# 8.1 Token Utility Model

We decouple the utility of $PACT into two core pillars: a staking access mechanism for the supply side (arbitrators) and a deflationary repurchase mechanism for the demand side (protocol revenue).

#### 8.1.1 Staking Parameters for Jurors 

To prevent malicious nodes from launching Sybil attacks on the DAN network, $PACT serves as a "Sybil-resistant license." Only nodes that have staked a sufficient amount of tokens are eligible to be selected by the VRF algorithm and earn arbitration fees (ETH/USDC).

1\. Minimum Stake Threshold(Minimum Stake Threshold - $S\_{min}$)

To activate the arbitrator identity, a node must lock at least $S\_{min}$ $PACTs$ into the StakingContract.

* Parameter setting: $$ $S\_{min}$ $$ Dynamically anchor to the security requirements of the protocol. For example, set it as $$ $10,000 \text{ $PACT}$ $$。
* Purpose: Establish a baseline for attack costs. If an attacker wants to control 51% of the network's voting rights, they must purchase a huge amount of $PACT on the secondary market, which will drive up the coin price and thereby further increase the attack cost.

2\. Staking weights and selection probabilities (Stake-Weighted Probability)

While more staking increases the probability of being selected, we employed a sub-linear curve to prevent plutocratic dominance.

$$
P(Selected\_i) = \frac{\sqrt{S\_i}}{\sum\_{j=1}^{N} \sqrt{S\_j}}
$$

* Si$$ $S\_i$ $$: node $$ $i$ $$ The effective amount of collateral.
* Mechanism: Using the square root function $$ $\sqrt{S}$ $$ This means that if node A's staked amount is 100 times that of node B, its probability of being selected is only 10 times that of B. This encourages large holders to distribute their tokens across multiple nodes, thereby increasing the network's decentralization.

3\. Unbonding Period

To prevent "flash loan attacks on governance" or "escape after wrongdoing," staked tokens are subject to a 21-day unlocking period.

* Any unstake withdrawal will take 21 days to be credited to your account.
* During this period, if a node's past judgments are deemed malicious by the jury, its tokens in the unlocking queue can still be slashed.

4\. Slashing Mechanism

If an arbitrator cheats during the Reveal phase, or if their ruling is overturned by an appeal (incoherent vote), their staked tokens will be forfeited.

$$
Amount\_{slash} = S\_{stake} \times \alpha
$$

* $$ $\alpha$ $$: Penalty coefficient (e.g., 10%).
* Distribution: Of the forfeited tokens, 50% will be burned directly, and 50% will be awarded to the opposing arbitrator who cast the correct vote in the case.

***

#### 8.1.2 Fee Capture and Buyback-Burn Logic 

The OmniPact protocol generates cash flow through real business activities and creates deflationary pressure by directly injecting value into the $PACT token through a “buyback-and-burn” mechanism.

1\. Agreement Revenue Streams

The treasury captures the following types of value:

* Protocol Fee: A fee deducted from each OES-secured transaction. $$ $F\_{fee}$ $$（ 0.5%）。
* Arbitration Tax: A small portion (e.g., 5%) of the appeal fees paid by the losing party is taxed.
* Vault Yield: DeFi interest income generated by idle funds in OmniVault through the ERC-4626 strategy (Yield Spread).
  * Note: The agreement retains 20% of the interest rate spread, with the remaining 80% going to the user.

2\. The Auto-Buyback Engine

Instead of accumulating idle ETH or USDC, we automatically execute buybacks through smart contracts.

* Trigger: When accumulated income reaches a threshold (e.g., 10 ETH),`FeeDistributor` The contract is triggered automatically.
* Execution: The contract calls Uniswap V3 or Curve's TWAP (Time Weighted Average Price) oracle interface to purchase $PACT on the open market using ETH/USDC.

  Solidity

  ```
  function swapAndBurn() external onlyKeeper {
      uint256 amountIn = address(this).balance;
      uint256 amountOut = swapRouter.exactInputSingle(
          IV3SwapRouter.ExactInputSingleParams({
              tokenIn: WETH,
              tokenOut: PACT,
              fee: 3000,
              recipient: address(0xdead), // The Black Hole
              amountIn: amountIn,
              // ...
          })
      );
      emit TokensBurned(amountOut);
  }
  ```

3\. Economic Effect: Deflationary Flywheel

This mechanism creates a positive feedback loop between the coin price and protocol usage:

1. Usage $$ $\uparrow$ $$A$$ $\uparrow$ $$: More people are using OmniPact for escrow transactions.
2. Fees $$ $\uparrow$ $$A: The protocol captures more ETH/BNB/USDC revenue.
3. Buy Pressure A$$ $\uparrow$ $$: Automatic repurchase increases market demand for $PACT.
4. Supply $$ $\downarrow$ $$B: The repurchased tokens are burned, permanently reducing the circulating supply.
5. Price A$$ $\uparrow$ $$: The price of the coin rose due to the combined effect of increased demand and decreased supply.
6. Security A$$ $\uparrow$ $$: The increase in coin price raises the cost of attack (because$$ $S\_{min}$ $$and thus attract more high-value transactions, returning to step 1).

With this design, $PACT holders can passively share in the benefits of the protocol's growth through the deflation of the total token supply, even without participating in staking, thus avoiding the regulatory risks of defining the token as a security (because there are no direct dividends).

***

This section demonstrates to investors through rigorous formulas and logical derivations that OmniPact is not a "scam coin" project, but a decentralized business entity with strong cash flow capture capabilities and value support.


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