5.7.8 Economics of Claimable Ownership Reward

All Kanons generate a residual reward based on their usage. However, these rewards are like airline loyalty points and can only be earned or claimed after satisfying certain requirements. This unique feature makes Kanon a utility NFT, not a security according to the definition of an investment contract using the Howey Test based on Securities and Exchange Commission v. W. J. Howey Co., 328 U.S. 293 (1946).[i]

To claim, each Kanon holder is required to connect to Synesis One’s main ontology mining UI with a Web3 wallet. Subject to changes, the required amount of ontology mining, before she can claim her reward, could be determined by the formulae in Section 9.3.3.

Where:

• C1 applies when T >= 180 days and TSV > ASV, otherwise, C2 applies - For example, C1 = 10% and C2 = 15%

• R = Total amount of claimable rewards earned in SNS

• MV = Market value of ontology mining output required for claiming reward in SNS

• t = Number of days allowed for claiming reward before it expires

• Cx = Conscription coefficient or a percentage of B required to qualify for reward claiming

• T = Number of days each Kanon holder holds Kanon or SNS in her wallet

• ASV = Average Synesis Value per connected wallet

• TSV = the holder’s total Synesis Value in her wallet

For the first 24 months of operation, subject to changes, the conscription coefficient and related parameters will be varied by the operations team to strike the right balance between either side of the credit and debit balance of SynesisDAO’s treasury. Subject to changes, the Conscription Coefficient will then be subject to a community vote by SynesisDAO when the total balance of SynesisDAO’s treasury falls 50% below its historical average after 24 months from the official launch date of SynesisDAO.

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[i] SECURITIES and EXCHANGE Commission v. W. J. Howey Co. et al. 328 U.S. 293, full text available at the Legal Information Institute. Accessed July 30, 2021 https://www.law.cornell.edu/supremecourt/text/328/293.