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How it worksTokenomics of the BigFile

Tokenomics of the BigFile

The BIG utility token

The BigFile (BIG) network utilizes a utility token called BIG, which serves several functions within the protocol:

  1. Governance: Any BIG holder can participate in the governance of the BIG network by staking BIG tokens. This allows them to vote on or submit governance proposals and earn voting rewards.
  2. Resource Payment: BIG can be converted into cycles, which are used to pay for BigFile resources.
  3. Node Provider Remuneration: BIG tokens are used to compensate node providers who operate the node machines that run the BigFile network.
  4. Participation in DAOs: BIG can be used to participate in token swaps of decentralized autonomous organizations (DAOs) on the BIG network.

These four protocol use cases are elaborated on in the following sections. Additionally, BIG can be used as a medium of exchange to pay for goods and services such as NFTs, subscriptions, and more.

Governance and voting rewards

Anyone can participate in the governance of the BIG network by staking BIG tokens in what are called neurons. Neuron holders can vote on proposals—suggestions on how the BIG network should evolve. A neuron's voting power is proportional to the amount of BIG staked and other characteristics, such as the staking duration. For example, a neuron can double its voting power by setting the staking duration to the maximum of 8 years. This increased voting power for longer staking periods creates an incentive to vote on proposals that aim to maximize the value of their staked BIG over the long term.

Participation in governance increases the maturity of voting neurons, which can then be used to mint BIG. Every day, the BIG network calculates a voting reward pot according to a schedule and divides it among all eligible neurons based on their relative voting power. The reward schedule is designed to incentivize early adoption: Initially, at genesis, maturity corresponding to 10% of the total supply of BIG is distributed as voting rewards on an annualized basis. Over the course of ten years, this percentage decreases to 5%.

Because the daily reward amount is independent of the overall amount of staked BIG in the system, rewards are distributed to neurons in proportion to their voting power and the proportion of proposals they voted on. This mechanism naturally incentivizes staking BIG and participating in governance: the lower the participation, the higher the rewards.

Neurons can be configured to vote automatically by following the votes of other neurons, an advanced form of "liquid democracy." Neurons that vote automatically still receive their full share of voting rewards, enabling the BIG community to reach decisions securely and quickly.

Cycles as fuel for computation and other resources

BIG tokens can be used to pay for the resources consumed on the BIG network. Specifically, BIG tokens can be converted into cycles (i.e., burned), and these cycles are used by developers to pay for installing smart contracts, known as "cubes," on the BIG network, as well as for the resources that cubes consume (such as storage, CPU, and bandwidth). The cycle price is pegged to a basket of fiat currencies, so the conversion rate from BIG to cycles fluctuates with the market price of BIG. This ensures that the cost to developers for acquiring fuel to run their applications remains predictable.

In this so-called "reverse gas model" of the BIG network, developers pre-pay costs by loading their canisters with computation cycles. As a result, users can interact with decentralized applications (dapps) without needing tokens or dealing with seed phrases. Since the cost of cycles is stable, developers can accurately estimate how much they will need to spend on computation, storage, and other resources.

Node provider rewards

BIG tokens are used to remunerate node providers—entities that own and operate the computing nodes that run the BigFile network. Node provider rewards are paid in newly minted BIG tokens. The remuneration they receive is fixed per node and is closely related to their actual costs. It depends on two main factors: First, the location of the node, as hosting prices vary between locations. Second, the type of node, which refers to the hardware and connectivity specifications.

To cover the investment and running costs of nodes, which are incurred in fiat currency, node provider rewards are specified in XDR (a basket of international currencies) and are converted into BIG based on the average exchange rate over the last 30 days.

Investing in the BIG ecosystem

BIG provides a plug-and-play solution for developers to transfer control of their dapps to a Decentralized Autonomous Organization (DAO) and raise funds in the process.

As part of a "decentralization swap," users can commit BIG tokens to a new DAO. In return, once the decentralization swap is complete, these users receive tokens of the DAO, with everyone paying the same price. Developers can specify a time period and set minimum and maximum funding targets of BIG to be collected, which determines when the sale concludes.

The BIG tokens raised through the decentralization swap are retained within the reserves of the fully autonomous DAO, rather than being forwarded to the original developers of the dapp or service. These funds can be used to pay for future computation needs of the dapp and to offer code bounties for future enhancements.

Investments via decentralization swaps in DAOs act as rocket fuel for the BIG ecosystem, providing easy and transparent access to exciting Web3 projects and channeling funds into the productive use of the platform.

Development of total supply

BIG has both inflationary and deflationary mechanisms. Governance participants can convert their voting rewards into newly minted BIG tokens, and node providers receive their rewards in the form of newly minted BIG as well. On the other hand, BIG is converted into cycles (i.e., burned) to pay for computation and storage, creating a deflationary effect.