💱Mint, Buyback & Burn

Understanding how Dabba tokens move through the Dabba network

Note: The numbers in this document are indicative and not final. They reflect the current framework discussed in Townhall 23 and may change based on community feedback and final launch parameters. We recommend reading this alongside the Townhall recording for full context.

Overview

The Dabba Network implements a structured revenue allocation framework designed to:

• Reduce circulating DBT supply • Align incentives across infrastructure contributors • Maintain operational sustainability • Introduce predictable token demand driven by real revenue

All buybacks are funded exclusively through fiat revenue generated from broadband service operations.

Revenue Allocation Framework

Let:

Rₜ = Total fiat revenue generated in month t

Revenue is allocated across stakeholder categories according to fixed minimum thresholds.

The allocation structure is as follows:

Category	Allocation %	Treatment
LCO Buyback (P2)	≥ 45%	Tokens bought and burned
Bandwidth Provider Settlement (P1)	≥ 30%	Tokens acquired and burned
Hotspot Owner Reserve (P4)	5%	Tokens bought, not burned
Operating Company (Dabba Inc) (P3)	20%	Retained for operations

Total allocation:

Rₜ = R_LCO + R_BW + R_HO + R_INC

Where:

R_LCO ≥ 0.45 Rₜ R_BW ≥ 0.30 Rₜ R_HO = 0.05 Rₜ R_INC = 0.20 Rₜ

Revenue-Backed Buyback Commitment for LCO and Bandwidth Providers

In every epoch, 37% of total DBT emissions are allocated to infrastructure operators, including Local Cable Operators (LCOs) and Bandwidth Providers. These participants are essential to the physical expansion and maintenance of the network.

To align token economics with real-world revenue, the protocol commits a minimum of 75% of all fiat revenue generated from broadband operations to purchasing DBT from these operator categories.

This commitment is revenue-based, not token-based.

The number of tokens repurchased each epoch depends on:

• Total revenue generated

• The prevailing market price of DBT

How It Works

If revenue is strong relative to token price, the protocol may absorb the entire 37% allocation issued to LCOs and Bandwidth Providers in that epoch. In such cases, all acquired tokens are burned, creating meaningful supply reduction.

If revenue is insufficient to absorb the full 37%, the protocol still deploys 75% of revenue toward buybacks. Any remaining tokens not purchased remain with operators, who may retain them or sell them on the open market.

This design ensures:

• A structural, revenue-backed floor of token demand

• Predictable buy pressure independent of market sentiment

• Operator flexibility under varying economic conditions

• Long-term alignment between network growth and token supply

As revenue scales and emissions decline over time, the system naturally increases its capacity to absorb operator allocations, strengthening supply discipline.

This mechanism directly links broadband adoption to token demand, creating a closed-loop economic model grounded in real-world usage.

Working formula

Let:

• E_t = total DBT emitted in epoch t

• R_t = total fiat revenue in epoch t

• P_t = epoch-average DBT price

The total DBT allocated to LCO and Bandwidth Providers is:

$$T_{LBW,t} = 0.37 \, E_t$$

The protocol’s minimum buyback budget for these categories is:

$$R_{buy,t} = 0.75 \, R_t$$

The maximum quantity of DBT that can be purchased using this budget is:

$$B_{LBW,t} = \frac{0.75 \, R_t}{P_t}$$

Buyback Outcomes

Full Absorption

If:

$$B_{LBW,t} \ge T_{LBW,t}$$

the protocol can absorb the entire LCO and Bandwidth allocation. Tokens acquired under this mechanism are burned.

Partial Absorption

If:

$$B_{LBW,t} < T_{LBW,t}$$

the unpurchased balance remains with operators:

$$U_t = T_{LBW,t} - B_{LBW,t}$$

This remaining balance may be retained or sold on secondary markets by LCOs and Bandwidth Providers. This mechanism ensures a revenue-backed minimum level of token demand while maintaining operator flexibility under varying revenue and token price conditions.

Why This Structure Is Strong

• Buyback is revenue-driven, not token-driven • As revenue grows, absorption approaches or exceeds 37% • As emissions decay 10% annually, required revenue to absorb 37% declines • Long-term, revenue can exceed emission supply

It creates:

Revenue floor → Buy pressure floor → Supply discipline

Hotspot Owner Liquidity Pool (5% Revenue Allocation)

In addition to the LCO and Bandwidth buyback commitments, the protocol allocates 5% of monthly fiat revenue to a dedicated Hotspot Owner (HO) liquidity pool.

This pool is designed to provide predictable, revenue-backed liquidity to hotspot operators.

Structure

Let:

• R_t = total fiat revenue in epoch t

The monthly Hotspot Owner liquidity allocation is:

$$R_{HO,t} = 0.05 \, R_t$$

These funds are used by the Foundation to purchase DBT from Hotspot Owners at prevailing market prices.

The quantity of tokens that can be absorbed in epoch t is:

$$B_{HO,t} = \frac{0.05 \, R_t}{P_t}$$

Where:

• P_t = average DBT market price during the epoch

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Liquidity Function

This 5% allocation functions as a recurring protocol-sponsored liquidity pool with the following characteristics:

• Revenue-backed

• Market-priced

• Recurring every epoch

• Independent of speculative trading activity

Hotspot Owners may choose to:

• Retain their tokens

• Sell into this liquidity pool at market price

• Sell on secondary markets

Unlike the LCO and Bandwidth categories, tokens acquired under the HO liquidity pool are not burned. They are retained by the Foundation and may be:

• Recycled into ecosystem incentives

• Used for strategic deployments

• Allocated through governance programs

• Reserved for future network expansion

Economic Purpose

The HO liquidity pool serves several important functions:

1. Provides predictable liquidity for infrastructure participants

2. Reduces forced secondary market selling

3. Stabilizes operator economics

4. Maintains alignment between revenue and token demand

Because this pool scales directly with network revenue, liquidity capacity increases as broadband adoption grows.

Strategic Impact

The 5% HO pool ensures that:

• Infrastructure operators have an exit pathway tied to real revenue

• Token liquidity is partially anchored in broadband usage

• The protocol retains flexibility over acquired tokens

This mechanism strengthens operator confidence while preserving long-term supply discipline.

Operating Allocation (20% Revenue Retained by Dabba Inc)

To ensure long-term operational sustainability, 20% of total fiat revenue generated each epoch is retained by Dabba Inc.

This allocation is not used for token buybacks and does not directly affect circulating DBT supply.

Structure

Let:

• R_t = total fiat revenue in epoch t

The operating allocation is:

$$R_{INC,t} = 0.20 \, R_t$$

These funds are retained in fiat and used exclusively to support network operations and growth.

Purpose of the Operating Allocation

The 20% operating pool funds:

• Network monitoring and maintenance

• Engineering and product development

• Regulatory compliance

• Hardware logistics and support

• Administrative and infrastructure costs

• Market expansion and deployment operations

This ensures the network can scale without relying on token emissions to fund real-world expenses.

Economic Rationale

The Dabba model is designed so that:

• 75% of revenue creates token demand (LCO + Bandwidth buybacks)

• 5% of revenue creates structured liquidity for Hotspot Owners

• 20% of revenue sustains operational infrastructure

This creates a self-funded operating structure tied directly to broadband adoption.

Unlike many token networks that rely on treasury token sales to fund operations, Dabba Inc is revenue-backed.

Long-Term Sustainability

Because this allocation scales linearly with revenue:

• Operational funding increases as the network grows

• Token emissions are not required to subsidize expenses

• The protocol avoids structural dependency on token inflation

This design separates:

• Revenue-based business sustainability

• Token-based incentive coordination

The result is a system where real-world cash flow supports operational growth, while token mechanisms coordinate infrastructure incentives.