RFC: MJN Token Economics — reserve-backed utility token with fiat bridge

[imajin-jin]

📄 Canonical document: docs/rfcs/RFC-12 — this discussion is for community input; the RFC source of truth lives in the repo.

---

Summary

MJN is a reserve-backed utility token that serves as the settlement currency for the Imajin protocol. Users can freely convert between fiat and MJN through the Foundation clearinghouse. The token starts at a fixed exchange rate and evolves to a managed float as network volume grows.

This is not a speculative asset. This is a settlement instrument that happens to live on Solana.

Core Model

Dual-Currency Network

Every transaction on the Imajin network can settle in fiat OR MJN. Nobody is forced into crypto. The network works either way.

Rail	Mechanism	Fees	Settlement Speed
Fiat	Stripe / e-transfer	2.9% + 30¢ (Stripe)	2-day payout
MJN	Solana on-chain	~$0.001 (gas, subsidized)	Instant

MJN is better — lower fees, instant settlement, atomic .fair splits — but not required. The user chooses. Over time, the economic advantage of MJN drives organic adoption.

Mint/Burn Reserve Model

Fiat in  → Foundation mints MJN → user's wallet
MJN in   → Foundation burns MJN → fiat to user's bank
                    ↕
         Foundation holds fiat reserves
         backing outstanding MJN supply

• Mint on deposit: User sends fiat (Stripe or e-transfer), Foundation mints equivalent MJN to their embedded wallet
• Burn on withdrawal: User redeems MJN, Foundation burns tokens and sends fiat to their bank
• Reserves are auditable: Outstanding MJN supply always backed by fiat reserves held by the Foundation
• No fractional reserve: 1:1 backing. Every MJN in circulation has fiat behind it.

Exchange Rate Strategy

Phase 1 — Fixed rate (launch)

• 1 MJN = fixed USD value (e.g., $0.01 or $0.10 — TBD)
• Maximum stability. Merchants know exactly what they're accepting.
• Settlement currency should be boring. This is intentionally boring.
• Foundation revenue: spread on mint/burn + transaction micro-fees

Phase 2 — Managed float (maturity)

• Foundation adjusts rate gradually based on network economics
• Not pegged, not wild — like a central bank managing currency
• Rate adjustments are published transparently
• Reflects real network utility, not speculation
• Transition happens when network volume makes price discovery meaningful

The rule: The rate never moves fast enough to matter for a single transaction. If you're buying coffee with MJN, you don't check the exchange rate first. That's the target.

How MJN Enters Circulation

Primary: Earned Through Participation

• .fair royalties — your creative work earns MJN when consumed
• Inference fees — your presence earns MJN when queried
• Contribution rewards — active participation in Cultural DIDs
• Network rewards — node operators earn for infrastructure

Secondary: Fiat Top-Up

• Users buy MJN directly through pay.imajin.ai
• Stripe charges their card, Foundation mints MJN
• Familiar UX — like loading a transit card or buying game credits

Tertiary: DEX Liquidity (future)

• Foundation seeds SOL/MJN pool on Jupiter/Raydium
• Only after sufficient circulation exists
• Provides an additional on/off ramp, not the primary one

Where MJN Gets Spent

On-Network Settlement

• Event tickets — pay in MJN for lower fees, instant confirmation
• Inference queries — trust-gated presence queries cost MJN
• .fair settlements — attribution chain splits execute on-chain
• Course enrollment — learn.imajin.ai accepts MJN
• Tipping — coffee.imajin.ai micropayments

Participating Businesses (Org DIDs)

• Org DIDs in your trust graph accept MJN at their businesses
• Coffee shop, bookstore, service provider — real-world commerce
• Merchant receives MJN, cashes out to fiat whenever they want
• Lower fees than credit card processing (no Stripe 2.9%)
• Instant settlement (no 2-day wait)

Declared-Intent Marketplace (#114)

• Users spend MJN balance to access declared-intent categories
• Businesses burn MJN gas to reach opted-in users
• Signal strength (intent + conversion history) determines gas cost
• The marketplace runs on MJN natively

Foundation Clearinghouse Role

The MJN Foundation operates as a protocol clearinghouse, not a bank.

What the Foundation Does

• Holds fiat reserves backing outstanding MJN supply
• Mints MJN on fiat deposit
• Burns MJN on fiat withdrawal
• Sets and publishes exchange rate
• Operates gas subsidy pool for transaction fees
• Publishes reserve audits (quarterly minimum)

What the Foundation Does NOT Do

• Hold user funds (MJN is in user's sovereign wallet)
• Control who can transact (permissionless within protocol rules)
• Lend against reserves (no fractional reserve, ever)
• Speculate on MJN price
• Restrict fiat withdrawal (always redeemable)

Revenue Model

• Mint/burn spread — small percentage on fiat ↔ MJN conversion
• Transaction micro-fees — fraction of a cent per on-chain settlement
• Gas pool margin — Foundation subsidizes gas but retains small margin
• Transparent, published, auditable

Regulatory Position

Swiss Foundation (FINMA)

• MJN Foundation is a Swiss Stiftung — FINMA has clear frameworks for utility tokens
• Reserve-backed + non-speculative + clearinghouse model = favorable classification
• Not a deposit-taking institution (user funds in sovereign wallets)
• Not a money transmitter (protocol clearinghouse with published rates)
• The MJN-scoped wallet decision helps here — general-purpose Solana wallet would trigger broader regulations

Why This Model Works

• Full reserve: No fractional lending, no systemic risk
• Redeemable: Always convertible back to fiat at published rate
• Transparent: Supply, reserves, and rate are all auditable
• Non-speculative: Fixed rate at launch, managed float later — not a trading vehicle
• Protocol-specific: MJN settles Imajin protocol transactions, not general-purpose payments

Token Supply Mechanics

Current State

• Token: 12rXuUVzC71zoLrqVa3JYGRiXkKrezQLXB7gKkfq9AjK
• Network: Solana Mainnet
• Supply: 0 (nothing minted)
• Mint authority: Ryan (transfers to Foundation)

At Launch

• Foundation receives mint authority
• Initial mint for gas subsidy pool
• Fixed rate published
• Fiat bridge activated via pay.imajin.ai

Growth

• Supply increases as fiat flows in (mint on deposit)
• Supply decreases as fiat flows out (burn on withdrawal)
• Net supply reflects the real economic value locked in the MJN network
• No arbitrary inflation, no emission schedule — supply follows demand

Open Questions

1. Fixed rate value — $0.01? $0.10? $1.00? Lower = more tokens in circulation, feels like micropayments. Higher = fewer tokens, feels like real money.
2. Managed float trigger — what network volume or user count triggers the transition from fixed to managed?
3. Reserve auditing — self-published or third-party audit? Frequency?
4. Multi-currency fiat — USD only at launch, or CAD/EUR/GBP from the start?
5. Withdrawal limits — any minimum/maximum for fiat redemption?
6. Tax implications — how do users report MJN earnings? Is the fiat ↔ MJN conversion a taxable event?
7. Foundation capitalization — initial fiat reserves to seed the gas pool and mint/burn operations
8. Merchant settlement — do Org DIDs receive MJN and convert themselves, or can they opt for automatic fiat conversion?

Dependencies

• MJN token on Solana mainnet (exists)
• Embedded wallet (Discussion RFC: Embedded Wallet — DID keypair as MJN-scoped Solana wallet with hierarchical key derivation #268)
• Pay service fiat rails (exists: Stripe, e-transfer)
• Foundation incorporation (planned: Q1 2026)
• .fair attribution for royalty settlement (exists)
• Declared-intent marketplace (Revenue stream 2: Declared-Intent Marketplace — user-owned attention profiles #114) for gas economics
• Org DID (Discussion RFC: Org DID — businesses and legal entities #253) for merchant participation

References

• MJN Whitepaper v0.2: docs/mjn-whitepaper.md
• Discussion RFC: Embedded Wallet — DID keypair as MJN-scoped Solana wallet with hierarchical key derivation #268: Embedded Wallet
• Discussion RFC: Cultural DID — identity primitive for collectives, scenes, and communities of practice #252: Cultural DID (quorum treasury)
• Discussion RFC: Org DID — businesses and legal entities #253: Org DID (merchant participation)
• Revenue stream 2: Declared-Intent Marketplace — user-owned attention profiles #114: Declared-Intent Marketplace
• Epic: Sovereign Inference — API gateway, presence bootstrap, and user-owned keys #256: Sovereign Inference (inference fee settlement)

---

MJN Foundation — Formation Roadmap

The Foundation is a Swiss Stiftung (non-profit foundation under Swiss Civil Code Art. 80-89). This is the same vehicle used by Ethereum, Solana, Cardano, and Polkadot. Switzerland has the clearest regulatory framework for protocol foundations with token economics.

Step 1: Formation (~CHF 30-50K, 4-8 weeks)

• Draft foundation deed (Stiftungsurkunde) — purpose, governance, initial board
• Minimum endowment: CHF 50,000 (~$55K USD)
• Notarize the deed with a Swiss notary
• Register with the Commercial Registry (canton of Zug or Zurich)
• Appoint initial Foundation Board (minimum 1 member, typically 3)
• Requires at least one Swiss-resident board member (can be a service provider)

Step 2: FINMA Token Classification (1-3 months)

• Submit formal token classification request to FINMA
• FINMA categorizes tokens as: utility, payment, or asset
• MJN target classification: utility token (settlement currency for a specific protocol)
• Arguments in our favor: reserve-backed, non-speculative, MJN-scoped, fixed rate at launch, clear protocol utility
• If classified as payment token: heavier regulation but still workable under Swiss framework
• Deliverable: formal no-action letter or classification ruling from FINMA

Step 3: Operational Setup

• Open Swiss bank account for the Foundation (crypto-friendly banks: SEBA, Sygnum, Hypothekarbank Lenzburg)
• Appoint statutory auditor (required for supervised foundations)
• Establish AML/KYC procedures for the fiat bridge
• Transfer MJN mint authority from Ryan to Foundation
• Set up Foundation governance: board meetings, decision protocols, transparency requirements

Cost Estimate

Item	Cost (CHF)
Legal setup (Swiss blockchain law firm)	20,000 - 40,000
Foundation endowment (minimum)	50,000
FINMA classification (legal fees)	10,000 - 20,000
Ongoing compliance + audit (annual)	10,000 - 20,000
Swiss-resident board member service (annual)	5,000 - 10,000
Total to launch	CHF 100,000 - 150,000 ($110-165K USD)

Recommended Law Firms (Blockchain Specialization)

• MME (Zurich/Zug) — represented Ethereum Foundation, deep FINMA experience
• Lenz & Staehelin (Zurich/Geneva) — largest Swiss firm, strong regulatory practice
• Walder Wyss (Zurich) — crypto and fintech specialization
• LEXR (Zurich) — startup-focused, more accessible pricing

Corporate Structure

MJN Foundation (Swiss Stiftung)
├── Owns: protocol spec, token treasury, mint authority
├── Governs: RFC process, token economics, rate adjustments
├── Contracts: Imajin Inc. for protocol development
│
Imajin Inc. (Canadian corporation)
├── Operates: imajin.ai (reference implementation, first node)
├── Builds: platform services, SDK, developer tools
├── Ryan Veteze — founder
├── Revenue: settlement fees, mint/burn spread, gas pool margin

Timeline

Milestone	Target
Engage Swiss law firm	Q2 2026
Foundation deed drafted	Q2 2026
FINMA classification submitted	Q2-Q3 2026
Foundation registered	Q3 2026
Mint authority transferred	Q3 2026
Fiat bridge operational	Q3-Q4 2026

Why Switzerland

• FINMA has clear token frameworks — utility, payment, and asset classifications are published and tested
• Neutrality — Foundation cannot be captured by US or Chinese regulatory pressure
• Precedent — Ethereum, Solana, Cardano, Polkadot all chose Swiss Stiftung for the same reasons
• The name draws from Japanese, built by a Canadian, governed from Switzerland — sovereign infrastructure has no nationality