---
# System prepended metadata

title: BZZ TOKEN
tags: [BZZ Token]

---

# BZZ TOKEN

## THE NEED OF A TOKEN

The SWARM Network allows any participant to store and access any type of information, on demand, in a decentralized network of information hosters and relayers.

There are three main problems with _all_ types of peer-to-peer network:
1. No built-in incentives 
2. Slow and delayed response 
3. Unrelated small chunks of info

These shorcomings are not alien to p2p storage networks. 

SWARM creates a set of mechanisms to solve these problems using BZZ token as the means of deposit and payment among peers. Storage, retrieval accounting, prioritization and persistence mechanisms are created, using the token as the sole unit of account.

In essence, the entirety of BZZ tokens claim on the use of all resources available in the network, storage and bandwidth, serving as an intermediary unit for the barter of these resources.

Therefore, the main idea of BZZ is to serve as the “fuel” for storing and retrieving information contained within the network, balancing all the resources available.


## A TOKEN TO BE USED

The main actions that can be performed with the token are storing and retrieving information, at the core of the network. Therefore, BZZ token can be used to pay storage providers to store chunks of information and to claim information hosted by them.

Since the network is based on a peer-to-peer tit-for-tat scheme and anyone can be a user and an storer simultaneously, it is needed to keep an accounting system of microtransactions for all information served and retrieved. Therefore, BZZ token is used to account resource imbalance between peers. 

For example, if a user serves a 1GB file, he has the right to reclaim 1GB from the network to reach balance cero.


![](https://i.imgur.com/1xGCzaw.png)

The accounting system is called SWAP, using BZZ as unit of account.

Information sent to the network can be ephemeral, consumed or used for a short period of time, as in real-time messaging. But also, it can be less temporal where an incentive ‘not to delete’ immediately is needed.

To create persistence, the token will be also used to store non-transient information for longer periods of time, through ‘Postage Stamps’ in the Swarm network. These are created up-front with BZZ tokens locked up and attached to a specific set of information.


## A TOKEN TO REPRESENT RESOURCES

Network resources are shared within all users of the Swarm network. These resources basically consist on:
1. Storage
2. Bandwidth

Every provider has of course a cost associated to providing resources: Electricity to be paid, hard drives to be installed and nodes to be set. There is a resource conversion to BZZ Token and as a provider, you can change unilaterally the BZZ price for the resources you provide. The final conversion will depend on the kind of information exchanged, amount of information and competition on the network.

Therefore, all BZZ tokens together represent all the storage available within the network.


## A TOKEN WITH DYNAMIC PRICING

Every provider will consequently set a pricing for their resources that matches a two-sided competitive market of supply and demand: users competing for available hard disk space and bandwidth (demand), and storage providers competing for users (supply). There will be a price equilibrium between these forces.

Consecuently, price fluctuation comes from two places:
* BZZ/DAI: depends on the amount of tokens in circulation and comes purely from the token bonding curve, the minting process.
* RESOURCES/BZZ: network resources measured as BZZ tokens, stablished independently by each provider in a competitive market.

The more resources available with a fixed demand, the lower the ratio RESOURCES/BZZ, and the more value the network has as a storage network. Therefore, the BZZ Token price will go up when the provided capacity goes up, representing always the value of the network.

Conversely, an increasing demand with a fixed storage supply will not make the token appreciate, but the price of storage as measured in BZZ tokens will.

Since the barriers of entry for any participant are very low, as we indicate in the following section, it is expected the market will take price to converge to a marginal cost.


## OBTAINING TOKENS

There are three ways to obtain tokens to be used in the network:

* **Buying** tokens from another holder.
* **Adding resources** to the network.
* **Minting** new tokens.

Buying tokens is the more evident way to participate: BZZ is a tradeable token, open to be exchanged as concert or theater tickets.

Adding and providing resources, and setting a competitive price for them, will account positively to the provider when third party participants use them, earning tokens. Furthermore, SWARM has developed a ‘Zero Cost Entry’ strategy: every node can automatically become a service provider. This creates a negligible barrier of entry; a brand-new user with free available resources and no other asset or currency, can use a SWARM client to join the network and start earning BZZ tokens.


Minting new tokens is the last possibility through a faucet of BZZ tokens, goverened by an autonomous smart contract set with a specifically designed [fixed-leveraged token bonding curve](https://gist.github.com/nagydani/d5c09c331224bfbffbcbe28b347ceb8e). This is a market maker contract that provides certain amount of liquidity into the system, in order to allow automatic sell/buy without external exchanges. SWARM Foundation doesn't retain any control of it, and funds exchanged for BZZ (Ether, initially) are stored in the self-standing vault of the contract. 

## BZZ TOKEN DETAILS

* Use: Bandwith and storage incentives
* Type: ERC20 
* Initial supply: 62.5mio
* Initial price: 0.32 DAI
* Liquidity provided by a bonding curve trading platform
