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
Please keep all of this confidential for now!
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?
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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
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
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
The proving puzzle algorithm will not be finalized until just before mainnet launch
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
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 Please keep all of this confidential for now!
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