# What is React React is building the digital infrastructure layer necessary to turn the grid edge into a resource for the energy system.
Energy infrastructure is undergoing a once-in-a-generation transformation. We are quickly transitioning from an energy system based on large, centralized fossil fuel power plants to one based on clean, distributed renewable energy. While this will have significant benefits for society in the form of low-cost energy and the elimination of carbon emissions, our current grid is not designed to handle the proliferation of renewable energy. We are already experiencing the consequences of our failure to modernize the grid- [the U.S. has more power outages than any other developed country](https://www.popsci.com/story/environment/why-us-lose-power-storms/). Renewable energy sources are primarily *intermittent*, meaning energy generation is primarily from sources that do not have guaranteed availability due to external factors that cannot be controlled (e.g. sun and wind). Historically, the operation of the power grid has relied on the ability of power generation to be highly controllable and responsive, allowing it to be adjusted to precisely match demand. Without this balance between supply and demand, the grid fails. Intermittent generation from renewable sources means that we need to find new ways to balance the grid and ensure our energy system can decarbonize while remaining stable. Distributed energy resources are essential for enhancing the reliability and efficiency of our new energy system. By incorporating real-time data and controllable load resources like smart thermostats and energy storage, we can improve and modernize the energy system by turning the grid edge into a resource. Individuals in the community can generate utility value while contributing to a cleaner and more optimized energy grid. ### **React is building the digital infrastructure layer necessary to turn the grid edge into a resource for the energy system.** The protocol rewards individuals for increasing the flexibility of the grid by connecting data and smart devices to the protocol. As devices are deployed, the network is able to create value for the energy system, including: * Grid forecasting optimizations through real-time, granular data * Power quality monitoring * Virtual power plant operations * Offset the need for expanded transmission and distribution infrastructure * Renewable energy exchange with corporations to meet ESG targets * Local energy markets React’s success will mean that value that was once reserved for monopolies can accrue to the community, while the energy system broadly benefits from being cheaper, cleaner, and more resilient. As a decentralized system, React will be cooperatively governed by its community to ensure incentive alignment. Cooperative systems have a long history in the energy industry. In the 1930s, less than 10% of the rural U.S. population had access to reliable electricity, with investor-owned utilities not interested in serving sparsely populated areas. However, in 1937, electricity cooperatives were established to electrify rural areas through resource sharing. The developed world is largely electrified today, but the need for cooperative models only increases with the proliferation of a distributed energy system. **React is building the next generation of energy cooperative** - a network that is programmed to build a stable, sustainable, and abundant energy future for humanity. **Just as early electric co-ops that successfully delivered reliable, affordable energy were dependent upon the community’s ability to come together to create a collective impact, React’s decentralized community will be necessary for the proliferation of this new energy paradigm.** # The React Stack How React contributes to cleaner and more resilient energy system.

React's role in building a more dynamic grid.

Virtual Power Plants (VPPs) will be a critical component to the energy grid of the future as intermittent renewables become the dominant form of generation and we electrify massive new end markets. {% content-ref url="/pages/YWnpo0V9nIRqi8s2wd8f" %} [Virtual Power Plants](/market-backdrop/virtual-power-plants) {% endcontent-ref %} However, scaling VPPs poses unique challenges. There are four major functions associated with VPPs, each highly distinct from the other. To build a VPP today, an operator must build expertise across the stack. ### **React is building the digital infrastructure layer necessary to turn the grid edge into a resource for the energy system.** Our vision for a cleaner, cheaper, and more resilient energy system can be realized, but it is reliant on our ability to deliver a more connected and distributed energy system. Specifically, the React stack operates across three functions: 1. Data & Connectivity 2. Aggregation 3. Energy Management By building the data, connectivity, and orchestration layer for the grid, VPP operators can focus on their market strategies without needing to build the underlying technology and spend significant resources on customer acquisition. Anode Labs has built an integration library to cover all major distributed energy resources, allowing any resource to participate. React's incentive design incentivizes participants to deploy energy monitors to buildings, creating the ubiquitous real-time data layer absent from the energy system today. Together, React creates the data infrastructure necessary for VPP operations. As a decentralized system, data is user-owned and controlled, and anchored on-chain for verifiability. React's token-based incentive system rewards participants for deploying energy monitors and connecting resources to the network. This creates a positive feedback loop for growth, pulling more resources into its aggregation layer as network effects emerge. This facilitates bottom-up network construction as opposed to top-down, eliminating very high customer acquisition costs from the aggregation equation. Last, the energy management system turns the network from a chaotic, distributed system, into a controllable resource for market participants. This allows market participants in the energy industry to operate on top of the network, utilizing the network's aggregation pools to act as a grid resource. To utilize the network's infrastructure, market participants must burn KWH tokens to mint Data Tickets. As a single digital infrastructure layer, React unlocks the grid edge as a resource for existing energy market participants, including utilities, REPs, and traders, among others. It unlocks additional insight into distribution grid operation and performance as the largest source of granular, real-time grid edge data. And it creates an acquisition channel for developers to deploy new DERs to customers in advantaged areas. # Network Overview A high-level summary of the React Network. ### **Background** As the energy transition brings about more variable energy generation like wind and solar, the importance of real-time energy flexibility becomes critical to system stability. The IEA estimates we need to increase energy system flexibility 10x by 2030. Virtual power plants are uniquely suited to balancing the power markets in real-time, and are therefore integral to modernizing our energy system. ### **React is on a mission to build a more agile and connected grid. Successfully decarbonizing our energy industry depends on it.** Distributed energy resources provide the basis for a stable, sustainable, and abundant energy system. However, distributed energy resources cannot add value in a silo; resources must be pooled to serve at grid-scale. Networks of distributed resources enable granular control of energy system flexibility and reduce performance risk. These networks are known as virtual power plants; they are critical to modernizing our energy system in a world built on renewable energy. The React protocol is completely transparent. All critical data, fees, financial settlement, and ownership information resides on-chain. Assets are anchored by their on-chain reputation, increasing the effectiveness of the protocol in underwriting its aggregate reliability. The protocol is anchored by the KWH token, which allows the protocol to function as a digitally-enabled cooperative. KWH tokens are distributed to participants who may take an active role in growing and stewarding the protocol. By aligning incentives through the KWH token, React mobilizes individuals to become active participants in the protocol, enabling the energy transition in a permissionless fashion. {% content-ref url="/pages/B6j7nQBDNBENjvxV5ria" %} [Technical Architecture](/react-overview/technical-architecture) {% endcontent-ref %} ### How the React Network Works Energy monitors and distributed energy resources are connected to React by resource contributors. These assets are tagged based on their qualities- location, capacity, max output, chemistry, etc. React continually monitors, tests, logs, and verifies devices to ensure the network maintains a high-fidelity picture of its connected resources. Market Participants (MPs), which can include utilities, REPs, and QSEs, among others, can build pools on top of the React Network. Similar to Bitcoin mining pools, resource contributors can opt-in to available pools in their region. Payment terms and fees are determined by market participants and posted to their pool terms. React will collect payments from market participants and settle with pool participants via stablecoin. ### **Token Economy** The KWH token is the backbone of the React ecosystem. It is a digital commodity used by the two primary parties in the ecosystem: * Resource contributors are rewarded in KWH for deploying energy monitors and connecting distributed energy resources on the grid * Market participants must consume KWH to mint Data Tickets, which are fungible, non-transferable tokens used to redeem API calls to utilize the network's data and EMS. Data Tickets will be priced at a fixed ratio against the USD. The amount of Data Tickets necessary to use the network varies depending on the end service (data streaming, M\&V, dispatch, etc.) KWH demand is based on the Burn-and-Mint Equilibrium with Net Emissions model, first pioneered by Helium. This creates commodity-like properties for KWH. For example, a transportation company must purchase and consume fuel to provide its services to customers. Similarly, market participants building on React must purchase and consume KWH tokens to redeem the network's services. {% embed url="" %} Overview of Helium HNT and Data Credits {% endembed %} KWH is also used for governance, community grants, and institutional partnerships. {% content-ref url="/pages/RuDg64xIBRmxjF7TYhoy" %} [$KWH Supply](/usdkwh-token-economics/usdkwh-supply) {% endcontent-ref %} ### **Governance** React is a decentralized, community-driven project. It is a new form of energy cooperative. Governance will be stewarded by the React Foundation and governed by community votes on React Network Proposals (RNPs). Proposals can include, among others: * Adjusting network configurations and parameters * Whitelisting of energy resources * Community incentives and grants * Institutional partnerships {% content-ref url="/pages/HLoeXHgBCACuYSBVlv6N" %} [Community Ownership](/usdkwh-token-economics/community-ownership) {% endcontent-ref %} # Definitions **BESS** – *battery energy storage system* A BESS is a type of energy storage system that uses batteries to store and distribute energy in the form of electricity. **BMS** – *battery management system* A battery management system (BMS) is a computer system that monitors, manages and maintains the charging, discharging and condition of electric batteries. **BTM** – *behind-the-meter* Behind-the-meter denotes electrical generation and/or electrical power storage system, such as a solar PV system with or without battery storage, that produces power intended primarily for on-site use in a home, office building, or other commercial, industrial, or institutional facility. The solar PV system is behind the electric meter on the owner’s property, not on the electric grid/utility. **DER** – *distributed energy resource* Distributed Energy Resources or “DERs” are electrical power or capacity resources, such as distributed renewable generation, energy efficiency, energy storage and demand response technologies, interconnecting directly to a distribution-level grid. **DERMS** – *distributed energy resource management system* DERMS is a software platform used to manage a group of distributed energy resource (DER) assets—such as rooftop photovoltaic solar panels, behind-the-meter batteries, or a fleet of electric vehicles—to deliver grid services. **DT** – *Data Tickets* Data Tickets are fungible, non-transferable tokens in the React ecosystem that can be redeemed for access to the network's data and services. KWH tokens must be burnt to mint DTs, which can then be utilized. **EV** – *electric vehicle* EVs are vehicles that run fully or partially on electricity, as opposed to gasoline. **FERC** – *Federal Energy Regulatory Commission* The Federal Energy Regulatory Commission (FERC) is an independent agency that regulates the interstate transmission of electricity, natural gas, and oil in the United States. **ISO / RTO** – *Independent System Operator / Regional Transmission Operator* An ISO (Independent System Operator) or RTO (Regional Transmission Organization) is a nonprofit organization responsible for the reliable operation of an electricity transmission system. The ISO or RTO is responsible for managing the transmission grid, including balancing supply and demand across the grid, operating the transmission system, and providing ancillary services such as frequency control and emergency reserves. Additionally, the ISO or RTO is responsible for setting the rules for the energy markets within their territory, as well as ensuring that market participants comply with the rules. **kWh / MWh / GWh** – *kilowatt-hour / megawatt-hour / gigawatt-hour* How we measure energy. A kWh equals the amount of energy you would use by keeping a 1,000 watt appliance running for one hour. **KWH** – *React token* The native token of the React ecosystem. **M\&V** – *measurement & verification* “Measurement and Verification” is the process of planning, measuring, collecting and analyzing data for the purpose of verifying and reporting energy consumption / savings. **PoE** – *Proof-of-Energy* Randomized challenges submitted to assets on the network to reinforce the reliability of the network's connected assets. **QSE** – *Qualified Scheduling Entity* Qualified scheduling entities (QSEs) submit bids and offers on behalf of resource entities (REs) or load serving entities (LSEs) such as retail electric providers (REPs). QSEs are able to submit offers to sell and/or bids to buy energy in the Day-Ahead Market and the Real-Time Market. **RNP** – *React Network Proposal* Governance proposals submitted for React community review. **VPP** – *virtual power plant* A virtual power plant is a way to pool the collective power of smaller distributed energy resources to mimic a larger, central power plant. # Need for Energy Flexibility ### Energy Infrastructure is Undergoing an Unprecedented Upgrade Electricity and heat production represent the largest single source of emissions in the economy. The electrification of transportation and buildings will not result in meaningful emission reductions without a decarbonized power sector. Energy transition investments are increasing at breathtaking speed. Global investment in the energy transition topped $750 billion in 2021. BloombergNEF estimates that annual spending on the energy transition must increase to \~$2.0T/year from 2022-2025, and then \~$4.0T/year from 2025-2030 to meet global decarbonization targets.
In the U.S., clean energy investment is reaching an all-time high thanks to the Inflation Reduction Act of 2022. The IRA directs \~$400 billion in federal funding to clean energy initiatives. The EIA expects nearly 80% of new utility-scale electric generation capacity added in 2022 was from renewable sources.
### Flexibility is the Key to a Decarbonized Grid **The power grid must always remain in equilibrium**. Power supply (generation) must always match power demand (load) to ensure the grid’s operating frequency is maintained, 60 Hz in the United States (50 Hz internationally). If supply and demand become unbalanced, the grid’s frequency can deviate from the safe operating conditions causing grid failure, blackouts and significant financial and economic losses. As a result, grid operators pay careful attention to ensure the grid remains stable. Utility planning has historically involved forecasting demand and building the supply and transmission/distribution needed to meet the peak demand. However, a grid based on intermittent renewables complicates this endeavor, as the supply side must also be forecasted with a high degree of confidence. The electrification of massive new end markets such as heating and transportation additionally increases forecasting complexity. McKinsey estimates the electrification of new end markets will result in load growth of \~40% by 2035- compared to nearly zero load growth over the last 15 years. The challenge of maintaining grid stability is moving from building out enough supply to meet forecasted demand to a complicated, multivariate approach where both variable supply and variable demand must be matched, each minute of the day, every day. Google’s energy team highlights the issue with renewable intermittency in their whitepaper “24/7 by 2030: Realizing a Carbon-Free Future.” To move to a wholly decarbonized system, we will need to establish large sources of clean, flexible power to supplement large sources of renewable energy. In the image below, Google’s energy team highlights the challenges in matching a data center’s electricity demand with the available supply of carbon-free energy. We need energy flexibility to fill in these gaps.

Energy demand of a Google data center (in grey) compared to intermittent wind energy generation (in green). Source: Google

A renewable-dense energy system requires granular flexibility to ensure grid stability. Fluctuations in sunshine and wind speeds can result in grid instability if no assets exist to “firm up” the power supply. Additionally, peak generation for intermittent renewables may not, and often do not, coincide with peak load demand on the grid, as the infamous solar energy net load “duck curve” highlights:

The California 'Duck Curve'. Source: IEA

The duck curve highlights the challenges associated with high solar penetration in an energy system. The lines denote the 'net load' of the California energy grid. Note the trough in the middle of the day- this "belly" of the duck shows how demand for electricity falls as distributed solar production ramps up. In the evenings, however, demand for electricity increases very quickly due to solar production declining. This can create stability challenges for the grid, especially in weather-induced stress. {% embed url="" %} Learn more about the duck curve and why it matters. {% endembed %} To integrate clean energy resources like solar and wind, which are considered intermittent resources, grid operators and utilities must find new ways to control electric load (demand on the grid). Additionally, as load growth expands from the “electrification of everything”, demand-side flexibility will become increasingly important in power system planning and operations, such as the use of demand response to shift peak demand locally to defer or reduce investment in grid upgrades. Demand-side flexibility can add resources to the grid without additional transmission and distribution infrastructure and limit the need for additional new build thermal power plants. According to the IEA, 500 GW of demand response resources should be brought into the market by 2030 to meet the pace of expansion required in the Net Zero Emissions by 2050 Scenario, a 10x increase over 2020 levels.

Demand-side energy flexibility in 2020, compared to predicted need in 2030. Source: IEA

Today, natural gas peaker plants typically serve as the primary source of “flexible power”, as they can be ramped up or down relatively quickly to ensure the grid can balance temporary fluctuations in demand. However, natural gas peaker plants are dirty sources of electricity (fossil-fuel based), inefficient, and expensive to operate. Controllable energy resource aggregations represent a clean alternative source of flexibility to natural gas peaker plants and is the critical unlock for a fully decarbonized grid. Additionally, siting many of these assets at the point of consumption, known as behind-the-meter (“BTM”), will significantly increase the granularity of load control while reinforcing the resiliency of our power system at a time when grid failures are becoming more widespread.
# State of Energy Data ### Energy data today is decades behind other industries. Our energy data infrastructure was built for a pre-internet society. Data pulls are still often done manually. Data is not streamed in real-time; meter data is available at the earliest the next day, often not until the end of the month. The consumption data is lumped into 15-minute intervals, with no insights into patterns and resource consumption. Consumption data is bespoke to each utility. There are \~2,900 electric utilities in the United States alone, with very little data standardization between them. Customers do not own this data; the utility does. As the utility has a monopoly on data, it often sells for very high prices which reduces the ability to drive better energy experiences for the customer. Additionally, DER data is largely verticalized. Typically, the OEM is the only default organization with access to the DER data. DERs will continue to proliferate in our homes and businesses: rooftop solar, energy storage, EV chargers, and electrified appliances. This data is siloed, limiting the ability to drive incremental value to consumers and improve the operation of the system. ### The value of energy data is enormous. The value of energy data is enormous. Arcadia, the largest utility data platform, recently raised a Series E at a $1.5 billion valuation. Arcadia is solving a critical problem by standardizing utility and energy data and making it available via a unified API. However, Arcadia is still dependent on existing utility data. We need to build new sources of data to scale dynamic participation across a decentralized energy system. {% embed url="" %} ### We need to build ubiquitous digital infrastructure to provide the data and connectivity necessary to unlock the grid edge as a resource. The modernization of the energy grid is dependent on this digital infrastructure. This is why energy monitors are the foundation of the React Network. They unlock dense, real-time data coverage across the grid edge. Even residences that cannot deploy large distributed energy resources- for example, leased apartment units- can participate in building out the React data and connectivity platform. # Virtual Power Plants In a world where a significant portion of our energy resources are derived from renewable power generation, wide-scale distributed storage makes integrating intermittent resources possible at scale. With a blanket of storage systems covering the power grid, operators can store electrons to ensure the balance of the system (additionally, with the introduction of bidirectional EVs, batteries can move electrons through space, time, and location). Batteries are energy assets with superpowers: they can both store excess energy during times of abundant resources or dispatch energy during extreme weather events or scarcity. Batteries allow us to align the demand curve with the supply curve instantaneously. Additionally, distributed energy storage reduces the need for expensive expanded transmission and distribution infrastructure, reducing the total cost of an upgraded power grid. Vibrant Clean Energy, a renewable energy consultancy, estimates \~$500 billion can be saved by 2050 in the upgrade to a fully decarbonized grid through the flexibility distributed energy resources provide to the grid.

Distributed energy significantly lessens the cost of the energy transition. Source: Vibrant Clean Energy

Home batteries are experiencing rapid growth, despite the fact that owners currently receive little economic benefit outside of increased resiliency of their home power supply. According to Berkeley Lab, residential battery assets were installed in 8.1% of residential solar installations in 2020; as net metering policies begin to be scaled back (as is currently occurring in California), these attachment rates will significantly increase. Wood Mackenzie forecasts battery deployments in 2021 to be \~3.5x that of 2020, with annual deployments continuing to increase at a \~25% CAGR through 2026.

Source: IHSMarkit

The aggregate power of these assets is already meaningful. IHSMarkit estimates that the US will have 1 GWh of residential Behind the Meter batteries deployed by year-end 2022; assuming a standard 10 kWh battery, this equates to \~100,000 households with battery storage deployed. This represents a tremendous, predominantly unutilized set of assets that could greatly accelerate decarbonization. Behind-the-meter stationary storage is not the only storage asset that will find itself increasingly common in residential and small business settings over the next decade. Electric vehicles are essentially large, rolling batteries. EV batteries have significantly more capacity than Behind the Meter stationary storage; a Tesla Model S has a 100 kWh battery, compared to 13.5 kWh for a Tesla Powerwall. EVs, with the proper battery design and charging infrastructure, have a capability known as bi-directional charging which enables EVs to discharge electrons from their batteries back to a home or the grid. The Ford F-150 Lightning (with 200,000 pre-orders, representing between 19.6 – 26.2 GWh of capacity) has made bi-directional charging a highly demanded feature in EVs, and will very quickly become industry standard. The high growth rate in battery deployments is accelerated by substantial reductions in battery costs over the past eight years. R\&D and the tailwinds from the Inflation Reduction Act continue to drive down the cost of batteries for consumers, and new battery chemistries are further increasing the density and usefulness of energy storage.
### Controllable Load Resources While energy storage is the highest-value grid asset due to its ability to move electrons through time with granular control, all *dispatchable assets* connected to significant load have value in the new system. Dispatchable assets, or controllable load resources, are smart devices that control a specific load. They can include a smart thermostat, electric hot water heater, pool pump, heat pump, or any device attached to a large load, where a remote dispatch can result in the temporary curtailment of that load. These devices do not store and release energy in the sense that batteries do. Instead, when dispatched, these devices temporarily curtail or modify their energy consumption. This temporary *reduction in energy consumption* results in a small change to the typical energy profile of that home or building. This flexibility helps improve the operation of the energy system in a similar fashion to energy storage. {% hint style="info" %} Think about electrons flowing through wires like water flowing through a pipe. We cannot control flowing water- it simply follows available paths. Electricity is similar. When a controllable load resource like a smart thermostat is dispatched, it is equivalent to a faucet turning off. This allows the electrons that would be consumed to flow elsewhere in the system. \ \ At times of peak grid stress, this level of flexibility is critical to ensuring the system remains in balance. {% endhint %} ### Virtual Power Plants Virtual power plants (VPPs) are networks of batteries and controllable load resources orchestrated together to provide load curtailment or supply injection to the grid, similar to traditional centralized power plants. Virtual power plants are coordinated through software known as a Distributed Energy Resource Management System, or DERMS, to intelligently identify, bid, and clear assets on the network into the power grid. The virtual power plant is able to generate revenue in the market, just like a traditional power plant. **Virtual power plants are community energy networks. They are comprised of individuals in a community pooling their resources together to benefit the broader energy system.** By incentivizing the deployment of energy monitors and connection of DERs, React is creating the data, connectivity, and orchestration layer to facilitate wide-scale VPP participation. {% embed url="" %} Further reading on virtual power plants. {% endembed %} # React's Market Opportunity **The React Network generates value by providing data and electrons to the energy market.** As highlighted in the sections above, the energy grid is becoming an increasingly complex system with the proliferation of renewable generation as well as the electrification of massive new segments. Optimizing the grid edge to serve as a decentralized balancing mechanism is critical to modernizing and strengthening our energy system. {% content-ref url="/pages/PRefxjz6GaellF8eDuw4" %} [Need for Energy Flexibility](/market-backdrop/need-for-energy-flexibility) {% endcontent-ref %} ### Providing Data Energy data today is decades behind other industries. Wide-scale real-time energy consumption data does not exist. Energy data is shared manually, in bespoke formats from each source. Utility data from smart meters is only accessible as interval data (typically 15-minute intervals) and cannot be shared in real-time. As the complexity of the energy grid increases through electrification, a horizontal platform for real-time, standardized, granular energy data is key to modernizing our energy system. {% embed url="" %} > In an era where software eats everything, the grid of tomorrow should look like the internet. The digital truth lies in unified data connectivity that provides universal visibility, communication, and actionability. The hardware backbone of React is the network of community-deployed energy monitors located at load sources across the grid. These devices are easily self-installed on a typical breaker panel, and stream real-time data back to React. This data is standardized and can be used to generate value from multiple counterparties, including: * Consumer energy technology and energy efficiency companies * Utilities * Retail electricity providers (REPs) * Energy demand forecasting * Fire insurance ### Providing Electrons React’s incentive system incentivizes the community to connect all the controllable energy devices in their properties. React is able to coordinate these devices to impact the flow of electrons on the grid, via the React Energy Management System (EMS). The React EMS can provide flexibility by injecting supply in the case of exporting battery capacity or reducing demand in the form of controllable load resources. The network can be compensated by coordinating these electrons via the EMS to alleviate stress on the grid during dispatch events. {% embed url="" %} React’s data and electron networks work in tandem to generate value for the community. Real-time data is imperative for optimizing dispatch of connected energy devices, as well as measuring and verifying their response. Similarly, connecting energy devices enriches the available real-time data and creates a horizontal platform for data access, increasing the total value of the data network. Together, React will become the leading network of grid edge data and resources to modernize the energy system. # Intro ### The React Mission **React is building the next generation of energy cooperative – a network that is programmed to build a stable, sustainable, and abundant energy future**. React seeks to accelerate the decarbonization of our energy system by providing an open protocol for an intelligent grid edge. React’s decentralized network eliminates the prohibitive costs associated with the traditional corporate aggregation model by offering an open, permissionless, and extensible system for resource owners to monetize the value of their assets. As a single source of data and device connectivity, React will offer power market participants access to granular, flexible energy in the specific location and quantity necessary. At scale, React's ultimate vision is to create the very fabric underpinning the transition to a renewable energy system- a global, community-owned network of energy devices providing intelligent flexibility to power grids. ### React's Role in the Energy Stack React functionally serves as a networking layer between resource contributors’ assets and participants in the power markets. React's roles can be defined as: 1. Incentivize energy monitor and DER deployments; 2. Collect and standardize grid-edge data; 3. Connect to all available DER resources; 4. Orchestrate connected devices for market participants via the EMS Data and energy flexibility are key to building the intelligent grid edge. React’s token model acts as an engine for incentivizing the deployment of data collection devices and distributed energy resources, and orchestrating them for participating in the power markets. ### Building From the Bottom-Up Community network projects such as Helium and others have proven the effectiveness of a well-designed token economy and an engaged community in developing distributed physical infrastructure. The Nova Labs team realized the necessity of a low-cost wireless network to enable the Internet of Things to proliferate, but also the capital barrier to deploy a network on a global scale. Several companies have attempted to build such a network through a traditional corporate approach, but all have failed. Instead, Helium leveraged token incentives to encourage an unaffiliated, or decentralized, set of individuals to deploy hotspots while transmitting ownership of the network to the community. In the three years since Helium’s adoption of a crypto-economic token incentive model, the Helium network has grown to nearly 1 million hotspots deployed in 182 countries, a truly ubiquitous wireless IoT network. Bottom-up construction provides a more equitable and efficient operating model for distributed networks. Bottom-up networks are built to deliver value where it is created, rather than to a middleman entity. Tokens provide the economic mechanism to build networks from the bottom up by better aligning value accrual with contributors. Tokens transmit ownership of the network to the participating community, rather than shareholders. With a true ownership stake, contributors are incentivized to contribute to and grow the network because networks become more valuable as they scale. Tokens help strengthen network effects for platform businesses that would traditionally have low switching costs and moats. React is leveraging this community model to accelerate the deployment and networking of distributed energy resources to unlock global decarbonized power grids. Decentralized ownership ensures the React Network remains a credibly neutral and verifiable venue for distributed energy data and connectivity, while reinforcing network effects. Additionally, React tokens provide an additional economic incentive for its community to invest in these critical assets. While React will initially launch in the United States, React plans to scale the network globally. All power grids face the same challenges with the increasing penetration of renewable generation, and React seeks to provide a solution to our global energy system. # Technical Architecture The initial React technical architecture was developed by Anode Labs. Anode Labs plans to open-source the core code base under an open-source license (license type to be determined) at a date following the mainnet launch. A high-level overview of the technical architecture and components can be found below. ### React Energy Layer #### **Energy Monitors** Energy monitors are small devices that can be installed on electric panels to monitor energy consumption in real time. Real time telemetry is not widely available in the energy market; however, it is imperative to optimizing both forecasts for energy supply and flexibility at the grid edge. Energy monitors are the foundation of the React Network, and will allow the network to build the largest collection of real-time energy data in the world. This data can be monetized as a standalone service, as well as used for measurement and verification for virtual power plant operations. Anode Labs is developing an open-source energy monitor for the community. We plan to foster an ecosystem of hardware manufacturers conforming to the open-source specifications in the future. React will work with existing energy monitors on the market for the early days of the network, before fully shifting to the open-source standard. While the energy monitor plays a core role in the React Network, it also provides ancillary benefits for each owner. The data insights can assist in reducing total electricity costs and inform the user on the consumption of each of their appliances, helping to optimize home electricity consumption. #### **Distributed Energy Resources** Distributed energy resources (“DERs”) are small, electricity-producing resources, energy storage systems or controllable loads that are deployed across the distribution grid, typically behind-the-meter, that provide electric capacity or energy where needed. DERs are intelligent and dispatchable, and can be aggregated together to provide flexibility to power grids as a unit. DERs can include home solar and energy storage, smart thermostats, EVs and EV chargers, hot water heaters, and even electrified appliances. The more flexibility available in a load source, the higher value to React and to the grid. Support is dependent on an accessible API for data collection and control. Anode Labs will continue to whitelist assets and work to integrate with all major DER brands. #### **Registration Services** Registration services are responsible for integrating an asset into React. During registration, React will collect each asset’s location, manufacturer, model, MAC address / serial number, retail electricity provider and plan type, and unique meter ID. These characteristics are tagged to the asset itself, which are then used for pool assignments, settlement, and verification. Aggregated distributed energy resources in React provide critical infrastructure services, and are subject to asset-level identity requirements imposed by regional grid operators. Grid operators need visibility into the specifications of each asset on the distribution grid and their individual characteristics to optimize grid stability controls. #### **Network Data Pipeline** The Network Data Pipeline extracts, transforms, and loads asset telemetry data in a standardized format. The Network Data Infrastructure will be the mission-critical link between all grid-edge resources on the network. It will be responsible for standardizing data across various energy resources connected to the React Network. The network data services will run every 5 minutes to extract state information from each energy asset connected to the network. Data pipelines are standardized across asset classes. Within each asset class, there may be multiple OEM devices that will be extracted, saved, validated, transformed and reported. Currently, the Network Data Pipeline uses cloud-based microservices and time series database architecture off-chain for our extraction, transformation and load (“ETL”) pipelines. The ETL pipelines and data will be stored off-chain. The Network data infrastructure will also communicate with the Distributed Energy Resource Management System (“DERMS”) software to store and transfer dispatch signals between the software and energy resources. Space & Time is currently working with the React Network to integrate their decentralized database and data warehousing systems as the Network’s off-chain data storage infrastructure. The network data pipelines are key to the effectiveness of the network. The network data systems are designed for up-time, data integrity and availability. #### **DERMS** Distributed Energy Resource Management System, or DERMS, is a software-based platform that provides the ability to continuously manage diverse and dispersed DERs, both individually and in aggregate, to support multiple objectives related to distribution grid operations,end-customer value or market participation. The objective of DERMS platforms is to be able to dynamically rchestrate the dispatch of internet connected, variable, and customer-sited constrained assets into a mission critical, virtual resource for utilities and system operators. React leverages Grid eXchange Fabric (GXF) as its native DERMS. GXF is an open, generic, scalable and independent 'Internet of Things' platform, which enables various connected smart objects in the public space to be easily controlled and monitored. GXF is maintained by LF Energy, an initiative launched by the Linux Foundation in 2018 to support the digitization of the power grid. {% embed url="" %} #### **State Estimation / Forecast Modeling** Additionally, React leverages LF Energy’s OpenEEmeter in conjunction with other open-source models for state estimation across the network’s portfolio of devices. OpenEEmeter is an open source toolkit for implementing and developing standard methods for calculating normalized metered energy consumption (NMEC) and avoided energy use. The OpenEEmeter library contains routines for estimating energy efficiency savings at the meter. Anode Labs is currently using OpenEEmeter’s weather modules for the energy forecasting layer on top of SciKit’s open source ML library. The libraries provide backend functionality, while our proprietary data and training makes it usable for our application. The state estimation model will be open sourced and initially operated by Anode Labs. We plan to decentralize the oracle over time. {% embed url="" %} #### **Elastic Asset Pools** Asset pools are regional collections of energy assets that can be orchestrated together to provide flexibility to the grid. We define React pools as “elastic” because assets can be sited in multiple pools- for example, in a utility pool as well as a wholesale market pool. Assets will be included in pools based on their location, characteristics, and market opportunities. Market participants in the energy markets will not have the infrastructure or expertise to interact natively with a decentralized, on-chain network. Therefore, abstracting away the complexity will be critical for successfully engaging the buy-side of the React Network. Market participants will pay for pool contracts through traditional fiat rails - typically bank wire. The React Foundation will maintain an account with Silvergate Bank, which will collect revenue and deposit it in the React Network’s on-chain treasury to be distributed to resource contributors. The React Foundation will release monthly bank statements to the community for auditability. Anode Labs continues to explore more decentralized alternatives for bridging off-chain revenue on-chain. ### React Crypto Layer #### **Off-Chain Storage** All evidence data will be stored in Space & Time's decentralized data network to preserve trust and reduce dependencies on centralized architectures. Potentially identifying information will be encrypted, while network health data will remain available. React's data provides a real-time picture of the network’s assets and is used by the exchange to determine availability and settlement. {% embed url="" %} Anode Labs plans to decentralize the entire data collection pipeline over time. Anode Labs is actively working with decentralized storage and compute protocols to facilitate this transition when performance and cost enable it. ### **Oracle Service** State estimation oracles are required to submit the valid capacity and deliverable power of the network’s assets to the chain. ### **Blockchain** React will be built on top of the Polygon PoS chain. React has selected Polygon PoS as it best fits the current needs of the network. First, Polygon PoS is an Ethereum commit chain that inherits Ethereum’s economic security via checkpointing transactions, while offering significantly more transaction throughput (\~7,000 txs/sec) and lower transaction costs than the L1. This is important to ensure that React's sophisticated smart contracts can operate without incurring significant costs while settling securely and quickly. Second, Polygon PoS is a carbon-negative blockchain, aligning with React's mission of accelerating a renewable energy system. Polygon has taken an active approach to sustainability, committing to their Green Manifesto of moving from carbon-negative to climate-positive. {% embed url="" %} Finally, full EVM compatibility means React is composable with other Ethereum dapps deployed on Polygon PoS. React will be able to take advantage of the deep developer community, compose natively with the large DeFi ecosystem, and benefit from the robust network effects built around the Ethereum project. # Security React is a distributed system by nature, and thus must be diligent about reducing Sybil attack vectors. React utilizes multiple measures for redundant protection against virtual identities participating as energy resources. ### Proof-of-Energy Proof-of-Energy (“PoE”) is a core component of React's reputation system to ensure that an asset is active and listening, and connected to a legitimate load source. The Network will select assets to perform a PoE challenge at random. The asset must respond to this randomized, isolated dispatch request for a certain amount of time. The connected energy monitor should record a measurable change in load as a result of the response, proving the asset is dispatching as requested. ### Proof-of-Location Helium is a global, community-owned network of wireless hotspots providing ubiquitous LoRaWAN coverage. The Helium Network consists of nearly 1 million hotspots globally.\ \ Energy monitors will connect to the Helium Network for location verification. By recording the location of the Helium access points the device connects to, the network can approximate location. ### Utility Data Each resource will be tied to a location. When a resource contributor joins the network, they will be required to tie their utility meter ID and utility account to the asset through Urjanet, an industry-leading API for utility data access. Utility meter IDs are unique to each location. This provides the network with historical meter data, as well as location verification from the utility itself. Utility data acts as an honest, 3rd party data provider for the network to help ensure honesty. ### Whitelisting For identity-level Sybil resistance, Anode Labs plans to whitelist energy resources for participation in the Network, eventually turning over whitelisting responsibility to community governance. Only whitelisted assets will be eligible to participate in React. Whitelisting certain assets and their OEM software ensures that assets must be connected to their OEM server to participate. Additionally, we anticipate sampling signatures of energy-related dispatch as well as pre-existing ramp rate/charge/discharge power system physical constraints to quarantine anomalous readings from the network for review. If the asset is determined to be spoofing, it can be excluded from participating in the network. React will form a review committee to make these objective determinations. Token holders will be eligible to vote for committee members. # $KWH Supply The React token, KWH, is the backbone of the React Ecosystem. KWH is used to incentivize battery deployments and reward participation, convey network ownership and governance rights to the community, and other benefits for holders. Well-designed token economics incentivize contributors to provision the network with the resources it requires, and align the interest of all network stakeholders. KWH is an ERC-20 token on the Polygon and Ethereum blockchains. React’s token economy will accelerate the deployment of battery storage on the grid and pull forward the decarbonization timeline. ### Token Supply React will have a permanently fixed maximum supply of 500 million KWH tokens.
Of the 500 million total KWH tokens: * 60.0% will go to the React community: * 36.5% for resource mining to reward network supply growth * 6.0% allocated for staking incentives * 17.5% held in the community treasury, to be utilized as the community sees fit through the proper governance channels. This could include further growth incentives, strategic airdrops, institutional partnerships, distributions to valuable community members, or furthering the network’s goals, such as investing in decentralized energy infrastructure in underserved areas. * 9.8% to investors for providing capital necessary to launch React * 30.2% will go to Anode Labs, for constructing the technical and operational systems required for React to function as a decentralized protocol, as well as to fund ongoing contributions The team and investors will be subject to a 3-year vesting / lockup schedule with a one-year cliff (i.e., 1/3rd will vest on the one year anniversary of granting, with 1/24 of the remaining balance vesting monthly thereafter). # $KWH Distribution React’s token model distributes value back to resource contributors in the form of KWH and stablecoins (initially USDC). Value distribution to resource contributors takes two forms: baseline incentives, and market compensation. Baseline incentives, in the form of newly minted KWH, are issued to resource contributors by the network to incentivize early participation and network growth. Over time, market compensation will overtake baseline incentives to compensate resource contributors, removing the need to continuously inflate the KWH supply. Market compensation is based on demand for the network’s data and energy services, as detailed in the next section. Demand for these services will be paid via Data Tickets, which are minted from burning KWH tokens. The React Foundation will facilitate this process for end users to alleviate them from the operational complexities of managing crypto infrastructure. {% content-ref url="/pages/f4kl6Mhxva4Zf40pqGUP" %} [$KWH Utility](/usdkwh-token-economics/usdkwh-utility) {% endcontent-ref %} One example of demand for the network’s services is a market participant building a VPP pool on top of React. When users opt-in to a market participant‘s VPP pool, the compensation terms will be outlined by the operator. The operator then pays the network in USD according to these terms. React bridges this USD on-chain and settles it with individual participants as USDC on-chain. As a result, contributors will earn a mix of both KWH tokens and stablecoins for their participation. {% hint style="info" %} This section highlights the initial parameters for KWH token distribution. As a complex system, **it is inevitable that React’s token economy may change over time**. For example, the community may need to tweak the multipliers as the network develops and the community is better able to determine how each asset should be weighted. The community will be instrumental in ensuring React’s token model evolves appropriately. {% endhint %} ### Baseline Issuance Baseline incentives reward resource contributors for connecting data and energy devices to the network. The rewards a resource contributor earns are a function of how many connections they maintain per energy monitor, as well as how active they are in community growth and network building. The baseline token issuance schedule is set to run for 8 years. Token issuance will slightly increase over the first 3 years, and then linearly decline at a 30% rate for the following 5 years. React is a digital network anchored to the physical world, where supply chains and other physical constraints can impact network growth. The slight increase in years 1-3 helps ensure rewards remain compelling while the network bootstraps itself into existence, before market forces take over the bulk of network compensation.
Baseline incentives are issued weekly. A weekly release schedule balances reward frequency and transaction fee optimization. To qualify for baseline incentives, a resource contributor must deploy a React-whitelisted energy monitor. Ubiquitous real-time energy data is the key to unlocking distributed energy and the connected grid. Baseline incentives payments to each resource contributor are defined by the amount of React Incentive Credits (RICs) earned in each weekly epoch. RICs are earned by the following: * Energy Monitor Baseline * Connected DER Multipliers * Referral Multiplier * Asset Reputation Scores An individual resource contributor’s weekly RIC balance is compared to the total network’s earned RICs to determine the percent of the weekly token emissions to which they are entitled. To illustrate, if an individual resource contributor earned 10 RICs in a week and the entire network earned 1,000, the resource contributor would be entitled to 1% of the weekly reward distribution. Each connected energy monitor earns a baseline of 1,000 RICs. This baseline is modified by the following multiplier schedule to define a resource contributor's total weekly RICs.

Note that the EV multipliers apply to vehicles with bidirectional capability; must have an associated charger to participate

{% hint style="info" %} NOTE: These multipliers will likely evolve and change over time as we continue to develop and tweak the token model. Token-incentivized infrastructure projects are complex systems. We will continue to refine this model to create the optimal value distribution system. {% endhint %} Each DER multiplier is given for assets that are connected to the same building as the energy monitor. For example, a building with an energy monitor, a solar system, and a 5 kW battery would earn 7,500 points in a given period, all else equal. React seeks to reward those that are aligned with its long-term vision of building a better energy system. The active multipliers seek to reward those specifically engaged in network value creation. Each community member will be given a referral code. Community members that are active in engaging new users to sign up will earn a 1.5x multiplier per referral for the following 4 weeks. To illustrate, if the resource contributor we defined earlier (7,500 RICs) referred 2 energy monitor deployments, they would earn 16,875 RICs for the next 4 weeks (7,500 \* 1.5 \* 1.5). The most active community members will be able to generate significant earnings through referral multipliers. Reputation scores ensure honesty among contributors. Reputation points are deducted for non-compliance, either through Proof-of-Energy failures or a failure to dispatch. Enough failures can result in a reputation score going to zero, which would imply zero token rewards. Similarly, a contributor will increase their reputation score by responding to Proof-of-Energy challenges and dispatch events. Reputation scores have a maximum weighting of 1.0. A contributor with maximum reliability will not earn points above their baseline for reputation, but an unreliable asset will quickly degrade their point base. The goal is to capture the concept that reputation is difficult to earn, but easy to destroy. Each instance of noncompliance with a Proof-of-Energy challenge or a dispatch instruction results in a reputation score weighting reduction by 1/3rd. Any reputation score below 0.33 rounds to zero. To illustrate, a single failure to respond to an energy command would result in an asset’s reputation score falling to 0.66. A second, consecutive failure would result in a weighting score decreasing to 0.33. A third consecutive failure results in a weighting score decreasing to 0. An asset’s point base quickly degrades for noncompliance, ensuring response integrity in React's asset base. Responding positively to an energy instruction will increase an impaired reputation score by 5 points, to a maximum of 1. An asset with a reputation weighting of 0.66, after positively responding to an instruction, would increase its weighting to 0.71. It is intentionally more difficult to increase reputation than decrease it to ensure maximum responsiveness. # $KWH Utility KWH is a digital commodity that fuels the React ecosystem, intrinsically linked to the value the network creates. Additionally, the token serves important roles in governance over the protocol, mitigating the protocol’s market risk, and economic alignment among actors. Tokens are supplied to the market in return for providing useful services to the network- deploying energy monitors and facilitating distributed energy connections. Token demand is similar to demand for any commodity. As the underlying service fueled by the commodity becomes more valuable, demand for the token increases. Demand-side participants must consume tokens to redeem the underlying services of the network. ### Network Service Demand Market participants pay the network for the right to use its services. Specifically, market participants pay for 1) network data, and 2) EMS dispatch calls. React offers a decentralized, digital infrastructure for market participants to construct new value streams above. {% hint style="info" %} A few concrete examples of potential network demand: 1\) **A VPP operator decides to expand its footprint to include React participants.** The operator would market its pool to React resource contributors, who could then opt-in. The pool would compensate contributors on a $/kWh basis as described in its pool details. However, to utilize the network's resources, the operator would need to pay React (via Data Tickets minted through KWH burns) for data associated with network state, M\&V data for performance monitoring, and the EMS dispatch instruction. 2\) **A utility is looking to optimize the management of its distribution footprint.** Real-time, granular data is prohibitively expensive. The utility could pay React in Data Tickets for data relating to power quality, real-time outage monitoring, and DER visibility. 3\) **A REP is seeking to expand its portfolio to customers with flexibility resources to limit their short market exposure.** The REP would pay React to identify valuable customers, stream their real-time data, and dispatch customers when necessary as a physical hedge. 4\) **An insurer is looking for better underwriting practices on their homeowners insurance book.** The insurer offers cheaper rates to customers by purchasing their voltage data from React to preemptively manage electrical faults that could potentially lead to fires. {% endhint %} Similar to Helium, React utilizes a Burn-and-Mint equilibrium model. However, React incorporates a unique twist on the model in line with preserving the flexibility of the token economy design. Instead of sending KWH to a burn contract to mint Data Tickets, KWH will be sent to the React DAO treasury to mint new Data Tickets. Token burns can be capital inefficient, while treasury tokens can be reinvested in furthering protocol growth. We believe that allowing the DAO to accumulate a pool of out-of-circulation tokens creates a new source of flexibility in the network's token economy to reinvest in its own growth and success. {% embed url="" %} The use of treasury funds is controlled by the React DAO. The treasury will be utilized as insurance for market performance, as well as other programs decided by the community through proper governance channels: additional incentives, partnerships, grants, etc. ### Staking Staking KWH serves two important roles: governance, and backstopping the risk in the system. **Staked KWH earns boosted governance participation rights.** This ensures that the most committed community members, taking a long-term view of the protocol, have the largest voice in network development. **Staked KWH also serves as a backstop for potential risk in the system.** In some circumstances, React may be the financially responsible party for power delivery in the markets. React takes multiple steps to ensure it can fully deliver its commitments - continuous, randomized asset testing, reputation scores, and energy resource portfolio management reduce the network’s risk. While we do not expect underperformance to be a common issue, it is possible the network may fall short of its committed dispatch amount, and will need to provide financial settlement for the difference. Staked KWH serves as a risk backstop in the system, as staked tokens can be liquidated to settle network underperformance. Tokens will be liquidated ratably among all stakers. Additionally, if necessary, KWH can be released from the treasury to backstop the protocol. For their role in governance and taking on the risk in the system, stakers are eligible to earn yield from the staking incentive token pool. As baseline incentives wind down, the community will have the power to decide how best to compensate KWH stakers. Stakers receive time-based multiplier points for staking (up to 3.0x), which ensures that long-term oriented community members are rewarded more significantly than a community member that jumps in and out of the staking pool. The “age of staked capital” drives how significant of governance and yield multipliers a community member can earn. The “age of capital” multiplier caps out at 548 days (1.5 years). Each day that tokens are staked results in an increase of 1/548th the total available staking multiplier, which maxes out at 3.0x. To illustrate, if a member stakes their tokens for 548 days, their available yield and governance for the staking pool will be 3.0x greater than the amount of token staked; if they have 100 tokens staked, the pool would consider their voting and yield potential worth 300 tokens. Stakers can un-stake tokens at any time. Un-staking requires a cool down period of 60 days to prevent the ability for stakers to game the system if a liquidation occurs. When un-staking, stakers forfeit all multipliers for governance and yield. # Community Ownership React is designed to be a community-owned and governed energy cooperative. KWH tokens will convey governance rights of the network to holders through a staked age of capital model. While every KWH token can vote, the longer KWH are staked, the more governance rights accrue. The community will govern the network through a DAO with token-based voting. There are three main classifications of React Network Proposals (RNPs): 1. Technical: upgrades to the React protocol 2. Economic: modifications to the React token economy and incentive structures 3. Community: process, organization, and other miscellaneous proposals relating to the community and structure of React RNP proposers will vet their proposals among other community participants and receive initial feedback in React's community Discord. Following initial vetting and feedback, the proposer will draft the RNP using the community-accepted standard RNP template and submit it to the community for discussion at the next community call. Community members will have the opportunity to comment on the RNP synchronously via the community call and asynchronously via the governance forum. Following a wait period, the RNP will be presented for community voting. If approved, the RNP will be implemented, initially by the core team. Eventually, the Network will decentralize the implementation functions to an implementation committee. React will use a mixture of off-chain and on-chain voting. Typically, we expect technical and economic proposals will utilize on-chain voting, while community proposals will be facilitated off-chain.