Aleo Economics Summary

## Aleo Economic Model  - Aleo credits are fundamentally what makes Aleo a decentralized, permissionless network. - Aleo's consensus model is product of years of research and engineering effort, and integrates learnings from two previous testnets - All of the below is subject to *tweaks*, not major changes <div style="color:#C4FFC2; padding-top:30px"> Please keep all of this confidential for now! </div> --- ## What Are Aleo Credits?  - The Aleo token is used to *access* blockspace on the Aleo blockchain AND the finite computing resources on the Aleo network - Aleo credits are sub-denominated into "gates" which represent the fundamental unit of compute on the Aleo network --- ## What Are Aleo Credits For?  - Incentivize actors on the network to contribute to its security - Promote the development and adoption of useful applications - Foster decentralization, such that no single party can control the entire system - Do not inadvertently encourage dishonest or malicious behavior --- ## Who Gets Aleo Credits?  - The initial starting supply will be 1.5 billion Aleo Credits allocated as follows: - 35% to early backers - 25% to the community - 15% to initial contributors - 17% to be split between company & foundation - 8% to strategic partners <div style="padding-top:30px"> After launch, Aleo credits are issued by the network to provers for solving PoSW puzzles and validators for securing the network and participating in consensus </div> --- ## Who Gets Aleo Credits  - Total circulating supply of Aleo credits grows by 73% to 2.6 billion over 10 years, and doubles in approximately 21 years - Inflation overall decreases over time, from 11.8% in year one to 1.7% in year ten - Coinbase rewards (earned by provers and validators) decrease in a linear fashion until emission ceases around the tenth year - Block rewards (earned by validators) are emitted at a constant rate of 17 credits/block in perpetuity - This means that network inflation approaches a limit of 0% ---  ## How Provers Earn Aleo Credits - Provers provide solutions to puzzles randomly generated by the Aleo network and compete for a chance to win a portion of the coinbase reward - Coinbase rewards are distributed once a certain threshold of valid puzzle solutions is reached - Multiple provers can earn a portion of the coinbase reward, in proportion to the number of valid puzzle solutions submitted <div style="color:#C4FFC2; padding-top:30px"> The proving puzzle algorithm will not be finalized until just before mainnet launch </div> ---  ## How Validators Earn Aleo Credits - Validators earn rewards in three ways: - By including a valid coinbase solution in a block (validators earn 50% of a coinbase reward) - By earning transaction fees from users - By aggregating transactions and producing a valid block ---  ## How Validators Earn Aleo Credits - On mainnet, validators are selected by stake, with 1 million credits currently set as the minimum. - This includes tokens staked *both* by the validator in question as well as any other party that stakes tokens towards the validator address - Stakers that are not validators will earn a pro-rata share of rewards earned by that validator --- ## Questions :thinking_face: ---