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LCO Reward Specification

Local Cable Operator (LCO) Reward Specification

A Local Cable Operator (LCO) is a network participant responsible for on-ground infrastructure deployment, management, and operational support of broadband connectivity within a given area. An LCO earns DBT tokens for enabling physical connectivity that supports hotspots, backhaul, and end-user traffic.

This section describes how LCOs earn DBT, including eligibility criteria, calculation methodology, and settlement mechanics.

Eligibility

To qualify for reward allocation in epoch t, an LCO must:

  • Be registered and validated on-chain

  • Provide documented operational support data for hotspots under its scope

  • Maintain compliance with performance and uptime requirements

  • Pass protocol integrity checks

Non-compliant or incomplete entries are excluded from reward calculations for that epoch.

Reward Components

LCOs earn rewards from the protocol based on:

  1. UBI Allocation Component

  2. Performance Pool (PP) Component

The relative contribution of each component depends on the protocol phase:

  • Year 1: 100% UBI

  • Year 2 onward: UBI + PP

Each epoch’s total reward allocation assigned to LCOs is derived from the global reward pool emitted by the protocol.

Year 1: Universal Basic Income (UBI)

During Year 1, all epoch reward allocation is distributed via UBI. Let:

  • R_t = total reward tokens assigned to LCOs in epoch t

  • L_t = total number of eligible LCO entries in epoch t

Then each LCO i receives:

RewardLCO,i,t=RtLtReward_{LCO,i,t} = \frac{R_t}{L_t}

This structure incentivizes early network coverage, broad deployment participation, and rapid onboarding of operational partners.

Year 2 Onward: UBI + Performance Pool (PP)

Beginning in Year 2, LCO rewards follow a hybrid allocation structure with two components:

  • UBI Component: fixed baseline share of $R_t$

  • Performance Pool Component: usage and contribution based share

Let:

  • UBI_t = alpha , R_t

  • PP_t = beta , R_t

  • alpha + beta = 1

Governance can tune alpha and beta to balance coverage incentives vs performance incentives.

Performance Metrics

LCO performance is quantified using two primary scores:

  1. Coverage Contribution C_LCO,i Measures the extension and density of network infrastructure supported by the operator.

  2. Support Throughput D_LCO,i Captures aggregate traffic volume sustained by hotspots under the operator’s management.

A composite score for each LCO $i$ is defined:

SLCO,i,t=wcov⋅C~LCO,i,t+wdata⋅D~LCO,i,tS_{LCO,i,t} = w_{cov} \cdot \tilde{C}_{LCO,i,t} + w_{data} \cdot \tilde{D}_{LCO,i,t}

Normalization

Let:

  • C_max,t = maximum coverage score among eligible LCOs in epoch t

  • D_max,t = maximum throughput score among eligible LCOs in epoch t

Then:

C~LCO,i,t=CLCO,i,tCmax,t\tilde{C}_{LCO,i,t} = \frac{C_{LCO,i,t}}{C_{max,t}}
D~LCO,i,t=DLCO,i,tDmax,t\tilde{D}_{LCO,i,t} = \frac{D_{LCO,i,t}}{D_{max,t}}

This prevents single outliers from skewing the pool.

Performance Pool Allocation

For each LCO i, the PP reward is:

Let S_total,t be the sum of composite scores across all eligible LCOs:

Stotal,t=∑j=1LtSLCO,j,tS_{total,t} = \sum_{j=1}^{L_t} S_{LCO,j,t}

Then LCO $i$’s share of the PP pool is:

PLCO,i,t=PPt⋅SLCO,i,tStotal,tP_{LCO,i,t} = PP_t \cdot \frac{S_{LCO,i,t}}{S_{total,t}}

Total Reward Per Epoch

Year 1 (UBI only):

RewardLCO,i,t=RtLtReward_{LCO,i,t} = \frac{R_t}{L_t}

Year 2+ (UBI + PP):

RewardLCO,i,t=UBItLt+PLCO,i,tReward_{LCO,i,t} = \frac{UBI_t}{L_t} + P_{LCO,i,t}

Where:

  • frac_UBI_t,L_t is the baseline shared equally

  • P_LCO,i,t is the performance-weighted component

This ensures LCO contributions are rewarded both for participation and measurable impact.

Settlement Mechanics

  • Reward calculations are performed off-chain in each epoch

  • Results are submitted on-chain as a single epoch settlement transaction

  • Final rewards are minted or released in DBT at the start of the next epoch

  • Each settlement logs per-operator allocations for transparency and auditing

Example (Year 2+)

Suppose:

  • Epoch reward allocated to LCOs: R_t = 100,000 DBT

  • UBI weight alpha = 0.40

  • PP weight beta = 0.60

  • Total eligible LCOs: L_t = 100

UBI component:

UBIt=0.40×100,000=40,000UBI_t = 0.40 \times 100{,}000 = 40{,}000

Baseline per LCO:

40,000100=400 DBT\frac{40{,}000}{100} = 400 \text{ DBT}

Assume normalized composite score for LCO i is 0.015 and total network score is 1.000:

PP portion:

PLCO,i,t=60,000×0.0151.000=900 DBTP_{LCO,i,t} = 60{,}000 \times \frac{0.015}{1.000} = 900 \text{ DBT}

Total reward:

RewardLCO,i,t=400+900=1,300 DBTReward_{LCO,i,t} = 400 + 900 = 1{,}300 \text{ DBT}

Governance Controls

Governance parameters that may be tuned include:

  • UBI vs PP split \alpha, \beta

  • Coverage vs throughput weight w_{cov}, w_{data}

  • Epoch timing

  • Normalization ceilings

These parameters enable protocol evolution while maintaining a transparent and measurable reward structure.

Compliance Notes

  • Only active and verified LCOs are eligible for rewards

  • Data feeds for coverage and throughput must be validated

  • Failure to meet compliance thresholds results in exclusion from that epoch’s settlement

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