Mint

Smartcoin Minting

To scale the minting and burning of smartcoins effectively, Umoja will introduce an RFQ (Request for Quote) mechanism along with the proposed smartcoin mint and burn interface. This ensures system functionality at scale while maintaining efficiency and predictability in the underlying trading model.

The smartcoin minting process is as follows:

1. Quote Request: User requests a quote to mint a certain amount of smartcoins, via the UI, or directly against our Pricing API.

2. Quote Return: Pricing API returns a quote that has a time-limited validity.

3. Quote Acceptance: User accepts or rejects the quote.

4. User Quote Confirmation: If the user accepts the quote, they are asked to send a certain amount of collateral to our smart contract address.

5. Smartcoin Minting: Upon receipt of the collateral, the smart contract confirms the amount of smartcoins to be minted against the quote provided by the Pricing API.

6. $UMJA Rewards: User earns $UMJA rewards for minting smartcoins based on the USD amount of smartcoins minted.

$UMJA Mint Rewards

To incentivize users to mint smartcoins, disincentivize them to burn smartcoins, purposely create an arbitrage market to increase recurrent usage of the protocol, and make the $UMJA token deflationary in the long-term, I propose the introduction of $UMJA mint rewards and UMJA burn fees.

To incentivize users to mint smartcoins - the most important function of the protocol - they will be rewarded with $UMJA tokens using the mint reward rate, mR. Initially, mR is the following:

mR = x $UMJA / $1 USD of Smartcoins Minted

Emission Schedule & Epochs

The $UMJA rewards emission schedule will be based on the USD amount of smartcoins minted, similar to how Bitcoin rewards BTC based on the approximate number of blocks produced. Every $100M of smartcoins minted, the protocol enters the next emissions phase (i.e., each epoch is every $100M minted smartcoins), and the emissions cap is halved. The emissions schedule is the following:

Epoch	Emissions Cap	Epoch Limit	Net Emissions
1	630,000,000	$100,000,000	630,000,000
2	315,000,000	$200,000,000	945,000,000
3	157,500,000	$300,000,000	1,102,500,000
4	78,750,000	$400,000,000	1,181,250,000
5	39,375,000	$500,000,000	1,220,625,000
6	19,687,500	$600,000,000	1,224,312,500
7	9,854,750	$700,000,000	1,234,167,250
8	4,921,875	$800,000,000	1,239,089,125
9	2,460,937.5	$900,000,000	1,241,550,062.50
10	1,230,468.75	$1,000,000,000	1,242,780,531.25
…	…	…	…

Umoja implements both mint rewards and burn fees within a narrow, initially asymmetric range to encourage healthy arbitrage and long-term usage of the protocol.