How Credits Flow: Before & After Collection
Every Credit is backed by real value. Here’s how it works.
Keep It Super Simple 3-Tier
Quick Tier (30 seconds)
Real money in → Credits issued → Credits circulate → Credits return with margin → Cycle repeats.
Standard Tier (5 minutes)
[Full flowchart below]
Deep Tier (Academic)
PART 1: Before Collection (The Bootstrap)
The Question
“How does the platform pay Credits when it hasn’t collected any yet?”
The Answer: Seed Capital
┌─────────────────────────────────────────────────────────────────┐
│ PHASE 0: THE SEED │
│ ════════════════════ │
│ │
│ FOUNDER'S SEED │
│ ┌─────────────┐ │
│ │ 1,000 dollars│ (from family emergency savings) │
│ │ (real money) │ │
│ └──────┬──────┘ │
│ │ │
│ ▼ │
│ ┌─────────────────────────────────────────┐ │
│ │ LB TREASURY │ │
│ │ (holds actual dollars) │ │
│ │ Balance: 1,000 dollars │ │
│ └──────────────────┬──────────────────────┘ │
│ │ │
│ ▼ │
│ ┌─────────────────────────────────────────┐ │
│ │ 10 MEDALLIONS MINTED │ │
│ │ (100 Credits each) │ │
│ │ = 1,000 Credits backed │ │
│ └──────────────────┬──────────────────────┘ │
│ │ │
│ ▼ │
│ ┌─────────────────────────────────────────┐ │
│ │ FIRST 10 RECIPIENTS │ │
│ │ (selected by Talent Scout) │ │
│ │ Each receives 100-dollar stake │ │
│ └─────────────────────────────────────────┘ │
│ │
└─────────────────────────────────────────────────────────────────┘
The Key Insight
Every Credit issued is backed by a dollar in the Treasury.
| Real Money In | Credits Issued | Backing |
|---|---|---|
| 1,000 dollars seed | 1,000 Credits | 100% |
| 5,000 dollars sponsor | 5,000 Joules | 100% |
| 100 dollars medallion | 100 Credits | 100% |
| 5 dollars membership | 5 Credits | 100% |
PART 2: First Circulation (The Daisy Chain Begins)
┌─────────────────────────────────────────────────────────────────┐
│ PHASE 1: FIRST CIRCULATION │
│ ══════════════════════════ │
│ │
│ RECIPIENT RECEIVES MEDALLION │
│ ┌─────────────────────────────────────────┐ │
│ │ "I have 100 Credits!" │ │
│ │ What can I do? │ │
│ └──────────────────┬──────────────────────┘ │
│ │ │
│ ┌───────────┼───────────┐ │
│ │ │ │ │
│ ▼ ▼ ▼ │
│ ┌──────────┐ ┌──────────┐ ┌──────────┐ │
│ │ SPEND │ │ SPLIT │ │ HOLD │ │
│ │(products)│ │(10×10) │ │(for later)│ │
│ └────┬─────┘ └────┬─────┘ └────┬─────┘ │
│ │ │ │ │
│ ▼ ▼ │ │
│ ┌──────────┐ ┌──────────┐ │ │
│ │ Credits │ │ 10 new │ │ │
│ │ flow to │ │ members │ │ │
│ │ seller │ │ (10 each)│ │ │
│ └────┬─────┘ └────┬─────┘ │ │
│ │ │ │ │
│ └────────────┴────────────┘ │
│ │ │
│ ▼ │
│ ┌────────────────────────────┐ │
│ │ CREDITS NOW IN CIRCULATION │ │
│ │ (moving between members) │ │
│ └────────────────────────────┘ │
│ │
└─────────────────────────────────────────────────────────────────┘
PART 3: During Collection (The Cost + 20% Engine)
┌─────────────────────────────────────────────────────────────────┐
│ PHASE 2: THE ENGINE │
│ ════════════════════ │
│ │
│ MEMBER BUYS SERVICE (80 Credits) │
│ ┌─────────────────────────────────────────┐ │
│ │ "I want business cards printed" │ │
│ │ Node Operator price: 80 Credits │ │
│ └──────────────────┬──────────────────────┘ │
│ │ │
│ ▼ │
│ ┌─────────────────────────────────────────┐ │
│ │ COST + 20% CALCULATION │ │
│ │ │ │
│ │ Node's cost: 66.67 Credits │ │
│ │ + 20% margin: 13.33 Credits │ │
│ │ ══════════════════════════ │ │
│ │ Customer pays: 80 Credits │ │
│ └──────────────────┬──────────────────────┘ │
│ │ │
│ ┌───────────┴───────────┐ │
│ │ │ │
│ ▼ ▼ │
│ ┌──────────────┐ ┌──────────────┐ │
│ │ NODE RECEIVES │ │ LB RECEIVES │ │
│ │ 66.67 Credits │ │ 13.33 Credits│ │
│ │ (their cost) │ │ (the margin) │ │
│ └──────────────┘ └──────┬───────┘ │
│ │ │
│ ▼ │
│ ┌──────────────────────────┐ │
│ │ MARGIN DISTRIBUTION │ │
│ │ ════════════════════ │ │
│ │ • 4% Reserve Float │ │
│ │ • 10% Operations │ │
│ │ • 6% Initiative Fund │ │
│ └──────────────────────────┘ │
│ │
└─────────────────────────────────────────────────────────────────┘
PART 4: After Collection (The Daisy Chain Continues)
┌─────────────────────────────────────────────────────────────────┐
│ PHASE 3: CHAIN REACTIONS │
│ ════════════════════════ │
│ │
│ ════════════════════════════════════════════════════════ │
│ 🌼 DAISY CHAIN: Credits flow person to person │
│ ════════════════════════════════════════════════════════ │
│ │
│ Member A │
│ ┌─────────┐ │
│ │ 100 Cr │──┬──▶ Buys product ──▶ Node Operator │
│ └─────────┘ │ ┌─────────┐ │
│ │ │ 80 Cr │ │
│ │ └────┬────┘ │
│ │ │ │
│ │ ┌─────────────────────┘ │
│ │ │ │
│ │ ▼ │
│ │ Node Operator │
│ │ ┌─────────┐ │
│ │ │ 80 Cr │──▶ Hires Designer │
│ │ └─────────┘ ┌─────────┐ │
│ │ │ 50 Cr │ │
│ │ └────┬────┘ │
│ │ │ │
│ │ ┌───────────────────┘ │
│ │ │ │
│ │ ▼ │
│ │ Designer │
│ │ ┌─────────┐ │
│ │ │ 50 Cr │──▶ Buys groceries │
│ │ └─────────┘ ┌─────────┐ │
│ │ │ 40 Cr │ │
│ │ └────┬────┘ │
│ │ │ │
│ │ ▼ │
│ │ Local Food Node │
│ │ │ │
│ │ ▼ │
│ │ (Chain continues...) │
│ │ │
│ ════════════════════════════════════════════════════════ │
│ 🌹 ROSE CHAIN: Sponsor → Recipient connections │
│ ════════════════════════════════════════════════════════ │
│ │
│ Sponsor (Johnny Appleseed) │
│ ┌─────────┐ │
│ │ 5000 J │──▶ 50 Medallions ──▶ 50 Recipients │
│ └─────────┘ │ │
│ ├──▶ Recipient 1 splits │
│ │ └──▶ 10 new members │
│ ├──▶ Recipient 2 builds │
│ │ └──▶ business │
│ └──▶ Recipient 3 hires │
│ └──▶ other members │
│ │
│ ════════════════════════════════════════════════════════ │
│ 🌷 TULIP CHAIN: Initiative funding flows │
│ ════════════════════════════════════════════════════════ │
│ │
│ Sweet 16 Initiative │
│ ┌─────────────┐ │
│ │ Funded with │──▶ Grants ──▶ Recipients │
│ │ 20% margin │ (Defense Claws, Let's Make Bread, etc.) │
│ └─────────────┘ │
│ │
└─────────────────────────────────────────────────────────────────┘
PART 5: The Velocity Cycle
┌─────────────────────────────────────────────────────────────────┐
│ THE VELOCITY CYCLE │
│ ══════════════════ │
│ │
│ ┌───────────┐ │
│ │ TREASURY │ │
│ ┌────────▶│ (dollars)│◀────────┐ │
│ │ └─────┬─────┘ │ │
│ │ │ │ │
│ [Purchases] [Issue] [Redeem] │
│ │ │ │ │
│ │ ▼ │ │
│ │ ┌───────────┐ │ │
│ │ │ CREDITS │ │ │
│ │ │(circulate)│ │ │
│ │ └─────┬─────┘ │ │
│ │ │ │ │
│ │ [Spend] │ │
│ │ │ │ │
│ │ ▼ │ │
│ │ ┌───────────┐ │ │
│ │ │ SERVICES │ │ │
│ │ │(delivered)│ │ │
│ │ └─────┬─────┘ │ │
│ │ │ │ │
│ │ [Pay] │ │
│ │ │ │ │
│ │ ▼ │ │
│ │ ┌───────────┐ │ │
│ ┌────┴────┐ │ NODES │ ┌────┴────┐ │
│ │ Members │◀───│ (operate) │───▶│Operators│ │
│ └─────────┘ └───────────┘ └─────────┘ │
│ │
│ ════════════════════════════════════════════════════════ │
│ KEY: The cycle is CLOSED LOOP — Credits always return │
│ with +20% margin, funding operations and initiatives. │
│ ════════════════════════════════════════════════════════ │
│ │
└─────────────────────────────────────────────────────────────────┘
The Nervous System Integration
This flowchart connects to:
| System | Connection |
|---|---|
| Stake Account (#945) | Joules backing MARKS commitments |
| Harper Review (#956) | Quality assurance on transactions |
| Reserve Float | 4% accumulated from margins |
| Initiative Fund | 6% funding Sweet 16 |
| Node Network | Where services are delivered |
Summary: Why This Works
| Question | Answer |
|---|---|
| How do Credits exist before collection? | Backed by real dollars in Treasury |
| How do Credits circulate? | Members spend them on services |
| How do Credits return? | Cost + 20% on every transaction |
| What happens to the 20%? | Reserve (4%), Operations (10%), Initiatives (6%) |
| Is it sustainable? | Yes — every Credit is backed, and the margin funds growth |
Related Documents
| Document | Relevance |
|---|---|
| Credits & Joules | Currency types |
| Cloth & Bag Analogy | Why Joules differ |
| Cost + 20% | Margin mechanics |
| Reserve Float | 4% buffer |
“Every Credit has a home. Every dollar has a purpose.”