Abstract

The Fire token (XFR) is a novel cryptocurrency implementing a "proof of propagation" distribution mechanism with dual deflationary dynamics. Unlike traditional mining or burn-to-mine schemes, XFR distributes its fixed supply through a referral tree: every claim requires a verified referrer, with rewards split across three generations (miner 49.5%, referrer 33%, referrer's referrer 16.5%, with 1% to the founder). Sybil resistance is achieved by requiring miners to use Ethereum addresses that transacted before 2026, eliminating mass wallet generation as an attack vector. A parallel rebase mechanism continuously deflates displayed token balances at approximately 90% per year (0.6% daily), creating visible scarcity while preserving relative holdings.

1. Introduction

Token distribution mechanisms face a fundamental trilemma: achieving broad distribution, maintaining Sybil resistance, and preserving decentralization. Proof-of-work mining achieves Sybil resistance through computational costs but concentrates tokens among those with specialized hardware. Airdrops achieve broad distribution but are notoriously vulnerable to Sybil attacks—single actors creating thousands of wallets to claim multiple allocations. Burn-to-mine mechanisms achieve Sybil resistance through capital commitment but may generate perverse incentive dynamics.

Fire XFR proposes a novel approach: proof of propagation. Distribution occurs through a referral tree where each claim requires a verified referrer.

2. Mechanism Design

2.1 Three Key Features

Referral-gated entry: Every miner must specify a referrer who has already mined. No self-referrals are permitted.

Three-generation reward splitting: Each mining reward is split: 49.5% to the miner, 33% to their referrer (parent), 16.5% to their referrer's referrer (grandparent), and 1% to the founder.

Pre-2026 address requirement: Only Ethereum addresses with transactions before 2026 may participate, enforced via Merkle proof verification against ~400 million eligible addresses.

2.2 Emission Schedule

The protocol supports up to N̄ = 100,000,000 mining events. At each mining index n, the protocol emits a reward R(n) following a geometric decay schedule:

R(n) = R₀ · rⁿ

where R₀ ≈ 2^104.5 shares and r = 0.999999309224710656. This ensures total emissions sum to approximately 2¹²⁵ shares, with the 100 millionth miner receiving approximately 29 shares.

2.3 Rebase Mechanism

A global rebase index I(t) decays discretely at 12:00 GMT daily:

I(t) = 0.994^d(t)

where d(t) is days elapsed since deployment. This yields approximately 88.7% annual deflation. Displayed token balances equal underlying shares multiplied by I(t). This rebase is purely nominal—it affects no fundamental payoffs for rational agents but creates powerful psychological incentives.

3. Reward Distribution

When address i mines at index n, the total reward R(n) is distributed according to the referral structure:

Case 1 - Full referral chain:

• Miner: 49.5%
• Referrer (parent): 33%
• Referrer's referrer (grandparent): 16.5%
• Founder: 1%

Case 2 - No grandparent:

• Miner: 49.5%
• Referrer: 33%
• Founder: 17.5% (base 1% + grandparent's 16.5%)

Case 3 - No real referrer:

• Miner: 49.5%
• Founder: 50.5% (base 1% + parent's 33% + grandparent's 16.5%)

4. Sybil Resistance

The restriction to addresses with pre-2026 transactions is the key Sybil resistance mechanism. Creating fake eligible addresses requires either (a) having transacted on Ethereum before the snapshot, or (b) purchasing control of old addresses. Both impose real costs, unlike typical airdrops where wallet creation is free.

With approximately 400 million eligible addresses and a maximum of 100 million mining events, Sybil attacks are economically impractical when address acquisition cost exceeds:

c > 0.99 · K / N̄

5. Propagation Score & Temperature Tiers

Each participant earns a propagation score based on their network contribution:

• Mining: 2 points (base score for participating)
• Direct referral: 1 point per miner you referred
• Indirect referral: 0.25 points per miner your referrals referred

Your propagation score determines your temperature tier, displayed as a badge on the leaderboard:

Percentile	Tier	Emoji	Color	% Users
99.9–100	Supernova	💥	White	0.1%
99.7–99.9	Nova	⭐	Off-white	0.2%
99.4–99.7	Fusion	❇️	Pale pink	0.3%
98.9–99.4	Fission	☢️	Dark red	0.5%
98.1–98.9	Dynamite	🧨	Red	0.8%
96.9–98.1	Lava	🌋	Red-orange	1.2%
95.1–96.9	Fire	🔥	Orange	1.8%
92.5–95.1	Stove	🫕	Amber	2.6%
88.7–92.5	Lightbulb	💡	Yellow	3.8%
83.2–88.7	Toast	🍞	Tan	5.5%
75.7–83.2	Fridge	🧊	Pale blue	7.5%
65.7–75.7	Freezer	🥶	Light blue	10%
52.7–65.7	Alaska	🏔️	Medium blue	13%
36.7–52.7	Antarctica	🐧	Dark blue	16%
19.7–36.7	Blackhole	🕳️	Brown	17%
0–19.7	Absolute 0	🧟	Black	19.7%

6. Game-Theoretic Properties

6.1 Immediate Mining Dominance

Since R(n) is strictly decreasing in n, earlier mining strictly dominates later mining. Any participant with referral access should mine immediately.

6.2 Bounded Referral Returns

For any participant, total referral income is bounded above by (β + γ)K ≈ 0.495K with equality impossible under the tree structure. The three-generation limit prevents pyramid-style runaway growth.

6.3 No Whale Windfall

Unlike burn-to-mine mechanisms, proof of propagation generates no wealth transfer to non-participating large holders. All emissions flow to founders and active participants only.

7. Technical Implementation

Blockchain: Binance Smart Chain (BSC)

Contract: 0x345A351f702f66032Dd88c78ACD18a1dC05f952C

Merkle Tree: ~400 million Ethereum addresses verified via on-chain Merkle proof

Daily Rebase: 0.6% deflation at 12:00 GMT

8. Conclusion

Fire XFR demonstrates that social network structure can substitute for capital commitment in achieving Sybil resistance. The proof of propagation mechanism achieves broad distribution without value destruction, creates self-limiting viral dynamics through the three-generation referral split, and generates urgency through the rebase mechanism without affecting fundamental value for rational participants.

The key innovation is transforming the cost of participation from capital (as in burn-to-mine) to social effort (recruiting referrals), while maintaining security through the pre-genesis address requirement.

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