docs_tfgrid_economics/docs/faq.md

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# Frequently Asked Questions

## Products

<details>
<summary><strong>Which products do you have?</strong></summary>

- **Mycelium Cloud**: Kubernetes cloud
- **Mycelium Network**: Always-on, shortest-path, safe networking tech with CDN and LLM broker
- **Hero**: Launching H1 2026, personal AI agent
- **Marketplace**: Allows many people to build on top
</details>


<details>
<summary><strong>Do you have customers?</strong></summary>

Yes, we have several customers using our Mycelium Network and Mycelium Cloud products. We are also in discussions with several potential high-volume customers, but cannot share specific names at this stage.
Check also our existing opensource offering in https://dashboard.grid.tf/

</details>

## Token System


<details>
<summary><strong>Will you do something to increase token performance?</strong></summary>

Yes, we have implemented a multi-token system with built-in burning mechanisms to create scarcity and drive value. 

Key features include:

- **Multi-Token Architecture**: to serve different purposes
- **Utilization**: large offtakers need more capacity then the current grid can provide
- **Burning Mechanism**: 10% of all revenue is used to buy and burn TFT, reducing supply
- **Liquidity Pools**: Position-based liquidity pools with Dutch auction exit to protect long-term holders (phase 2)
- **Stable Utility Token (CC)**: Pegged to gold for price stability

</details>


<details>
<summary><strong>If your project is so strong, why your token weak?</strong></summary>

We believe, the current marketcap of TFT is super low compared to the potential of the ThreeFold ecosystem.
If you look at the current marketcap of $10M, it is very low compared to the potential market size of the cloud and AI markets (several trillion USD).

We are not here to pump the token price, but to build a sustainable ecosystem.
We have a real product, real customers, and a real plan to grow the ecosystem.

> Now its up to you to draw your own conclusions.

</details>




<details>
<summary><strong>What are the different types of tokens in the ThreeFold ecosystem?</strong></summary>

The ThreeFold ecosystem uses a multi-currency system with three distinct token types:

1. **TFP (ThreeFold Point)**
   - Exists only within the marketplace for internal accounting and settlements
   - 1 TFP = 1 TFT
   - Cannot be converted back to TFT until the market price of TFT exceeds the fixed conversion rate of CC to TFP
   - When users convert to TFP, their TFT is locked until they return TFP to unlock their TFT

2. **TFT (ThreeFold Token)**
   - Tradable reserve asset traded on public blockchains
   - Price can be volatile
   - Scarce, capped at 1 billion maximum
   - Not directly usable inside the marketplace, must be converted to TFP first

3. **CC (Cloud Credit)**
   - Stable utility token pegged to 1/1000 of a gram of gold (0.001g)
   - Only circulates within the digital marketplace (non-tradable)
   - Primary medium of exchange for services within the ecosystem
   - Generated when users enter with TFT or credit card, burned when exiting
</details>

<details>
<summary><strong>How do the token swaps work?</strong></summary>

There are several types of swaps in the ThreeFold ecosystem:

1. **TFP to CC Swap (both directions)**
   - Allows users to swap TFP for CC at a fixed rate
   - Users can acquire CC at a fixed rate of 1 CC for 2 TFP until the market price of TFP surpasses this rate
   - Open question: maybe it should be 1 CC = 1 TFP

2. **USD to CC Swap (one way)**
   - Allows users to purchase CC directly with USD via credit card
   - Fixed rate of 1 CC = $0.128 (as of Oct 8, 2025, changes as the price of gold changes)
   - USD collected is held in a treasury to back the CC in circulation
</details>

<details>
<summary><strong>How is revenue distributed in the ThreeFold ecosystem?</strong></summary>

Revenue distribution in the ThreeFold ecosystem follows this model:
- 80% of revenue goes to Farmers (as TFP)
- 10% of revenue is burned to reduce supply and maintain peg stability
- 10% of revenue goes to ThreeFold Foundation for ecosystem development and maintenance
</details>

<details>
<summary><strong>Why does ThreeFold use a multi-token system?</strong></summary>

The multi-token architecture solves several critical problems:
- **Price Stability**: CC provides predictable pricing for services (pegged to gold)
- **Market Opportunity**: TFT remains tradable with upside potential
- **Controlled Liquidity**: Prevents sudden token dumps while maintaining fairness
- **Sustainable Growth**: Minting/burning mechanisms ensure backing and prevent inflation
- **Operational Viability**: Farmers receive stable CC for planning while retaining TFT exposure options
</details>

## Burning Mechanism

<details>
<summary><strong>What is token burning and how does it work?</strong></summary>

Token burning permanently removes tokens from circulation. When a percentage of real revenue is used to buy and burn tokens, it directly reduces the total supply, creating scarcity. If demand stays constant or increases, the token price naturally rises.

In the ThreeFold ecosystem:
- 10% of all generated revenue is used to purchase tokens on the open market and destroy them
- This converts real economic activity into direct buying pressure
- As supply decreases, each remaining token represents a larger claim on the network's total value
</details>

<details>
<summary><strong>What are the base assumptions for the burning mechanism?</strong></summary>

The base assumptions for the burning mechanism are:
- TFT Price (initial): $0.10
- Market Cap (Fully Diluted): $100,000,000
- Burn on Revenue: 10%
- Revenue over 4 years: $1,000,000,000
- Tokens Burned: $100,000,000 worth of tokens
- Market Size Reference: Cloud & AI markets worth several trillion USD

The conclusion is that there can never be 0 tokens in a functioning economy, so the price will keep rising as supply decreases.
</details>

## Node Economics

<details>
<summary><strong>What is a ThreeFold farmer?</strong></summary>

A farmer is an individual or entity that operates one or more "nodes" on the ThreeFold Grid. A node is essentially a physical or certified compute machine that provides resources like CPU, memory, and storage to the network. By making these resources available, farmers become integral to the decentralized cloud, enabling users worldwide to deploy applications, store data, and run various workloads without relying on centralized providers.
</details>

<details>
<summary><strong>How do farmers make money?</strong></summary>

Farmers earn income by renting out "slices" of their nodes:
1. Farmers invest in hardware to set up their nodes and connect them to the ThreeFold Grid
2. They can divide their nodes into multiple slices with allocated resources
3. Farmers can set their own pricing within a defined minimum and maximum range
4. When a user reserves a slice, the farmer earns income with an 80/10/10 split:
   - 80% goes directly to the farmer
   - 10% is burned to reduce token supply
   - 10% goes to ThreeFold for protocol development and maintenance
</details>

<details>

<summary><strong>How does the decentralized marketplace work?</strong></summary>

The ThreeFold Grid operates as a decentralized marketplace where farmers and users interact directly:
1. Farmers offer resources by listing their available node slices with specifications and pricing
2. Users browse available resources and reserve slices for specific durations
3. The marketplace supports dynamic pricing where prices adjust based on reservation length
4. ThreeFold sets "Bid Tiers" for various slice types to ensure baseline demand
5. Smart contracts on the ThreeFold blockchain handle reservations and payments
</details>

## Liquidity Pools

<details>
<summary><strong>Can I get my TFT back immediately after converting to CC?</strong></summary>

Not instantly. The process requires:
1. Convert CC to TFP (TFP) in Pool 2
2. Exit TFP via Dutch auction in Pool 3 to receive USDC
3. Buy TFT on the open market with USDC if you want TFT again

The original TFT you deposited is locked to back the CC that was minted.
</details>

<details>
<summary><strong>What if I just want stable income from farming?</strong></summary>

You can keep your earnings in CC for:
- Stable value (pegged to gold)
- No exposure to TFT market swings
- Ability to convert to TFP later if you want upside potential
</details>

<details>
<summary><strong>How do I benefit from TFT price increases?</strong></summary>

Convert your CC to TFP. TFP value tracks TFT market price, so if TFT goes up, your TFP position becomes more valuable in CC or USDC terms.

</details>

## Yin-Yang Currency Philosophy

<details>
<details>
<summary><strong>How is the liquidity pool different from traditional DeFi pools?</strong></summary>

The ThreeFold position-based liquidity pools are fundamentally different from traditional DeFi pools:

| Feature          | Traditional Liquidity Pools              | ThreeFold Position-Based Pools      |
| ---------------- | ---------------------------------------- | ----------------------------------- |
| LP Tokens        | Floating value tokens issued             | No tokens - fixed positions tracked |
| Your Share       | Changes with market volatility           | Fixed based on contribution + time  |
| Exit             | Instant (swap LP tokens)                 | Controlled (Dutch auction)          |
| Impermanent Loss | Yes - you lose value in volatile markets | No - your position doesn't change   |
| Gaming Risk      | Front-running, sandwich attacks          | Protected by time-weighting         |
| Best For         | Active traders                           | Long-term supporters                |

The ThreeFold approach prioritizes fairness and long-term contribution over market speculation.
</details>

<details>
<summary><strong>How does the Dutch auction exit mechanism work?</strong></summary>

The Dutch auction exit mechanism works as follows:

1. **Bids Are Submitted**: LPs submit requests with amount and minimum acceptable price
2. **Bids Are Sorted**: Ranked from lowest price to highest (those willing to accept biggest discount first)
3. **Clearing Price Is Found**: System fills bids from bottom up until reaching allowed maximum
4. **Settlement**: Successful LPs receive their share of the paired token at the clearing price

Key principles:
- No timing advantage - when you bid doesn't matter, only the price you're willing to accept
- Price determines priority - bigger discounts get filled first
- Capped exit volume - only up to 50% of total liquidity can leave through Dutch auctions
</details>

<details>
<summary><strong>What is position-based liquidity pooling?</strong></summary>

Position-based liquidity pooling tracks contributions differently than traditional pools:

- Every liquidity contribution is recorded as a fixed position with:
  - Token type (e.g., USDC, TFT)
  - Contribution amount
  - Timestamp

- No floating LP tokens are issued
- Share is determined by how much you contributed and how early you contributed
- Positions don't change with price fluctuations
- No impermanent loss like in traditional DeFi pools
</details>

<details>
<summary><strong>How does margin redistribution work in the liquidity pools?</strong></summary>

When liquidity providers exit through the Dutch auction:
- The margin between what a bidder was willing to accept and the final clearing price is collected by the pool
- This margin is aggregated across all filled bids and shared among remaining liquidity providers
- Distribution is proportional to each LP's share of the total liquidity
- The longer you hold, the more you benefit when others leave
</details>


<summary><strong>What is the philosophical foundation behind the dual token system?</strong></summary>

The ThreeFold token system is philosophically rooted in economist Bernard Lietaer's concept of complementary currencies:

**Yang Currencies**:
- Conventional, national currencies (e.g., dollar, euro, yen)
- Promote competition, scarcity, hierarchy, and analytical thinking
- Efficient for global trade and industrial economic activities

**Yin Currencies**:
- Complementary or community currencies
- Foster cooperation, egalitarian relationships, quality of life, sustainability, and social trust
- Thrive within bounded communities where circulation reinforces social cohesion

In the ThreeFold system:
- TFT serves as the Yang currency (tradable, scarce, market-driven)
- CC serves as the Yin currency (stable, community-focused, cooperative)
</details>

<details>
<summary><strong>Why are both Yin and Yang currencies important?</strong></summary>

Lietaer presents Yin and Yang currencies as complementary tools rather than antagonistic systems:

- Societies that incorporate both systems are typically more resilient and socially robust
- The dual structure aims to:
  - Preserve market efficiency and investment potential (Yang)
  - Enable stable, community-oriented value exchange (Yin)
  - Create resilience through complementarity
  - Balance speculation with sustainability

Real-world examples like Bali's dual system and Japan's care economy demonstrate how both currency types can solve multiple community needs.
</details>

## Implementation and Roadmap

<details>
<summary><strong>When will the liquidity pools be launched?</strong></summary>

The liquidity pools are planned to launch on January 1, 2026.
</details>

<details>
<summary><strong>What protections are built into the liquidity system?</strong></summary>

Several key protections ensure sustainability:

1. **No Unlimited Dumping**: Exits are capped per period (e.g., max 5% of total liquidity) and require accepting a discount
2. **Fair Distribution**: Position-based tracking means early supporters aren't diluted, with time-weighting rewarding long-term commitment
3. **Sustainable Liquidity**: Only 50% of total contributed liquidity can ever exit via Dutch auctions, with margin benefits redistributed to remaining participants
4. **Transparency**: All positions are clearly tracked and visible with consistent rules applied equally
</details>


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*This FAQ is regularly updated to reflect the latest information about ThreeFold's token economics. For the most current details, always refer to the official documentation.*