How Quai Network's SOAP Protocol Revolutionizes Tokenomics and Security

Quai Network has unveiled the Subsidized Open-market Acquisition Protocol (SOAP), a pioneering mechanism aimed at transforming token economics and improving blockchain network security. By channeling mining rewards into purchasing and burning its native QUAI tokens, SOAP is designed to create a self-reinforcing loop of buy-side demand, thereby bolstering token value, enhancing overall stability, and incentivizing broader network participation.

What is SOAP? A New Vision for Mining Rewards

SOAP introduces a unique approach to mining rewards that shifts away from traditional distribution models. While it shares some similarities with merge mining, SOAP diverges in a key aspect: miners do not directly receive their rewards. Instead, mining rewards are directed to a designated protocol address, which uses the funds to buy QUAI tokens on the open market. These tokens are then either permanently burned or locked for a predetermined period, with a portion distributed as rewards to depositors.

This novel framework minimizes the usual sell-side pressure generated when miners liquidate tokens, effectively transforming potential downward market forces into mechanisms for long-term value appreciation.

The Economic Framework of SOAP: A Three-Pronged Approach

The Subsidized Open-market Acquisition Protocol is anchored in three core principles that make it a cornerstone of Quai Network's economic strategy:

1. Revenue Allocation

Every subchain on the network directs 100% of its generated revenue toward purchasing QUAI tokens. These purchased tokens are burned immediately to reduce circulating supply or locked to serve as reward distributions with a minimum lock-up period of 30 days. This ensures ongoing buy-side pressure, which supports token valuation and network sustainability.

2. High Initial Yields

During the protocol's early adoption phase, the majority of acquired QUAI tokens will be allocated as locked rewards, enabling exceptionally high annual percentage yields (APYs). These high yields are intended to attract depositors and rapidly increase Total Value Locked (TVL), a critical metric for the protocol’s growth trajectory.

3. Preemptive Buy Support

By implementing a two-week maturity period for QUAI rewards, the SOAP protocol strategically initiates its purchasing mechanisms before newly issued tokens enter the liquid market. This forward-looking approach offsets potential sell-side pressure and fosters price stability.

Analyzing Market Impact: SOAP in Different Phases

To illustrate its transformative potential, Quai Network has shared projections under two distinct phases, assuming a daily QUAI token purchase value of $20,000.

Phase 1: Bootstrap

In its early stage, the protocol is expected to achieve groundbreaking results by offering extraordinary yields. With a TVL of $500,000, the APY could soar to an unparalleled 1,460%. Such high returns are predicted to drive widespread user adoption and accelerate liquidity inflows.

Phase 2: Stabilization

As the ecosystem matures, the target APY levels out to approximately 30%. To sustain this yield, the protocol would need to grow its TVL to $24.3 million. Despite the reduced APY, the steady daily buy-side activity would continue exerting upward pressure on QUAI prices, contributing to long-term market resilience.

Currently, the estimated circulating supply of QUAI available for immediate trading stands at $2.1 million. Under these conditions, SOAP’s daily buy-side activity has the potential to significantly impact short- and medium-term token price movements, creating a more balanced economic landscape.

Revolutionizing Blockchain Security and Inclusivity

SOAP offers significant advantages for network security while simultaneously improving the mining experience. By supporting multiple mining algorithms, including Bitcoin’s SHA-256 and Litecoin/Dogecoin’s Scrypt, the protocol caters to a diverse range of hardware options, from ASICs to GPUs. This inclusivity allows the network to attract a broader, more decentralized array of participants, reducing reliance on any specific type of hardware and fortifying the blockchain's integrity against centralized control.

From the miner's perspective, SOAP is non-disruptive. Mining pools can seamlessly integrate the protocol as an auxiliary meta-layer without requiring any changes to Stratum mining protocols (V1/V2) or modifications to existing firmware, enabling a frictionless operational experience.

Timeline and Industry Implications

Quai Network has announced a comprehensive rollout plan for SOAP. The testnet phase is scheduled to run from October 2 to October 9, 2025, with the full mainnet launch planned between October 16 and October 23, 2025.

While the project team acknowledges potential risks—such as the possibility of SOAP merely neutralizing sell-side pressure from miners—they stress that participating hashrates willing to engage in non-arbitrage mining will likely ensure a net positive buy-side flow. The intent is for SOAP to not just counteract sell pressure but actively cultivate an upward momentum capable of sustaining token stability and long-term growth.

A Paradigm Shift in Tokenomics

As industry watchers evaluate the rollout of SOAP, many recognize its potential to revolutionize blockchain ecosystems. If successful, SOAP could establish a new benchmark for token economics by stabilizing token prices, boosting hash rates, improving blockchain security, and increasing subchain participation.

Quai Network's innovative approach could pave the way for other blockchain projects to adopt similar mechanisms, leading to more sustainable and secure ecosystems across the decentralized finance (DeFi) landscape. With its unique combination of economic strategy and security innovation, SOAP may well be the next big leap in blockchain tokenomics.