Reward Calculations

Here is a simplified example of the progressive allocation function.

The progressive allocation function is built into the contract, providing a clear framework for how rewards are distributed. To help you grasp its mechanics and enhance your strategic planning, consider the following example:

Imagine there are 10 BOX NFTs in existence. We assign an index to each NFT in ascending order and calculate the sum of an arithmetic series.

$$1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10 = 55 shares$$

Knowing that the latest auction closed with a final bid of 5 ETH, the calculation of rewards per share is conducted as follows:

$$5 ETH / 55 shares = 0.0909 ETH per share$$

We distribute the 5 ETH based on the indexing of the NFTs, which influences the share each one receives, adhering to the progressive allocation function. This ensures that each NFT's share of the rewards is calculated in a manner that reflects its position in the sequence.

$$NFT index 10 * 0.0909 = 0.909 ETH$$

$$NFT index 9 * 0.0909 = 0.818 ETH$$

$$NFT index 8 * 0.0909 = 0.727 ETH$$

In this next example, we explore the scenario where holders choose to cash in on their rewards and burn some BOX NFTs, leading to a decrease in the NFT supply.

Suppose there are now only 7 BOX NFTs in existence. Initially, a reranking occurs, ordering the NFTs from the newest to the oldest. Subsequently, the rewards are allocated across the 7 NFTs using the same progressive allocation function. The shares are distributed based on the sum of their indices:

$$1 + 2 + 3 + 4 + 5 + 6 + 7 = 28 shares$$

For the next auction, where an NFT was sold for 6 ETH, the calculation of the share reward would proceed as follows: divide the total ETH (6 ETH) by the total number of shares (28 shares), resulting in 0.2142 ETH per share. So, each share is allocated a reward of 0.2142 ETH under this distribution scheme.

$$6 ETH / 28 shares = 0.2142 ETH per share$$

To determine the reward allocation for each BOX NFT based on its index, you multiply the share value by the NFT's index number. This calculation is carried out similarly for each NFT based on its respective index, ensuring that each NFT receives a reward proportional to its position in the ranking.

$$NFT index 7 * 0.2142 = 1.5 ETH$$

$$NFT index 6 * 0.2142 = 1.285 ETH$$

$$NFT index 2 * 0.2142 = 0.4285 ETH$$

Whenever an auction comes to a close, the existing BOX NFTs earn ETH rewards, influenced by the total NFT circulation and each one's rank—from the latest to the eldest. Here's a heads-up: if any BOX NFTs are burned from the ranking's midsection, the elder NFTs rise up, suddenly reaping more rewards than before. At its core, this whole game is driven by the interplay of supply, demand, and your ranking in the lineup.