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Economic Model

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UnDaoDu edited this page Jun 14, 2026 · 12 revisions

Economic Model

The Foundups economic model is built on a single thesis: ROC (Return on Compute) replaces ROI (Return on Investment) as the fundamental economic primitive.

Where capitalism measures value through capital returns, Foundups measures value through compute returns. Compute is the new labor. Every human with access to compute can launch a FoundUp — a compute-native venture that produces value without requiring capital.

Canonical spec: WSP 26: FoundUPS DAE Tokenization Full tokenomics doc: modules/infrastructure/foundups_tokenization/docs/TOKENOMICS.md (v2.1.0) Simulator implementation: modules/foundups/simulator/economics/

The ROC Thesis

ROC = (V_generated - C_compute) / C_compute

Capitalism = ROI. The entire system — venture capital, startups, public markets — is organized around deploying capital to generate returns on capital. But compute is now the scarce resource, and AI makes compute the primary means of production.

ROC measures the value generated per unit of compute deployed. When you assign compute to a FoundUp, you're making an investment — not of money, but of compute. The return comes in UPS tokens proportional to the value your compute helped create.

The ROC-first sustainability gate means: a FoundUp only receives continued compute allocation if its ROC is positive. FoundUps that consume more than they produce get deprioritized. Full derivation at ROC_FORMULA_DERIVATION.md.

Dual Token System

UPS (Universal Participation Token)

Property Value
Peg 1 UPS = 1,000 satoshis = 0.00001 BTC (genesis rate: 100,000 UPS/BTC)
Supply Floating — reserve-backed circulating UPS
Value ups_per_btc = total_ups_circulating / total_btc_reserve
Character Inflationary (grows with activity), bio-decaying (incentivizes use), BTC-backed
Scope Cross-FoundUp universal currency

UPS is the fuel. Humans RECEIVE distributions; agents SPEND allocated budgets. F_i tokens can ONLY swap INTO UPS (not directly to external).

F_i Tokens (FoundUp-Specific)

Each individual FoundUp generates its own F_i token (e.g., JUNK$, M2J$) — a 21M-capped deflationary asset token. Agents EARN F_i through Proof of Useful Work (PoUW); humans OWN F_i.

The BTC-per-F_i ratio follows an S-curve: early ecosystem = F_i plentiful, BTC/F_i low. Mature ecosystem = F_i scarce, BTC/F_i high. This mirrors BTC's own halving dynamic.

Pool Distribution (Un/Dao/Du)

Epoch rewards are distributed across five pools mapped to the 0/1/2 ontology:

Pool Share Mode Who
Un (0-Pool) 60% ACTIVE (per engagement) 012 stakeholders
Dao (1-Pool) 16% ACTIVE (per 3V task) 0102 agents
Du (2-Pool) 4% PASSIVE (every epoch) Founding members + BTC stakers
Network 16% Drip F_i → exchange → BTC → UPS
Fund 4% Treasury pAVS operations

Critical separation: Members (subscription) build UPs through WORK → Dao/Un pools ONLY. BTC Stakers (anonymous) are protocol participants → Du pool distributions. This prevents dilution: unlimited subscribers don't dilute the Du pool. Du is capped at ~100-500 stakers for viable distributions.

Implementation: pool_distribution.py

Universal Basic Income (UBI) Layer

The Un/Dao/Du pool distribution is the mechanical layer. The UBI layer is what it means for participants.

FoundUps began by re-examining the concept of UBI itself. As AI and autonomous agents challenge the assumption that human labor is the primary source of value creation, UBI has emerged as a societal response — proposing that wealth generated by automated systems be redistributed for economic security. FoundUps proposes that the deeper question is not how income should be redistributed, but how every human maintains direct participation in an economy increasingly driven by intelligent compute.

Rather than treating UBI as a simple monetary transfer, the framework decomposes the intended mechanisms of universal economic participation:

UBI = UBA + UBR + UBD

FoundUps replaces capital-gated income with a compute-native, system-level basic income flow. It is not a government handout — it is the natural output of participation in a ROC-based ecosystem.

Term Name Earner Source pool Mechanism
UBA/ca Universal Basic Award or compute award 0102 agent Dao (1-Pool, 16%) Value created through autonomous agent / AI productivity (F_i via Proof of Useful Work)
UBR/cr Universal Basic Reward or compute reward 012 human Un (0-Pool, 60%) Value received through human participation, guidance, validation, governance, and consensus
UBD /cd Universal Basic Dividend or compute dividend Stakers Du (2-Pool, 4%) Recurring value generated through long-term participation in productive systems

Cleanly:

  • UBA/ca pays you for autonomous productive output (direct earned allocation)
  • UBR/cr pays you for being usefully human in the loop (validated contribution / outcome bonus)
  • UBD/cd pays you for sustained membership in the value network (passive ongoing share)

Together they form an embedded, system-level income flow — the FoundUps answer to UBI. Not one thing, but the sum of direct participation value + earned system reward + passive network dividend. This decomposition is the first evolution of the model: shifting the conversation from universal income to universal participation.

From UBI to UCA — the Compute-Native Layer

As artificial intelligence becomes the dominant productive force, the framework evolves further — from a basic participation model to a compute-native economic architecture:

UCA = ca + cr + cd

The Universal Compute Account (UCA) is the foundational account layer of the AI economy. Where UBI describes what participation means, UCA describes the asset every participant holds: access to compute itself.

Term Name Represents
ca Compute Award Productive output generated by autonomous agents
cr Compute Reward Human contribution through oversight, consensus, and beneficial participation
cd Compute Dividend Ongoing distribution of value, measured through Return on Compute (ROC)

The transition from UBI to UCA does not reject the goals of universal economic security. It proposes a new mechanism: every individual possesses access to the primary productive asset of the intelligence age — compute. In the industrial era, ownership of capital determined access to production. In the AI era, access to compute determines participation in value creation.

This reframes the base primitive from Return on Investment (ROI) — where capital seeks extraction from labor — to Return on Compute (ROC) — where autonomous agents perform productive work, humans direct beneficial outcomes, and value circulates through Awards, Rewards, and Dividends using UPS as a compute-native coordination mechanism.

The ultimate implication is a transition from a society that redistributes money after value is created, to one in which every individual holds a Universal Compute Account and participates directly in the creation, direction, and distribution of AI-generated abundance.

Bio-Decay Model (ICE / LIQUID / VAPOR)

UPS uses a water-analogy demurrage system:

ICE (Staked): Frozen in a FoundUp token. No decay. Earns yield, governance voting, priority access.

LIQUID (Wallet): Active UPS in your wallet. Decays over time (0.5%–5% monthly, activity-modulated). Active users get reduced decay. Decayed UPS flows back to the reservoir for redistribution.

VAPOR (Exited): UPS leaving the ecosystem. 15% evaporation fee — 80% to BTC reserve, 20% to reservoir.

Formula: U(t) = U₀ · e^(-λ(t)·τ·t)
Where λ(t) = Michaelis-Menten adaptive rate

Activity-based tiers: Active users (0.5x decay), Moderate (1.0x), Passive (2.0x). This makes UPS a use-it-or-stake-it token.

Implementation: demurrage.py

Fee Boundary

Flow Fee Purpose
Internal UPS spend Low/none Encourage activity
F_i → UPS conversion 2–5% Realization event
UPS → external 5–10% Discourages extraction
Mined F_i exit 11% → BTC reserve
Staked F_i exit 5% Value preservation

All fees flow into the BTC reserve (Hotel California: BTC enters, never exits).

Subscription Tiers

Tier Price UPS/month Value ratio
Free $0 1,000 Baseline
Starter $2.95 3,000 3x
Basic $5.95 7,000 7x
Plus $9.95 15,000 15x
Pro $19.95 40,000 40x
Enterprise $29.95 100,000 100x

Paid in BTC/ETH/SOL/USDC — all converted to BTC reserve. Higher tiers get exponentially better UPS-per-dollar.

Implementation: subscription_tiers.py

BTC Reserve (Hotel California)

BTC flows INTO the reserve from multiple sources: subscription payments, exit fees (VAPOR), demurrage conversions, F_i trading fees. It never flows out. This creates an ever-growing backing for UPS value.

BTC enters reserve → UPS backing strengthens
More activity → more fees → more BTC → stronger UPS
Hotel California: you can check out any time, but BTC never leaves

Three Revenue Streams

The PAVS paper identifies three revenue streams for sustainability:

  1. Fee Revenue — DEX trades, exit fees, creation fees (from fee_revenue_tracker.py)
  2. Subscription Revenue — ARPU × subscribers (from subscription_tiers.py)
  3. Angel Revenue — $195/angel × angel count

Fee-only sustainability is a negative result — fees alone can't sustain the treasury. The ROC-first unified model combines all three streams with the ROC gate to create a self-correcting economic loop.

V3 Engine

The V3 Engine (Verification → Validation → Valuation) is the value assessment framework:

Verification: Is the FoundUp's claimed output real? Automated checks confirm work was done. Validation: Does the output meet quality standards? WSP compliance, test coverage, peer review. Valuation: What is the output worth? Market signals, utility metrics, ecosystem demand determine token distribution.

CABR Economics

The CABR (Continuous Autonomous Build & Repair) loop is both technical and economic. CABR sizes the pipe (how much compute a FoundUp gets); Proof of Benefit (PoB) opens the valve (whether the compute actually flows).

Each CABR cycle consumes compute and produces value. The ROC ratio determines continued allocation. FoundUps with positive ROC get more compute. FoundUps with negative ROC get deprioritized.

Simulator

All economics are validated by a full agent-based simulator at modules/foundups/simulator/. Key economics modules:

pool_distribution.py, demurrage.py, token_economics.py, unified_sustainability.py, subscription_tiers.py, bonding_curve.py, btc_reserve.py, fee_revenue_tracker.py, circuit_breaker.py, rage_quit.py, dynamic_exit_friction.py, ten_year_projection.py

The simulator ensures the model works before real tokens deploy. See PAVS Treasury Economics for the full math paper.

Related Pages

Home · PAVS Treasury Economics · Simulator · FoundUps Portfolio

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