## Aleo Economic Model
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- 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
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## What Are Aleo Credits?
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- 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
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## What Are Aleo Credits For?
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- <strong style="color:#C4FFC2;">Incentivize</strong> actors on the network to contribute to its security
- <strong style="color:#C4FFC2;">Promote the development </strong>and adoption of useful applications
- <strong style="color:#C4FFC2;">Foster decentralization</strong>, such that no single party can control the entire system
- <strong style="color:#C4FFC2;">Do not</strong> inadvertently encourage dishonest or malicious behavior
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## Who Gets Aleo Credits?
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- 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
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<p>After launch, Aleo credits are issued by the network to <strong style="color:#C4FFC2;">provers</strong> for solving PoSW puzzles and <strong style="color:#C4FFC2;">validators</strong> for securing the network and participating in consensus<!-- .element: class="fragment" data-fragment-index="1"-->
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## Who Gets Aleo Credits
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- Total circulating supply of Aleo credits <strong style="color:#C4FFC2;"> grows </strong> by 73% to 2.6 billion over 10 years, and <strong style="color:#C4FFC2;"> doubles </strong> in approximately 21 years
- Inflation overall <strong style="color:#C4FFC2;">decreases</strong> 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 <strong style="color:#C4FFC2;"> around the tenth year </strong>
- Block rewards (earned by validators) are emitted at a <strong style="color:#C4FFC2;"> constant </strong> rate of 17 credits/block in perpetuity
- This means that network inflation approaches a limit of <strong style="color:#C4FFC2;">0%</strong>
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## 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 <strong style="color:#C4FFC2;">coinbase reward</strong>
- Coinbase rewards are distributed once a certain threshold of valid puzzle solutions is reached
- <strong style="color:#C4FFC2;">Multiple provers</strong> can earn a portion of the coinbase reward, in proportion to the number of valid puzzle solutions submitted
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## How Validators Earn Aleo Credits
- Validators earn rewards in three ways:
- <strong style="color:#C4FFC2;">By including a valid coinbase solution</strong> in a block (validators earn 50% of a coinbase reward)
- By earning <strong style="color:#C4FFC2;">transaction fees</strong> from users
- By aggregating transactions and <strong style="color:#C4FFC2;">producing a valid block</strong>
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## How Validators Earn Aleo Credits
- On mainnet, validators <strong style="color:#C4FFC2;">are selected by stake</strong>, with 1 million credits currently set as the minimum.
- This includes tokens staked *both* by the validator in question <strong style="color:#C4FFC2;">as well as any other party that stakes tokens towards the validator address</strong>
- Stakers that are not validators will <strong style="color:#C4FFC2;">earn a pro-rata share</strong> of rewards earned by that validator
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## Questions
:thinking_face:
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