Calculation Example | Polimec Knowledge hub

Polimec

On-Chain Credentials

Polimec utilizes credentials issued on-chain by specialized, trusted third parties to ensure adequate verification of all network participants. Without a certificate, network participants are unable to complete actions on the network. Thus, all network participant in the following example obtained verified credentials.

Funding Application

This example, along with the numbers presented in other chapters, has been randomly generated solely for illustrative purposes.

Example of contribution token registration:

Contribution Token Registration Parameters

Example

Evaluation

Example funding specifications:

Target funding amount: USDT 1,000,000
10% (threshold) of target funding amount: USDT 100,000

Evaluators bonding PLMC during the evaluation period:

The 10% (threshold) of the target funding amount represents the minimum level of support required from evaluators for a project to progress to the funding round. This threshold requires evaluators to bond PLMC equal to 10% of the target funding amount. This approach prevents unrealistic or excessively high valuations, as well as participants getting stuck in an unsuccessful funding round without the economical means to deliver on their planned endeavors.

After 7 days, and given that the total USD amount of PLMC bonded by evaluators is USDT 200,000 (as shown in the example), and the total USD amount of PLMC required to meet the 10% evaluator bonding threshold is USDT 100,000, the project successfully progresses to the funding round.

Funding Round

Example funding specifications:

Total allocation of contribution tokens available for the funding round: 100,000
Funding round thresholds for retail, professional, and institutional participants:
- Auction round: 50%, i.e. 50,000 contribution tokens
- Community round: 50%, i.e. 50,000 contribution tokens

Auction Round

Example funding specifications:

Amount of contribution tokens allocated to the auction round (Q₀): 50,000
Minimum price per contribution token (P₀): USDT 10

During the auction round, the issuer offers 50,000 contribution tokens with the minimum price set at USDT 10 per contribution token.

Following, an example is used to simulate the auction round, with the numbers being generated randomly.

Participants bidding in the auction round:

The protocol automatically defines the winning bids from the auction round, and consequently, the weighted average price, using the following procedure:

Identifies eligible bids (in retrospect)
Ranks bids from highest to lowest and sorts bids from latest to earliest
Calculates weighted average price
Adjusts bids that are above weighted average price

1. Identifies eligible bids (in retrospect)

The auction round ends after 7 days and the participants with the highest bids win the auction. In addition, the protocol promptly rejects bids that are below the minimum price per contribution token, without allowing them to be submitted.

Furthermore, the protocol establishes additional tranches for quota bidding based on the funding specifications, including the amount of contribution tokens allocated to the auction round and the minimum price per contribution token.

When the amount of contribution tokens for the auction round is reached, the protocol generates new tranches. In the example above, the threshold is reached when Sofia placed a bid of 20,000 contribution tokens at the minimum price of USDT 10 per contribution token. Until this point, participants can submit bids at the minimum price of USDT 10 per contribution token.

In quota bidding, the highest-ranked bids are accepted, while the lowest-ranked bids are excluded. Each tranche is allocated a fixed amount of 10% of Q₀ which, in this example, is 5,000 contribution tokens. In addition, referring to the formula above, the price development for this example unfolds as follows:

P₀=USDT 10
P₁=P₀+(P₀x0.1)=USDT 10+(USDT 10x0.1)=USDT 10+USDT 1=USDT 11
P₂=P₁+(P₀x0.1)=USDT 11+(USDT 10x0.1)=USDT 11+USDT 1=USDT 12
P₃=P₂+(P₀x0.1)=USDT 12+(USDT 10x0.1)=USDT 12+USDT 1=USDT 13
P₄=P₃+(P₀x0.1)=USDT 13+(USDT 10x0.1)=USDT 13+USDT 1=USDT 14

For each new tranche, the price develops in a linear fashion, requiring the complete filling of the preceding tranche with bids at the corresponding price to advance to the next tranche.

Example of quota bidding tranches:

2. Ranks bids from highest to lowest and sorts bids from latest to earliest

As a next step, the eligible bids are ranked from highest to lowest bid price and also from latest to earliest:

As the total amount of contribution token bids exceeded the contribution tokens allocated to the auction round, there was an adjustment in the genesis tranche. Sofia’s contribution token amount was reduced to 0, resulting in the removal of her bid. This adjustment is due to the fact that she placed the most recent bid at the minimum price per contribution token. The difference of 20,000 contribution tokens is allocated to Damian, Anna, and Fred. Damian filled the most recent tranche of 5,000 contribution tokens at USDT 14, representing the highest price. Meanwhile, Fred’s bid was split into two tranches because his desired contribution token amount exceeded the available next 5,000-contribution token tranche. Consequently, he paid USDT 11 for the first 5,000 contribution tokens and USDT 12 for the second tranche of 5,000 contribution tokens.

3. Calculates weighted average price

Following the definitive bid prices must be established by defining the weighted average price, which is calculated by multiplying the winning bid prices by their respective bid weights:

4. Adjusts bids that are above weighted average price

Participants whose bids meet or surpass the weighted average price, such as Damian, Anna, and Fred, take part in the auction round at a price below their bid. On the other hand, participants like Crp VC and Adam, whose bids fall below the weighted average price, participate at their initial bid price. This follows the rules that apply for participants with the winning bids:

Winning bids below the weighted average price are executed at their bid
Winning bids above the weighted average price are executed at the weighted average price

Summed up, the value of all bids stands at USDT 523,000 for the allocated 50,000 contribution tokens.

Community Round

Example funding specifications:

Amount of contribution tokens allocated to the community round: 50,000
Weighted average price: USDT 11.20

The issuer intends to offer 50,000 tokens for participation in the community round, which is open to both retail and professional/institutional participants who were unsuccessful in securing a bid during the auction round. This is the case for the first 5 days of the community round. After that, and thus for the last 2 days of the community round, everyone can participate again.

Participants bidding in the community round (first come, first served):

The issuer successfully sold all 50,000 tokens allocated for the community round, with participations in the amount of USDT 560,000. In conjunction with the auction round, which accrued participations in the amount of USDT 523,000, the total funding amount raised by the issuer constitutes USDT 1,083,000.

Multipliers and Vesting Periods

Auction Round - Multipliers and Vesting Periods

Participants that bidded during the auction round are either professional or institutional participants. Given distinct credential types, these participants have different maximum multipliers: professional participants can apply up to a 10x multiplier, while institutional participants can leverage up to a 25x multiplier. The participants’ selection of multipliers influences the PLMC to be bonded and the vesting period.

Continuing from the previous example, the subsequent bids met the eligibility criteria:

Next, to illustrate, the multipliers are applied to the very same participants of the auction round. These multipliers are simulated and generated randomly.

Auction round example with multipliers and vesting periods:

*starts 7 days after successful funding round **starts 7 days after the project’s mainnet launch

Following, the weighted average price needs to be calculated. Damian, Anna, and Fred participated in the auction round below their initially submitted bids, while Crp VC and Adam maintained participation at their initially submitted bids, as they were below the weighted average price. This adjustment affects the USDT bids/funds raised.

Auction round example with multipliers and vesting periods, adjusted for weighted average price:

Community Round - Multipliers and Vesting Periods

During the first 5 days of the community round, only participants with no winning bid in the auction round are eligible to participate. In the last 2 days, everyone can participate again. In this context, with the weighted average price already established, the price remains fixed, eliminating the need for further adjustments.

Community round example with multipliers and vesting periods:

Due to simplicity and consistency reasons, the amounts for retail participants are considerably higher than expected per participant. Consider each listed retail participant above as a conglomerate of retail participants and not as individuals.

Rewards Payout

Issuer Fee Calculation

With the total funding amount raised being USDT 1,083,000, the issuer will have to pay an issuer fee in their contribution token depending to the raised amount, as per fee schedule.

Therefore, the calculation for the issuer fee is as follows:

This equals an issuer fee of approx. or . Note that the issuer fee in contribution tokens, i.e. 9,850, is separate from the contribution tokens, i.e. 100,000, sold in the funding round.

The issuer fee in contribution tokens equals the issuer fee in USDT divided by the average token price paid by participants. This average price can be different from the weighted average token price, since participants in the auction round may have entered below that price.

Issuer Fee Allocation

It is imperative to note that the issuer fee, equivalent to USDT 106,640, is paid in the form of contribution tokens in accordance with the fee schedule. This fee is then fully allocated to the on-chain contribution treasury to incentivize and reward network participants.

As the target funding amount of USD 1,000,000 is met by the total funding amount raised, which equals USD 1,083,000, it can be deduced that the project has achieved over 100% of its target funding. Thus, the allocation of the issuer fee proceeds as follows:

Liquidity Pools: 50%
Evaluator Rewards: 30%
Long-Term Holder Bonus: 20%

In this example, the issuer fee allocated in contribution tokens to the evaluators is .

Evaluator Rewards Allocation

In this example, the successful attainment of the target funding amount triggers the automatic acceptance of funds and the subsequent distribution of evaluator rewards in contribution tokens.

In accordance with the bonded PLMC threshold of 10%, the protocol designates two portions of the rewards. A proportion of 80% is allocated pro rata among all evaluators, while the residual 20% is earmarked exclusively for those who participated as early evaluators by bonding their PLMC prior to the achievement of the 10% bonding threshold.

All evaluator rewards:

The distribution of evaluator rewards among Valeria, Tim, and Marc is determined in proportion to their respective contributions to the total USD amount of bonded PLMC, which stands at USDT 200,000.

Early evaluator rewards:

The rewards earned by early evaluators, i.e. evaluators Valeria and Tim, are augmented by an additional 20% of the total rewards as a means of incentivizing early participation in project evaluations and deterring free riding.

The allocation of rewards between evaluators Valeria and Tim is determined proportionally to their contribution towards the 10% evaluator bonding threshold of USDT 100,000.

Thus, the individual evaluator rewards in this example are: