You send reserve assets (e.g., DAI, ETH) to the curve
The TBC calculates how much XOR to mint based on the curve
New XOR is created and sent to your wallet
The reserve assets remain in the curve’s treasury
The price adjusts upward for the next buyer

Primary vs. Secondary Markets

An important distinction in SORA’s economy:

Primary Market (TBC) — Buying/selling directly with the bonding curve, which mints or burns XOR
Secondary Market (Polkaswap) — Trading between users without affecting total supply

The TBC ensures there’s always a floor price for XOR, as users can always sell back to the curve at the mathematically determined rate.

TBCD: The Stablecoin

TBCD (Token Bonding Curve Dollar) is a stablecoin pegged to the US dollar that can be used as a reserve asset in the TBC. This provides:

Stability — A dollar-denominated option within the SORA ecosystem
On-ramp/Off-ramp — Easier conversion between crypto and fiat-equivalent value
TBC Reserve — Can be used to purchase XOR from the bonding curve

VAL: The Validator Token

VAL is the second major token in the SORA ecosystem, specifically designed for network security and validator rewards.

VAL Purpose

While XOR handles network utility, VAL focuses on security:

Validator Compensation — VAL is distributed to validators who produce blocks
Nominator Staking — Users can nominate validators and receive a share of VAL rewards
Network Security — Creates economic incentives for honest validation

Deflationary Mechanics

Unlike XOR’s elastic supply, VAL is deflationary:

VAL tokens are burned on every network transaction
This continuous burning reduces total supply over time
Scarcity increases as network usage grows

The deflationary model creates a positive feedback loop: more network activity → more burning → reduced supply → potential value appreciation for long-term holders.

VAL Distribution

VAL rewards are distributed as a percentage of daily burned tokens:

Network transactions burn VAL
The burned amount is tracked
A percentage of the burned amount is reminted and distributed to validators
Validators share with their nominators based on stake

This creates an elastic reward system that scales with network activity.

PSWAP: The Liquidity Token

PSWAP powers the liquidity incentives on Polkaswap, the SORA ecosystem’s decentralized exchange.

PSWAP Purpose

PSWAP exists to incentivize liquidity provision:

LP Rewards — Liquidity providers earn PSWAP for providing trading liquidity
Strategic Incentives — Aligns liquidity with ecosystem needs
Exchange Utility — Powers the Polkaswap reward system

Supply Mechanics

PSWAP has a capped maximum supply of 10 billion tokens that decreases over time through two mechanisms:

1. Buyback-and-Burn

Every trade on Polkaswap generates a 0.3% fee:

Fees are used to buy PSWAP from the market
Purchased PSWAP is burned permanently
This creates constant buy pressure and reduces supply

2. Reward Decay

PSWAP rewards for liquidity providers are designed to decrease over time:

Initially, 90% of burned tokens are reminted for LP rewards
This rate decreases to 35% after 5 years
Creates early-adopter advantage while ensuring long-term sustainability

Vesting Schedule

PSWAP rewards typically have a vesting period, meaning:

Rewards are earned immediately
Full access to rewards is delayed (vesting period)
Encourages long-term participation

Economic Model Deep Dive

The SORA Economic Philosophy

SORA’s tokenomics are built on several key principles:

Fee Distribution

Understanding where fees go helps clarify the ecosystem’s economics:

Fee Source	Distribution
XOR Transaction Fees	50% burned, 50% to validators
Polkaswap Trading Fees	Used for PSWAP buyback-and-burn
Bridge Fees	Network maintenance and security
Staking Rewards	VAL distributed to validators/nominators

Inflation vs. Deflation

SORA’s economic model balances inflationary and deflationary pressures:

Inflationary Forces:

TBC mints new XOR when demand is high
Validator rewards create new VAL
LP rewards create new PSWAP

Deflationary Forces:

50% of XOR transaction fees burned
VAL burned on every transaction
PSWAP buyback-and-burn from trading fees
TBC burns XOR when sold back to curve

The result is a dynamic equilibrium where supply adjusts to actual economic activity.

XOR in SORA Nexus

With the upcoming SORA Nexus upgrade, XOR’s role expands:

Universal Settlement Asset

In SORA v3, XOR becomes the universal fee, settlement, reward, and bond asset across all public and private data spaces. This means:

Cross-data-space transactions settle in XOR
Governance bonds are posted in XOR
Validator rewards paid in XOR
All network fees denominated in XOR

XOR Fee Equilibrium

SORA Nexus introduces sophisticated fee markets:

Each data space can have custom fee structures
XOR remains the underlying settlement layer
Equilibrium mechanisms balance fee markets across data spaces

Enhanced Utility

The transition to Iroha 3 infrastructure adds:

Collateralized Locks using XOR
Enhanced governance participation
Cross-chain bridge settlements
ISO 20022 compliance for institutional integration

Practical Implications

For Users

Understanding tokenomics helps you make informed decisions:

When to buy XOR — Consider the TBC price vs. secondary market prices
Staking choices — VAL rewards depend on validator performance and network activity
Liquidity provision — PSWAP rewards are highest early, decrease over time

For Developers

Building on SORA means understanding:

Gas estimation — XOR fees affect transaction costs
Token integration — Which token suits your use case
Economic incentives — How to align your application with ecosystem economics

For Validators

Operating a validator involves:

VAL rewards — Primary compensation for block production
Nominator management — Attracting stake to increase rewards
Economic security — Understanding slashing conditions

Summary

SORA’s tokenomics represent a paradigm shift in cryptocurrency economics:

Traditional Model	SORA Model
Fixed supply	Elastic supply (XOR)
Speculation-driven	Utility-driven
Single token	Multi-token specialization
Human-managed	Algorithmically managed
Inflation or deflation	Dynamic equilibrium

The combination of the Token Bonding Curve, deflationary secondary tokens, and utility-focused design creates an economic system that can grow sustainably with actual adoption.

Learn More

XOR Token Deep dive into XOR utility and mechanics

Token Bonding Curve Technical details of the TBC

VAL Token Validator rewards and staking

PSWAP Token Liquidity incentives on Polkaswap

Next Steps

Governance — How SORA Parliament governs the economy
SORA Nexus — The next evolution of SORA tokenomics