Co-founder of Harmony: update the Harmony token economy model and launch the "open mortgage" economy model

BlockBeats news, on April 1, Harmony co-founder Nick White posted Harmony's New Tokenomics on Medium, detailing the updated token economy model. The open mortgage mode will be started, and the equivalent amount of 44.1 billion tokens will be issued every year. Finally, 0 additional amount will be achieved through the destruction fee.

Nick White says it will start an "Open Staking" economy, in which total returns (issuance and transaction fees) across the network will remain the same regardless of average block time and mortgage ratios. The goal of this change is to achieve a higher mortgage ratio, simplify the model, and create a path to a 0 issue.

Nick White mentioned that the updated economic model will focus on the following changes:

1. Without taking into account changes in basic variables (such as block time or mortgage ratio), the number of additional issues plus transaction fee is maintained at 44.1 billion tokens each year. Under this model of equal issuance of 44.1 billion tokens per year, when the total number of circulating tokens increases, the proportion of newly issued tokens decreases.

2. Through the destruction of transaction fees to achieve zero additional way. The launch rate is set at 3.5%. The transaction fee is inefficient to issue tokens, but eventually the transaction fee is high enough that the issue can be inefficient to achieve 0 issue (dynamic note: to some extent similar to the mechanism of bitcoin, the transaction fee is getting higher and higher, and the miners' income is halved over time).

3. Annualized rewards in the first year: 164%(with a net mortgage rate of 5%) to 9% (with a net mortgage rate of 95%)

The following figure compares the equity reward between the old model (blue) and the new model (red)

Nick White thinks higher mortgage ratios are beneficial for two reasons. First, the mortgage rate is a barometer of the health of the PoS blockchain. A high collateral rate (above 60 percent) means the network is highly secure, since at least 20 percent of the tokens are needed to launch 33 percent of the attacks. Just as important, a high mortgage percentage marks having a large and loyal community committed to the project over the long term. If 60% or more tokens are locked into the mortgage contract, the user knows that most of them are in the hodler's hand.

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A second benefit of the higher mortgage rate is that it creates an organic demand for Harmony's native token, the ONE. In the long run, the adoption of on-chain applications will drive network usage and demand for token ONE.

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The original link: https://medium.com/harmony-one/harmonys-new-tokenomics-bcdac0db60d7

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