Proposal: TEA Tokens to receive dividends instead of Global token

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The TEA Project currently uses the Harberger Tax to levy an expense on owners of state maintainer node licenses. Recall that the state maintainer license allows users to help run TEA's state machine.

• The owner sets a self-valuation price of their state maintainer seat license.
• The owner of the seat license then pays a periodic (daily) tax based on the self-valuation price (currently 7%).
• Because it's a Harberger Tax, anyone can purchase the seat license away from the current owner if they bid 1T higher than the current self-valuation price.

For example, if I valued my seat license at 2000T, I would pay 7% of that as the daily Harberger Tax, or 140T.

New Proposal: Distribute Harberger Tax to TEA Token Holders

In Epoch 10, the Harberger Tax was distributed to Global token holders, a token issued on a bonding curve that allowed all ecosystem users to participate in the profits of state maintainer seat license taxation. As we progress into Epoch 12, we are looking to distribute these taxes to TEA token holders instead.

Using another hypothetical example for illustration, let's say that there are 10 state maintainer seats with an average valuation of 2000. This results in a total daily Harberger Tax collected of 1400T.

To see how the 1400T will be distributed, we'll make use of the following diagram:

1. The public service rewards that state maintainers pay to the CML hosting miners comes out of the two sources of revenue for the state maintainer nodes: 1) memory tax 2) state txn fees. None of this comes from the collected Harberger Tax.
2. All of the Harberger Tax (1400T in our example) accrues into a temporary treasury fund. At regular intervals when this treasury has funds they'll be distributed to TEA token holders.

In this new scenario, the taxation funds get distributed directly to the TEA token holders. Note that users will receive these dividends based on the amount of TEA they have in their layer-2 wallets. The following won't be eligible for receiving dividends:

• TEA funds in layer-1 wallets (Ethereum).
• TEA funds that are locked in deposit (e.g. deposits for mining nodes).
• TEA funds that are locked in bonding curves (e.g. TApp tokens).

Why We Propose to Move Away from the Global Token

Before we discuss why we moved away from Global tokens, let's first look at an overview of the tokens currently existing in the TEA Ecosystem.

• TEA: a utility token similar to ETH. This token is used to pay for TApp usage as well as to pay for gas which is calculated based on hardware resource usage.
• CML: An NFT that functions as TEA's mining software license.
• Entity tokens: These tokens represent business entities in the TEA ecosystem, e.g. a mining machine or an application. These entities can all be tokenized to facilitate being invested in, and the token owners share in the dividends.

These are the three types of tokens circulating in the TEA network. We had earlier in Epoch 10 introduced a Global token so named because it was a "global" all-encompassing token in the TEA ecosystem. It allowed all users to invest and share in the benefits related to the state machine and other backbones of the TEA ecosystem, mainly taxes and fees on various public resources net of public service expenditures.

The issue was that Global tokens were issued on a bonding curve. Because this meant that early investors could buy cheap at the expense of later investors, it had an element that would entice speculators to treat it as an investment vehicle. Because the TEA Project team was behind the Global token, it might be construed that the TEA Project team was offering a security. It's true that the same bonding curve token exists for TApp owners and CML miners, but they can choose whether to implement the bonding curve or not. If they do and wish to enjoy the financial benefits, then they must assume the risk that they may be offering securities. Just as Ethereum only provided the underlying token infrastructure during the ICO craze of 2017, the TEA Project is only providing the token infrastructure for TApp developers and CML miners on which they can launch their tokens (the tokens are optional - any developer or miner can set the theta-% = 100 and earn all of their TApp of CML node's revenue).

Some might argue that allowing TEA tokens to generate dividends might invite scrutiny that they might be considered securities. But in context of their main use as a utility token, we feel that dividend-seeking will not be the main reason to own TEA tokens.