Why $AZERO has one of the best-designed #tokenomics in the #crypto space?
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1/
The total supply of @AZERO is currently 320 mil coins
Compared to some other popular L1 protocols out there like..
$SOL 540 mil total
$DOT 1.2 bil total
$MATIC 10 bil total
$AZERO is a much scarcer resource
2/
Remember that scarcity is the main driver of price appreciation when demand increases.
$AZERO takes advantage of the above principle.
3/
All forward-thinking projects introduce some sort of inflation mechanism
$AZERO is no exception to this.
Though inflation can lead to concerns about the long-term value of any given token, we need to look at it from a different, more mature perspective
4/
Aleph Zero is a Proof-of-Stake protocol.
Simplified explanation - to validate on-chain transactions a given amount of $AZERO is required to be staked (locked up) by so called validators and nominators.
They are paramount for security and stability of the network.
5/
Now, think for a minute, what would convince them to lock their investment up instead of selling everything on the nearest pump, cashing out and letting the chain crumble?
They are compensated in $AZERO for providing this service
6/
So, having a finite amount of token would pose a threat of inability to pay validators at some point, which then could lead to the collapse of a whole project.
Fortunately that's not the case for $AZERO.
7/
$AZERO has an annual inflation rate of 10% of its initial total supply, which translates to 30 mil coins released yearly.
Your first thought might be - "that's a lot.."
But is it really?
Let us once again compare $AZERO to few of the most popular chains out there.
8/
$SOL currently has 540 mil total supply.
It would take $AZERO 7 years to reach that amount of tokens.
30 years to reach $DOT's total amount of 415 mil.
And 320 years to reach $MATIC's quantity!
From this perspective, 30 mil annualy turns out to be quite a small amount
9/
Inflation is essential for the ongoing expansion of the ecosystem.
While price appreciation is important and will come down the road, it can't get too steep too fast, especially for such a relatively young blockchain like Aleph Zero.
It would only stunt its growth.
10/
The release of new tokens will provide an affordable entry level for projects looking to on-board Aleph Zero.
Then, once the ecosystem grows larger and gains reputation so will the demand for $AZERO grow, propelling the price.
11/
What does that mean to you?
As mentioned earlier, every PoS project needs a sustainable economy model that can support the ongoing payment of validators in order to ensure viability, growth and success of the project.
12/
Designing a solution that balances the need for growth and funding with the need to maintain value and stability is a challenging task.
Yet, I belive guys at @Aleph__Zero managed to pull it off.
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Take care guys!
twitter.com/MoonshotsApe/status/1612218537946370052?s=20&t=jJRFUsyQbubAN9LS3H9mJQ
Edit on the 8th point: $DOT's total supply is currently 1.2 billion