Nova Rewards — Tokenomics

Version: 1.0
Last Updated: May 31, 2026
Status: Final

Executive Summary

Nova Rewards operates on a transparent, blockchain-based tokenomics model built on the Stellar network using Soroban smart contracts. The NOVA token serves as the core utility token for the rewards ecosystem, enabling merchants to incentivize customer engagement while providing users with true ownership of their loyalty rewards.

This document outlines the complete token supply, distribution model, vesting schedules, reward emission mechanics, and governance framework that powers the Nova Rewards platform.

Token Overview
Total Supply & Distribution
Vesting Schedules
Reward Emission Model
Governance Mechanics
Token Flow Diagrams
Deflationary Mechanisms
Economic Sustainability
Technical Implementation
References

Token Overview

Basic Token Information

Parameter	Value
Token Name	Nova Token
Token Symbol	NOVA
Total Supply	1,000,000,000 NOVA (1 billion)
Decimals	7 (Stellar standard)
Blockchain	Stellar (Soroban)
Token Type	Utility Token
Contract	`contracts/nova_token/src/lib.rs`
Mintable	Yes (admin-gated)
Burnable	Yes (user-initiated)

Token Utility

The NOVA token serves multiple functions within the ecosystem:

Loyalty Rewards — Merchants issue NOVA tokens to customers for purchases and engagement
Redemption Currency — Users redeem NOVA for products, services, or XLM
Staking — Users stake NOVA to earn yield (V2 feature)
Governance — Token holders vote on protocol parameter changes
Referral Incentives — Users earn NOVA for successful referrals

Total Supply & Distribution

Initial Allocation

The total supply of 1,000,000,000 NOVA tokens is allocated across six categories to balance ecosystem growth, team incentives, and long-term sustainability.

pie title Nova Token Allocation (1 Billion Total Supply)
  "Ecosystem & Rewards" : 40
  "Team & Founders" : 20
  "Public Sale" : 15
  "Treasury" : 15
  "Advisors" : 5
  "Reserve" : 5

Detailed Allocation Table

Category	% of Supply	Token Amount	Purpose
Ecosystem & Rewards	40%	400,000,000 NOVA	User rewards, merchant incentives, referral bonuses, staking yield
Team & Founders	20%	200,000,000 NOVA	Core team compensation with 12-month cliff and 36-month vesting
Public Sale	15%	150,000,000 NOVA	Community distribution, liquidity provision, exchange listings
Treasury	15%	150,000,000 NOVA	Protocol development, partnerships, emergency reserves
Advisors	5%	50,000,000 NOVA	Strategic advisors with 6-month cliff and 24-month vesting
Reserve	5%	50,000,000 NOVA	Future strategic initiatives, unforeseen opportunities
TOTAL	100%	1,000,000,000 NOVA

Allocation Rationale

Ecosystem & Rewards (40%) — The largest allocation ensures sufficient tokens to incentivize user adoption and merchant participation over a 4-year emission period
Team & Founders (20%) — Competitive compensation with long vesting to align team incentives with long-term success
Public Sale (15%) — Provides community access while maintaining decentralization
Treasury (15%) — Funds ongoing development, audits, partnerships, and operational expenses
Advisors (5%) — Attracts strategic guidance from industry experts
Reserve (5%) — Flexibility for future opportunities without requiring governance approval

Vesting Schedules

All token allocations except Ecosystem & Rewards follow time-locked vesting schedules implemented via the contracts/vesting/src/lib.rs smart contract.

Vesting Parameters by Category

Category	Cliff Period	Vesting Duration	Release Schedule	Tokens Locked at Launch
Team & Founders	12 months	36 months	Monthly linear	200,000,000 NOVA
Advisors	6 months	24 months	Monthly linear	50,000,000 NOVA
Public Sale	None	6 months	Monthly linear	150,000,000 NOVA
Ecosystem & Rewards	None	48 months	Monthly linear	400,000,000 NOVA
Treasury	None	None	Unlocked	0 NOVA
Reserve	None	12 months	Monthly linear	50,000,000 NOVA

Vesting Formula

The vesting contract implements linear time-weighted release:

vested_amount = total_amount × (time_elapsed / total_duration)

Where:

Before cliff: 0 tokens vested
After cliff, before end: Linear pro-rata release
After vesting end: 100% vested

Example: A team member with 1,000,000 NOVA vesting over 36 months with a 12-month cliff:

Months 0-12: 0 NOVA claimable (cliff period)
Month 13: 27,778 NOVA claimable (1/36 of total)
Month 24: 333,333 NOVA claimable (12/36 of total)
Month 48: 1,000,000 NOVA claimable (100%)

Circulating Supply Projections

Milestone	Circulating Supply	% of Total	Notes
Launch (Day 1)	175,000,000 NOVA	17.5%	Treasury (150M) + first month ecosystem (25M)
6 Months	275,000,000 NOVA	27.5%	+ Public sale fully vested (150M)
12 Months	350,000,000 NOVA	35.0%	+ Team cliff reached, advisors 25% vested
24 Months	550,000,000 NOVA	55.0%	+ Team 33% vested, advisors fully vested
36 Months	750,000,000 NOVA	75.0%	+ Team fully vested
48 Months	1,000,000,000 NOVA	100.0%	Fully diluted supply (all vesting complete)

Reward Emission Model

Ecosystem Allocation Distribution

The 400,000,000 NOVA Ecosystem & Rewards allocation is distributed over 48 months according to the following breakdown:

Reward Type	% of Ecosystem	Token Amount	Monthly Emission	Purpose
User Rewards	60%	240,000,000 NOVA	5,000,000 NOVA	Purchase rewards, engagement bonuses
Staking Yield	20%	80,000,000 NOVA	1,666,667 NOVA	APY for staked NOVA (V2)
Referral Bonuses	10%	40,000,000 NOVA	833,333 NOVA	Referrer and referee rewards
Merchant Incentives	10%	40,000,000 NOVA	833,333 NOVA	Onboarding bonuses, campaign co-funding

Total Monthly Emission: 8,333,333 NOVA (~0.83% of total supply)

User Reward Calculation

Merchants configure reward rates as basis points (bps) in their campaigns. The reward calculation is:

reward_amount = purchase_amount × reward_rate_bps / 10,000

Example: A $100 purchase with a 500 bps (5%) reward rate:

reward = 100 × 500 / 10,000 = 5 NOVA

Referral Reward Structure

The referral system (contracts/referral/src/lib.rs) implements a dual-reward model:

Event	Referrer Reward	Referee Reward	Total Issued
Successful Referral	10 NOVA	5 NOVA	15 NOVA
Referee First Purchase	5 NOVA	0 NOVA	5 NOVA

Constraints:

Each user can only be referred once (enforced on-chain)
Referrers tracked via counter-based leaderboard
Rewards issued immediately upon qualifying event

Staking Yield Model (V2)

Staking rewards use continuous time-weighted accrual:

yield = staked_amount × annual_rate × time_elapsed / (10,000 × SECONDS_PER_YEAR)

Where:

annual_rate — Set by admin in basis points (e.g., 500 = 5% APY)
time_elapsed — Seconds between stake and unstake
SECONDS_PER_YEAR — 31,536,000 (365 days)

Example APY Scenarios:

Staking Duration	Amount Staked	Annual Rate	Yield Earned
30 days	10,000 NOVA	5% (500 bps)	41.10 NOVA
90 days	10,000 NOVA	5% (500 bps)	123.29 NOVA
365 days	10,000 NOVA	5% (500 bps)	500.00 NOVA

Sustainability: Staking rewards are funded from the 80M NOVA staking allocation. At 5% APY with 50% of circulating supply staked, the allocation supports ~3.2 years of emissions.

Governance Mechanics

Overview

Nova Rewards implements on-chain governance via the contracts/governance/src/lib.rs contract, enabling token holders to propose and vote on protocol parameter changes.

Governance Parameters

Parameter	Value	Description
Voting Period	7 days (120,960 ledgers)	Duration for casting votes
Quorum Requirement	1 yes-vote minimum	Minimum participation for proposal validity
Proposal Creation	Open to all addresses	No token threshold required
Vote Weight	1 address = 1 vote	Simple majority (not token-weighted in V1)
Execution Authority	Admin-gated	Admin executes passed proposals

Governance Lifecycle

stateDiagram-v2
    [*] --> Active: create_proposal()
    Active --> Passed: finalise() + quorum met
    Active --> Rejected: finalise() + quorum not met
    Passed --> Executed: execute() (admin only)
    Rejected --> [*]
    Executed --> [*]

Proposal Process

Proposal Creation
- Any address calls create_proposal(proposer, title, description)
- Proposal enters Active status with 7-day voting window
- Event emitted: ("gov", "proposed")
Voting Period
- Token holders call vote(voter, proposal_id, support)
- Each address may vote once (yes or no)
- Votes tallied on-chain in real-time
- Event emitted: ("gov", "voted")
Finalization
- After 7 days, anyone calls finalise(proposal_id)
- Proposal passes if: yes_votes >= QUORUM && yes_votes > no_votes
- Status transitions to Passed or Rejected
- Event emitted: ("gov", "finalised")
Execution
- Admin calls execute(proposal_id) for passed proposals
- Status transitions to Executed
- Admin implements approved changes off-chain or via contract calls
- Event emitted: ("gov", "executed")

Governable Parameters

The following protocol parameters can be modified via governance proposals:

Parameter	Current Value	Contract	Impact
Reward Pool Daily Limit	Unlimited	`reward_pool`	User withdrawal caps
Staking Annual Rate	5% (500 bps)	`nova-rewards`	Staking yield
Referral Rewards	10 NOVA / 5 NOVA	`referral`	Referrer/referee bonuses
Admin Roles	Multi-sig addresses	`admin_roles`	Protocol control
Vesting Schedules	See table above	`vesting`	Token unlock timing

Governance Roadmap

V1 (Current):

Simple majority voting (1 address = 1 vote)
Admin-executed proposals
Minimum quorum of 1 vote

V2 (Planned):

Token-weighted voting (1 NOVA = 1 vote)
Increased quorum requirement (e.g., 10% of circulating supply)
Timelock for proposal execution (e.g., 48-hour delay)
Delegation mechanism for vote proxying
On-chain execution for whitelisted parameter changes

Token Flow Diagrams

Primary Token Flow

graph TD
    A[Treasury] -->|Mint| B[Reward Pool]
    B -->|Issue Rewards| C[Users]
    C -->|Stake| D[Staking Contract]
    D -->|Yield| C
    C -->|Redeem| E[Merchants]
    C -->|Swap| F[DEX]
    F -->|XLM| C
    C -->|Burn| G[Burned Supply]
    E -->|Deposit| B
    H[Vesting Contract] -->|Release| I[Team/Advisors]
    I -->|Stake/Transfer| C

Merchant Reward Issuance Flow

sequenceDiagram
    participant M as Merchant
    participant RP as Reward Pool
    participant U as User
    participant NT as Nova Token

    M->>RP: deposit(amount)
    Note over RP: Pool balance increases
    U->>M: Makes purchase
    M->>RP: withdraw(user, reward_amount)
    RP->>NT: transfer(pool, user, amount)
    NT->>U: Balance updated
    Note over U: Reward credited

Redemption & Burn Flow

sequenceDiagram
    participant U as User
    participant NR as Nova Rewards Contract
    participant NT as Nova Token
    participant DEX as Stellar DEX

    U->>NR: swap_for_xlm(nova_amount)
    NR->>NT: burn(user, nova_amount)
    Note over NT: Tokens permanently removed
    NR->>DEX: Multi-hop swap (NOVA → XLM)
    DEX->>U: XLM transferred
    Note over U: Redemption complete

Governance Proposal Flow

sequenceDiagram
    participant P as Proposer
    participant GC as Governance Contract
    participant V as Voters
    participant A as Admin

    P->>GC: create_proposal(title, description)
    Note over GC: Proposal Active (7 days)
    V->>GC: vote(proposal_id, support)
    Note over GC: Votes tallied
    V->>GC: finalise(proposal_id)
    alt Passed
        GC->>A: Proposal Passed
        A->>GC: execute(proposal_id)
        Note over GC: Status: Executed
    else Rejected
        Note over GC: Status: Rejected
    end

Deflationary Mechanisms

Token Burn on Redemption

The NOVA token implements a deflationary model where tokens are permanently removed from circulation when users redeem rewards for XLM.

Burn Mechanism

Trigger	Contract Function	Burn Amount	Implementation
XLM Swap	`swap_for_xlm()`	100% of swapped NOVA	`nova_token::burn(from, amount)`
Redemption Fee	Future implementation	TBD% of redemption	Not yet implemented

Current Implementation:

// From contracts/nova-rewards/src/lib.rs
pub fn swap_for_xlm(env: Env, from: Address, nova_amount: i128) {
    from.require_auth();
    // Burn the full NOVA amount
    nova_token_client.burn(&from, &nova_amount);
    // Execute multi-hop swap for XLM
    // ...
}

Burn Rate Projections

Projected annual token burn under three adoption scenarios:

Scenario	Annual Redemptions	Avg Redemption Size	Tokens Burned/Year	% of Supply
Low Adoption	100,000	50 NOVA	5,000,000 NOVA	0.5%
Moderate Adoption	500,000	100 NOVA	50,000,000 NOVA	5.0%
High Adoption	2,000,000	150 NOVA	300,000,000 NOVA	30.0%

Assumptions:

Low: 10% of users redeem monthly
Moderate: 30% of users redeem monthly
High: 60% of users redeem monthly

Deflationary Impact

The burn mechanism creates long-term deflationary pressure:

Year	Circulating Supply (Moderate)	Burned (Cumulative)	Net Supply
Year 1	350,000,000	50,000,000	300,000,000
Year 2	550,000,000	100,000,000	450,000,000
Year 3	750,000,000	150,000,000	600,000,000
Year 4	1,000,000,000	200,000,000	800,000,000

Note: Actual burn rates depend on user behavior, merchant adoption, and XLM liquidity.

Economic Sustainability

Emission vs. Burn Balance

The tokenomics model balances inflationary emissions with deflationary burns:

Inflationary Pressures:

Monthly ecosystem emission: 8,333,333 NOVA
Vesting unlocks: Variable by schedule
Total 4-year emission: 400,000,000 NOVA

Deflationary Pressures:

Redemption burns: 50-300M NOVA/year (scenario-dependent)
No re-minting of burned tokens
Permanent supply reduction

Equilibrium Point: At moderate adoption (5% annual burn), the protocol reaches supply equilibrium around Year 3, after which net supply decreases.

Treasury Sustainability

The 150,000,000 NOVA Treasury allocation funds:

Expense Category	Annual Budget	4-Year Total	% of Treasury
Development	15,000,000 NOVA	60,000,000 NOVA	40%
Partnerships	7,500,000 NOVA	30,000,000 NOVA	20%
Audits & Security	5,000,000 NOVA	20,000,000 NOVA	13%
Marketing	7,500,000 NOVA	30,000,000 NOVA	20%
Emergency Reserve	—	10,000,000 NOVA	7%

Sustainability Measures:

Treasury funds released quarterly based on milestones
Governance approval required for expenditures >5M NOVA
Unused funds roll over to subsequent quarters

Staking Yield Sustainability

The 80,000,000 NOVA staking allocation supports yield at various participation rates:

Staking Participation	Annual Yield (5% APY)	Years Sustainable
10% of supply	5,000,000 NOVA	16 years
30% of supply	15,000,000 NOVA	5.3 years
50% of supply	25,000,000 NOVA	3.2 years

Adaptive Yield Strategy:

Admin adjusts annual_rate based on staking participation
Target: 30% participation at 5% APY for 5+ year runway
Governance can allocate additional Treasury funds if needed

Technical Implementation

Smart Contract Architecture

Contract	File Path	Primary Functions	Token Role
Nova Token	`contracts/nova_token/src/lib.rs`	`mint()`, `burn()`, `transfer()`, `approve()`	Core ERC-20 implementation
Reward Pool	`contracts/reward_pool/src/lib.rs`	`deposit()`, `withdraw()`, `set_daily_limit()`	Merchant funding, user withdrawals
Vesting	`contracts/vesting/src/lib.rs`	`create_schedule()`, `release()`	Time-locked token distribution
Governance	`contracts/governance/src/lib.rs`	`create_proposal()`, `vote()`, `execute()`	Protocol parameter changes
Referral	`contracts/referral/src/lib.rs`	`register_referral()`, `claim_reward()`	Referral tracking and rewards
Nova Rewards	`contracts/nova-rewards/src/lib.rs`	`stake()`, `unstake()`, `swap_for_xlm()`	Staking and redemption logic

Token Supply Management

Minting Authority:

Admin-gated via nova_token::mint(to, amount)
No hardcoded supply cap (enforced at application layer)
Minting events logged on-chain: ("nova_tok", "mint")

Burning Mechanism:

User-initiated via nova_token::burn(from, amount)
Requires from authorization
Permanently reduces circulating supply
Burn events logged: ("nova_tok", "burn")

Supply Tracking:

// Pseudo-code for supply calculation
total_minted = sum(all mint events)
total_burned = sum(all burn events)
circulating_supply = total_minted - total_burned - vesting_locked

Precision & Arithmetic

All token amounts use i128 with 7 decimal places (Stellar standard):

// Example: 1 NOVA = 10,000,000 stroops
const STROOP_MULTIPLIER: i128 = 10_000_000;

// Reward calculation with fixed-point arithmetic
let reward = (purchase_amount * reward_rate_bps) / 10_000;

Overflow Protection:

saturating_add() and saturating_sub() prevent overflow panics
All arithmetic operations validated in unit tests

Storage Optimization

Token balances and allowances use persistent storage with automatic TTL extension:

// From nova_token/src/lib.rs
fn set_balance(env: &Env, addr: &Address, amount: i128) {
    let key = DataKey::Balance(addr.clone());
    env.storage().persistent().set(&key, &amount);
    // Extend TTL by 31 days (2,678,400 ledgers at 5s/ledger)
    env.storage().persistent().extend_ttl(&key, 2_678_400, 2_678_400);
}

Storage Costs:

Balance entries: ~100 bytes per address
Vesting schedules: ~200 bytes per schedule
Governance proposals: ~500 bytes per proposal

References

Smart Contract Documentation

Contract	Documentation	ABI
Nova Token	`contracts/nova_token/src/lib.rs`	`docs/abis/nova_token.json`
Reward Pool	`contracts/reward_pool/src/lib.rs`	`docs/abis/reward_pool.json`
Vesting	`contracts/vesting/src/lib.rs`	`docs/abis/vesting.json`
Governance	`contracts/governance/src/lib.rs`	`docs/abis/governance.json`
Referral	`contracts/referral/src/lib.rs`	`docs/abis/referral.json`
Nova Rewards	`contracts/nova-rewards/src/lib.rs`	`docs/abis/nova_rewards.json`

External Resources

Stellar Documentation — Blockchain platform docs
Soroban Smart Contracts — Smart contract framework
Freighter Wallet — User wallet integration

Appendix: Tokenomics Assumptions

Key Assumptions

User Adoption: 10,000 users by Month 6, 50,000 by Year 1
Merchant Adoption: 50 merchants by Public Launch, 200 by Year 1
Average Reward Rate: 3-5% of purchase value
Redemption Rate: 25% of earned rewards redeemed within 90 days
Staking Participation: 30% of circulating supply staked by Year 2
XLM Liquidity: Sufficient DEX liquidity for <5% slippage on swaps up to 10,000 NOVA

Risk Factors

Regulatory Changes: Token classification or securities regulations may impact distribution
Market Volatility: XLM price fluctuations affect redemption value
Adoption Risk: Lower-than-projected user/merchant adoption reduces burn rate
Liquidity Risk: Insufficient DEX liquidity increases swap slippage
Smart Contract Risk: Bugs or exploits could compromise token integrity

Mitigation Strategies

Legal Review: Ongoing compliance monitoring and legal counsel
Liquidity Incentives: Treasury funds allocated for DEX liquidity provision
Adaptive Emissions: Governance can adjust reward rates based on adoption
Security Audits: External audits before Mainnet launch and major upgrades
Emergency Pause: Admin can pause critical functions if vulnerabilities detected

Revision History

Version	Date	Author	Changes
1.0	2026-05-31	AI Assistant	Complete tokenomics documentation for issue #911

Document Status: Final — Ready for stakeholder review and publication

Closes: #911

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