---
title: $SNR Economics
description: "The role of tokenomics in the Sonr ecosystem is twofold: it provides a medium of exchange and serves as a reward mechanism for validators. The platform's native tokens are used to facilitate transactions, secure network integrity, and incentivize behaviors that contribute to the network's longevity and reliability."
sidebarTitle: "Design Model"
icon: "star"
---

<Note>
The Sonr platform has implemented a sophisticated token handling and treasury process designed to ensure the stability and sustainability of the SNR token. This process is critical in managing the economics of the Sonr ecosystem and ensuring its long-term viability.
</Note>

## Key Economic Processes

<CardGroup>
  <Card title="Buyback Process for Non-SNR Payments">
    When payments are made in currencies other than SNR, the Sonr system
    initiates a buyback process. This approach involves using the received
    non-SNR currency to purchase SNR tokens from the open market. This mechanism
    supports the demand and market value of SNR tokens and ensures a consistent
    influx of SNR into the system, reinforcing its utility and circulation
    within the ecosystem.
  </Card>
  <Card title="Contribution to SNR Fee Pool">
    The SNR tokens acquired through the buyback process are contributed to the
    SNR fee pool. This pool plays a pivotal role in the ecosystem, as it is
    utilized for various operational purposes, including network transaction
    fees, rewards for validators, and other ecosystem incentives. This
    continuous replenishment of the fee pool ensures the smooth operation and
    sustainability of the network's economic activities.
  </Card>
  <Card title="Allocation to the Treasury">
    Half of the unvested tokens, representing 50% of the total, are allocated to
    the Sonr treasury. This treasury acts as a strategic reserve, supporting the
    long-term objectives of the Sonr ecosystem. Funds from the treasury can be
    utilized for various purposes, including development initiatives, marketing
    efforts, community growth, and other activities that align with Sonr’s
    strategic goals and contribute to the overall growth and success of the
    platform.
  </Card>
  <Card title="Scaling Inflation Rewards">
    To ensure the equitable distribution of incentives and maintain a balanced
    economic model, Sonr has implemented a system where inflation rewards scale
    relative to the authentic growth of its user base. This approach means that
    as the number of genuine users on the platform increases, so do the
    inflation rewards. This scaling mechanism aligns the incentives with actual
    platform usage, fostering an environment where growth in the user base
    directly contributes to the overall health and stability of the token
    economy.
  </Card>
</CardGroup>






## Validator Incentives

Validators play a pivotal role in the network, responsible for processing authentication requests and maintaining the blockchain's integrity. They are incentivized through a task claiming process based on a first-come-first-serve mechanism and are remunerated via transaction fees and token rewards. This incentive structure ensures the high performance and reliability of services within the network.

<CardGroup>
  <Card title="Task Claiming">
    Validators select tasks from the Order Stack on a first-come-first-serve
    basis, ensuring a fair and efficient distribution of work.
  </Card>
  <Card title="Delivery and Payment">
    If a validator successfully delivers a service request, they proceed to the
    payment process. The payment is provided with a vesting schedule, aligning
    the validators' incentives with the long-term health of the network.
  </Card>
  <Card title="Slashing Conditions">
    In instances where a validator fails to deliver on a service request, a
    slashing condition is triggered. This condition serves as a deterrent
    against poor performance and ensures the reliability of services within the
    network.
  </Card>
  <Card title="Consequences of Failure">
    Failure to deliver a service results in the slashing and burning of the
    validator's staked SNR tokens. This punitive measure reinforces the
    commitment of validators to fulfill their tasks diligently and efficiently.
  </Card>
</CardGroup>
