Rewards Overview

Skyhitz uses a dual-contract system to create a sustainable music economy powered by the HITZ token with Bitcoin-style emission.

System Overview

Two Smart Contracts

HITZ Token Contract: SEP-41 compatible fungible token with controlled emission
- Max supply: 21,000,000 HITZ
- No pre-mint: all tokens released through rewards
- Bitcoin-style halving every 4 years
- 7 decimals precision
Skyhitz Core Contract: Handles user actions, staking, and XLM fee management
- Records all user actions (stream, like, download, mine, invest)
- Manages HITZ token staking for equity actions
- Collects XLM fees to Treasury
- Distributes HITZ rewards to entry pools

HITZ Token Economics

Supply Model

Parameter	Value
Max Supply	21,000,000 HITZ
Decimals	7 (210,000,000,000,000 stroops)
Pre-mint	0 (all tokens released through rewards)
Distribution	On-demand via user actions

Emission Schedule (Bitcoin-style Halving)

The HITZ token follows Bitcoin's emission model with halvings every 4 years:

Epoch 0: 0.3 HITZ per unit (Years 0-4)
Epoch 1: 0.15 HITZ per unit (Years 4-8)
Epoch 2: 0.075 HITZ per unit (Years 8-12)
Epoch 3: 0.0375 HITZ per unit (Years 12-16)
...continues until epoch 64 (~256 years)

Halving Interval: 126,144,000 seconds (exactly 4 years)

Emission Timeline Projection

Year	Epoch	Unit Reward (HITZ)	Approx. Total Released
0-4	0	0.3	~10.5M HITZ
4-8	1	0.15	~15.75M HITZ
8-12	2	0.075	~18.375M HITZ
12-16	3	0.0375	~19.6875M HITZ
16-20	4	0.01875	~20.34M HITZ
20-24	5	0.009375	~20.67M HITZ
24+	6+	<0.005	Approaches 21M

Note: ~99% of supply released in first 24 years, similar to Bitcoin's emission curve.

Action Types & Rewards

Action	Difficulty	Base Fee	HITZ Reward (Epoch 0)	Stake Required	Type
Stream	1	0.01 XLM	0.3 HITZ	No	Micro-spend (Escrow)
Like	2	0.02 XLM	0.6 HITZ	No	Micro-spend (Escrow)
Download	3	0.03 XLM	0.9 HITZ	No	Micro-spend (Escrow)
Mine	10	0.1 XLM	3.0 HITZ	Yes (50 HITZ)	Equity (TVL)
Invest	10-1000+	0.3-100+ XLM	3.0-300+ HITZ	Yes (variable)	Equity (TVL)

Reward Calculation

Formula: HITZ Reward = difficulty × unit_reward(epoch)

Where:

difficulty = action-specific multiplier (1 for stream, 10 for mine, etc.)
unit_reward(epoch) = current epoch reward (starts at 0.3 HITZ, halves every 4 years)

Invest Action (Dynamic)

The Invest action scales with the investment amount:

Minimum: 0.3 XLM → 3 difficulty → 0.9 HITZ reward + 15 HITZ stake
Scaling: 10 difficulty units per 1 XLM
Example: 1 XLM → 10 difficulty → 3.0 HITZ reward + 50 HITZ stake
Example: 10 XLM → 100 difficulty → 30 HITZ reward + 5,000 HITZ stake

Stake Requirements

Stake Unit: 5 HITZ (50,000,000 stroops) per difficulty unit

Action	Difficulty	Stake Required
Mine	10	50 HITZ
Invest (0.3 XLM)	3	15 HITZ
Invest (1 XLM)	10	50 HITZ
Invest (10 XLM)	100	500 HITZ

Two Revenue Streams

1. Escrow (Non-Equity Revenue)

Generated by: Stream, Like, Download actions

Purpose: Performance-based revenue that reflects how much users engage with the music

Flow:

User pays XLM fee (0.01-0.03 XLM)
XLM goes to Treasury wallet
User instantly receives HITZ reward
Entry's escrow_xlm increases
Treasury bot periodically converts XLM to HITZ
HITZ distributed to entry reward pools based on escrow performance

Key Point: These actions do NOT grant equity/shares, but they DO earn HITZ rewards and contribute to the entry's reward pool growth.

2. TVL (Total Value Locked - Equity Revenue)

Generated by: Mine, Invest actions

Purpose: Entry valuation and long-term investment with equity stake

Flow:

User pays XLM fee + stakes HITZ tokens
XLM goes to Treasury wallet
HITZ tokens locked in contract as stake
User receives HITZ reward
Entry's tvl_xlm increases
User gets proportional ownership stake
User can claim proportional rewards from entry's reward pool

Key Point: These actions DO grant equity/shares (proportional to stake), allowing users to claim ongoing rewards.

Action Details

Stream (Completion)

Cost: 0.01 XLM (1× base fee)
Reward: 0.3 HITZ (epoch 0)
Difficulty: 1
Stake: None
Effect: Increases entry's escrow; user earns instant HITZ reward
When: Triggered when user completes listening to a track

Like

Cost: 0.02 XLM (2× base fee)
Reward: 0.6 HITZ (epoch 0)
Difficulty: 2
Stake: None
Effect: Increases entry's escrow; user earns instant HITZ reward
When: User likes a track

Download

Cost: 0.03 XLM (3× base fee)
Reward: 0.9 HITZ (epoch 0)
Difficulty: 3
Stake: None
Effect: Increases entry's escrow; user earns instant HITZ reward; enables download
When: User wants to download a track

Mine

Cost: 0.1 XLM + 50 HITZ stake
Reward: 3.0 HITZ (epoch 0)
Difficulty: 10
Stake: 50 HITZ (automatically locked)
Effect: Creates new entry; increases TVL; user gets equity stake
When: User brings external music (from Audius, Sound.xyz, etc.) into Skyhitz
Note: Mining involves fetching metadata, pinning to R2 storage, and initializing on-chain

Invest

Cost: 0.3+ XLM + proportional HITZ stake
Reward: 0.9+ HITZ (epoch 0), scales with amount
Difficulty: Dynamic (10 per 1 XLM)
Stake: 5 HITZ per difficulty unit (50 HITZ per 1 XLM)
Effect: Increases entry's TVL; user gets equity stake
When: User wants to increase their stake in an existing entry

Staking & Ownership

How Staking Works

When you Mine or Invest:

Your HITZ tokens are locked in the contract
Your stake is recorded for that specific entry
Entry's total stake increases
You gain proportional ownership: your_stake / total_stake

Ownership Benefits

Your ownership percentage determines:

Reward Claims: Your share of the entry's reward pool
Voting Power: Future governance rights (planned)
Entry Success: As the entry performs well, reward pool grows

Dilution

When others stake in the same entry, total stake increases
Your absolute stake amount never decreases
Your ownership percentage may decrease if others stake more
However, if the entry performs well, your absolute rewards can still increase

Example

Entry has 1000 HITZ total stake
You staked: 100 HITZ
Your ownership: 10%

Entry's reward pool grows to 500 HITZ
Your claimable: 50 HITZ (10% of 500)

Someone else stakes 500 HITZ
New total: 1500 HITZ
Your new ownership: 6.67% (100/1500)

But if reward pool grows to 900 HITZ:
Your claimable: 60 HITZ (6.67% of 900)
You still earn more despite dilution!

Claiming Rewards

Users with equity stakes (from Mine or Invest) can claim accumulated HITZ rewards from the entry's reward pool.

How It Works

Terminology (per entry):

Reward Pool: Total HITZ allocated to this entry from Treasury distributions
Total Stake: Sum of all users' HITZ stakes in this entry
User Stake: Your HITZ stake in this entry
Ownership: your_stake / total_stake
Already Claimed: Total you've claimed from this entry previously
Claimable: Your share of the pool minus what you've already claimed

Formula:

claimable = (your_stake / total_stake) × reward_pool - already_claimed

Claiming Flow

Preview (read-only): Check your claimable amount without invoking the contract
- Call get_claimable_rewards(entry_id, user)
- UI shows amount and enables "Claim" button if > 0
Claim (transaction): When you have claimable rewards
- Call claim_rewards(entry_id, claimer)
- Contract verifies you have stake in the entry
- Calculates your claimable amount
- Records the claim in claimed_rewards[user]
- Transfers HITZ from contract to your wallet
- Returns claimed amount
Multiple Claims: You can claim multiple times as rewards accumulate
- Each claim updates your claimed_rewards record
- Future claims only give you the new rewards since last claim

Example

Entry Stats:
- Total Stake: 1,000 HITZ
- Reward Pool: 500 HITZ
- Your Stake: 200 HITZ (20% ownership)

First Claim:
- Your share: 20% × 500 = 100 HITZ
- Already claimed: 0
- Claimable: 100 HITZ ✓

After First Claim:
- Your claimed record: 100 HITZ

Later, Reward Pool Grows to 800 HITZ:
- Your share: 20% × 800 = 160 HITZ
- Already claimed: 100 HITZ
- Claimable: 60 HITZ ✓

Second Claim:
- You receive: 60 HITZ
- Your claimed record: 160 HITZ

Units & Precision

Contract uses stroops (i128): 1 HITZ = 10,000,000 stroops
Proportional math uses scale constant (1,000,000) for precision
UI displays values in HITZ with appropriate formatting

Claiming FAQs

Q: Why is my claimable amount 0 even though there's a reward pool?

You may have no stake in this entry (only Mine/Invest grant stakes)
You may have already claimed all available rewards
The pool may not have grown since your last claim

Q: Does claiming reduce my stake?

No! Claiming only transfers rewards, your stake remains unchanged
You continue earning on the same stake for future rewards

Q: Does claiming reduce the entry's APR?

No. APR is calculated based on reward pool vs total stake
Your claim doesn't change the ratio for APR purposes
(Unlike the old system where claiming reduced escrow)

Q: Can I claim multiple entries at once?

Currently, claims are per-entry
Batch claiming may be added in future updates

Q: How often should I claim?

Claim whenever the amount is worth the transaction fee
There's no penalty for waiting
Your rewards are safely tracked on-chain

Creator Features (Planned)

Creator Claim

After manual verification, original creators can claim ownership of their entries
Initial allocation: 25% of total stake at claim time
Promotional boost: If they promote post-claim (criteria TBD), allocation increases to 50%
Status: Contract support ready; UI integration pending

Creator Takedown

After verification and diligent process, entries can be removed if necessary
TVL will be returned to stakers pro-rata
Stakes and rewards for removed entry cease to exist
Status: Admin function available; formal process being defined

Internal Mine / Mint

For exclusive collaborations with Skyhitz
Creators can launch exclusives with pre-agreed stake distribution
Initial percentage negotiated case-by-case
To start: email [email protected] (see landing page)

Treasury System

Treasury Bot

The Treasury bot automates the conversion of XLM fees to HITZ rewards:

Collect: Accumulated XLM fees from user actions
Convert: Buy HITZ on Stellar DEX with the collected XLM
Distribute: Send HITZ to Core contract via distribute_rewards()
Auto-Allocate: Contract distributes proportionally based on escrow performance

Key Point: The bot doesn't need to know about individual entries—the Core contract handles all distribution logic automatically based on each entry's escrow_xlm performance.

Reward Distribution Formula

For each entry:
  entry_share = (entry.escrow_xlm / total_escrow) × total_hitz_distributed

Entries with more escrow (more stream/like/download activity) receive a larger share of the HITZ reward pool, which benefits their stakers proportionally.

Economic Sustainability

Short-term (Years 0-4)

High emission rate (0.3 HITZ per unit)
Attracts early users and investors
Builds initial liquidity
Establishes entry valuations

Mid-term (Years 4-12)

Emission halves twice (0.15 → 0.075 HITZ)
Scarcity increases HITZ value
Established market dynamics
Mature staking ecosystem

Long-term (Years 12+)

Minimal new emission (<0.0375 HITZ)
HITZ becomes scarce asset
Reward pools sustained by secondary market
Ecosystem fully self-sustaining

Key Takeaways

Dual Token System: XLM for fees, HITZ for rewards and staking
Dual Revenue Streams: Escrow (performance) and TVL (equity)
Instant Rewards: All actions earn HITZ immediately
Equity Stakes: Mine and Invest grant ownership for ongoing rewards
Proportional Claims: Stakers claim rewards based on ownership percentage
Deflationary Supply: Bitcoin-style halving ensures long-term scarcity
Automated Distribution: Treasury bot and smart contract handle reward allocation
Sustainable Economics: Designed for 20+ year ecosystem growth

System Overview​

Two Smart Contracts​

HITZ Token Economics​

Supply Model​

Emission Schedule (Bitcoin-style Halving)​

Emission Timeline Projection​

User Actions​

Action Types & Rewards​

Reward Calculation​

Invest Action (Dynamic)​

Stake Requirements​

Two Revenue Streams​

1. Escrow (Non-Equity Revenue)​

2. TVL (Total Value Locked - Equity Revenue)​

Action Details​

Stream (Completion)​

Like​

Download​

Mine​

Invest​

Staking & Ownership​

How Staking Works​

Ownership Benefits​

Dilution​

Example​

Claiming Rewards​

How It Works​

Claiming Flow​

Example​

Units & Precision​

Claiming FAQs​

Creator Features (Planned)​

Creator Claim​

Creator Takedown​

Internal Mine / Mint​

Treasury System​

Treasury Bot​

Reward Distribution Formula​

Economic Sustainability​

Short-term (Years 0-4)​

Mid-term (Years 4-12)​

Long-term (Years 12+)​

Key Takeaways​

System Overview

Two Smart Contracts

HITZ Token Economics

Supply Model

Emission Schedule (Bitcoin-style Halving)

Emission Timeline Projection

User Actions

Action Types & Rewards

Reward Calculation

Invest Action (Dynamic)

Stake Requirements

Two Revenue Streams

1. Escrow (Non-Equity Revenue)

2. TVL (Total Value Locked - Equity Revenue)

Action Details

Stream (Completion)

Like

Download

Mine

Invest

Staking & Ownership

How Staking Works

Ownership Benefits

Dilution

Example

Claiming Rewards

How It Works

Claiming Flow

Example

Units & Precision

Claiming FAQs

Creator Features (Planned)

Creator Claim

Creator Takedown

Internal Mine / Mint

Treasury System

Treasury Bot

Reward Distribution Formula

Economic Sustainability

Short-term (Years 0-4)

Mid-term (Years 4-12)

Long-term (Years 12+)

Key Takeaways