LoopCost
LoopCost is the total routing cost for any material or product transfer across the federation. It combines the base price with export and import penalties derived from LoopSignals, plus a distance cost. By design, LoopCost ensures local exchanges are always cheaper than cross-boundary ones, keeping circular value circulating close to its source.
The formula
LoopCost is a computed value, not a standalone schema. It is calculated at routing time from three components:
Base price
The material or product's stated transfer price in LoopCoin, set by the offering node.
Export penalty
Applied when a material leaves its home node. Derived from the offering node's LoopSignal for the material's category — a low signal means the node wants to keep that material locally, raising the export penalty.
Import penalty
Applied when a material arrives at the receiving node. Derived from the receiving node's LoopSignal — a high signal means strong local demand, lowering the import penalty to attract inbound offers.
Distance cost
A small per-kilometre cost between nodes, ensuring physically adjacent cities trade more readily than distant ones regardless of signal values.
Why this matters
Local-first routing
Within a single node, LoopCost equals base price only — no penalties. Materials are always cheapest to exchange locally, making the circular economy default to its shortest loop.
Community-governed penalties
Export and import penalties are not set by a central authority. They emerge from each city's democratically approved LoopSignal configuration, giving communities direct influence over material flows across their boundaries.
Overflow mechanism
When local demand is saturated (low LoopSignals), penalties drop and surplus materials can flow to neighbouring nodes that need them — the "Overflow" in LOOP.
Transparent routing decisions
Because the formula is public and signal values are published by each node, any participant can compute the cost of any exchange in advance and verify that routing decisions are fair.