Tokenomics

The DPO2U framework utilizes a dual-token model bridging Cardano and the Midnight Network to sustain an autonomous economy of AI Agents.

Cardano and Midnight

Midnight Network is a partner chain of Cardano. $NIGHT is a Cardano Native Asset, while $DUST operates exclusively on the Midnight layer. This dual-token design separates economic incentives from execution costs.

1. $NIGHT (The economy token)

$NIGHT is a Cardano Native Asset. It acts as the backbone of the platform's viability.

• Service Funding: Companies pay $NIGHT to request LGPD Kits, compliance checks, or continuous monitoring.
• Agent Rewards: Agents receive portions of $NIGHT dispersed via the FeeDistributor.compact contract as a reward for successful task completion.
• Staking: Future features will allow validators and businesses to stake $NIGHT to improve their trust scores.

2. $DUST (The execution token)

$DUST operates purely on the Midnight layer as a non-transferable token subject to decay over time.

• Gas / Execution Fees: It is exclusively used to pay for the execution of operations and state changes within the Compact smart contracts (e.g., registering the Attestation).
• Privacy Operations: Necessary for shielding transactions and generating zk-SNARKs.

Token supply and distribution

Parameter	Value
Total supply	100,000,000 $NIGHT
Transfer fee	1% on every transfer → routed to Treasury
Burn mechanism	Treasury can burn excess $NIGHT via governance vote

Allocation breakdown

Allocation	Percentage	Purpose
Agent operations	40%	Reserved for agent rewards and operational costs
Treasury reserve	25%	Protocol sustainability and ecosystem growth
Community & staking	20%	Future staking rewards and community incentives
Founder (vested)	15%	12-month linear vesting, no cliff

Fee structure

Every $NIGHT transfer incurs a 1% fee that flows automatically to the Treasury contract. When the Auditor Agent completes a compliance task, the FeeDistributor allocates rewards:

Recipient	Share	Description
Expert Agent	40%	Generates the LGPD Kit and documentation
Auditor Agent	60%	Validates compliance and emits on-chain Attestation

The split incentivizes accurate validation (higher share for the Auditor) while rewarding the upfront generation work by the Expert.

Deflationary mechanics

The Treasury contract supports a burn() function callable by governance. This creates a deflationary pressure that counteracts token inflation from rewards:

1. Fee accumulation — 1% of every $NIGHT transfer accumulates in the Treasury
2. Swap execution — SwapExecutor converts accumulated $NIGHT to USDC (Uniswap V3) every 6 hours
3. Burn events — governance can vote to burn excess Treasury $NIGHT, reducing circulating supply
4. Net effect — active token usage simultaneously funds operations and reduces supply

The self-funding autonomy model

Agents are designed to be entirely decoupled from maintaining balance sheets on centralized infrastructure. They follow a self-sustaining loop:

1. Intake: The Treasury receives a service fee in $NIGHT from a client.
2. Work: The Auditor Agent performs the cryptographic validation.
3. Execution: The Auditor Agent expends $DUST from its own linked wallet to write the Attestation to the Midnight blockchain.
4. Compensation: The FeeDistributor automatically credits the agent's wallet with $NIGHT proportionally to the work done.
5. Sustainability: The agent holds enough value to continuously purchase or bridge into more $DUST, keeping it perpetually active without human intervention.

Philosophical foundation

The self-funding model is grounded in game theory and incremental improvement. For the full philosophical framework (Axelrod's cooperation theory, protopian economics, antifragility), see the Introduction.

What's next

• Smart Contracts — Compact contracts implementing the fee and distribution logic
• Architecture — how the economic layer fits into the 5-layer protocol stack
• Agents — the 6 active agents and their on-chain permissions