Economic Sustainability Model

The economic sustainability of Lume is built on the principle that tokens are not pre-mined and not artificially distributed — they are created only when real network value emerges. This value is represented by confirmed useful traffic that comes from external consumers through the network of nodes. This is why the core of the model is the Proof-of-Demand (PoD) mechanism, which determines the issuance volume in each network cycle based on real demand for bandwidth, not by the number of users.

In PoD, all emission is calculated using the formula:

Mint_epoch = Σ(Bᵢ × Qᵢ × Sᵢ × DDM_region × DDM_global × K)

The key point here is that each multiplier reflects the actual network work, not hypothetical metrics.

The parameter Bᵢ only considers confirmed traffic from node i — that is, traffic that has passed cryptographic validation, anti-fraud filtering, and relates to legitimate requests from clients, not internal operations or noise. The multiplier Qᵢ adjusts token issuance depending on the channel quality — jitter, packet loss, latency, and bandwidth stability; nodes with high Qᵢ provide better connections and thus receive more rewards for each megabyte of traffic. The coefficient Sᵢ measures node uptime stability: the closer the uptime to continuous operation, the higher its share in the issuance. The factors DDM_region and DDM_global reflect demand: if regional or global network load exceeds available capacity, these coefficients increase — and the network increases rewards for participants in regions where demand objectively exists. Finally, the coefficient K, a dynamic constant for "token-per-byte," regularly changes depending on global network load and liquidity conditions.

Thus, all Lume emission grows only when the network’s actual value increases, not simply because more devices are connected.

However, formulas alone are not enough to maintain sustainability. For this, the system includes the Adaptive Minting Constraint (AMC) — an algorithm that limits the possible emission range to prevent the economy from entering either inflationary or deflationary states. AMC sets a safe corridor within which token issuance can change: at least 40% and at most 160% from the previous quarterly period. But this is not just a hard limit — AMC dynamically considers changes in demand and smoothly adjusts issuance through economic elasticity by ±15%, allowing the system to respond to changes without sharp fluctuations. If demand increases faster than the network can adapt, AMC reduces K — decreasing token issuance per unit of useful traffic. If demand drops, AMC gives the network more flexibility so participants continue to receive rewards without causing liquidity shortages.

On the other hand, the economic model is supported by the Deflationary Pressure System (DPS) — a set of mechanisms that automatically create deflationary pressure when necessary. For example, if the network operates under overload and global demand exceeds 90% of available bandwidth, a portion of the emission (usually 2–7%) is automatically burned, reducing the growth rate of supply. Similarly, the Activity-Burn mechanism works: if a participant shuts down a node and remains inactive for over 45 days, 20% of their unused rewards are burned. This creates natural selection within the network — tokens are distributed only among nodes that truly provide value.

All these processes are interrelated with the Dynamic Reward Rebalancing (DRR) algorithm — a mechanism that analyzes the network’s state daily and redistributes rewards to maintain its efficiency. DRR uses the network load indicator:

NSI = (load_peak / load_avg) × jitter_avg × failover_rate

And based on NSI, adjusts the reward share for different categories of nodes. Nodes with low jitter and high stability receive higher coefficients. Nodes with fluctuating connections receive lower ones. This helps the network avoid a situation where “bad” connections take a share of the emission, reducing the system's overall efficiency.

Long-term stability is ensured by the Long-term Equilibrium Mechanism (LEM). It tracks moving averages: the average level of emission over 90 days, token turnover speed, and network load — and adjusts the operation of AMC, DPS, and DRR so the economy remains in equilibrium. When demand is low, emission automatically decreases; when demand overheats, burning mechanisms are triggered. As a result, a self-balancing tokenomics is formed, which requires no manual management.

All economic processes are stabilized by the Nexus Liquidity Reserve (NLR) — a liquidity reserve replenished from emission, fees, and corporate payments. NLR acts as a backup mechanism: it smooths market fluctuations, ensures liquidity during demand spikes, allows the network to buy back tokens during local shortages, and also protects staking pools. This ensures Lume remains stable even in scenarios of strong external fluctuations or temporary demand imbalances.

Together, all elements — PoD, AMC, DPS, DRR, LEM, and NLR — create a unified economic system that automatically regulates supply growth, adjusts rewards based on real network load, controls deflation, and ensures long-term token sustainability. This makes Lume a network whose value increases with its usefulness, and the token becomes a reflection of real load and real demand.