September 18, 2023

Introducing peaq’s economics: low inflation, low transaction fees, innovative rewards

What’s happening?

The first version of peaq’s economics is live on peaq’s sister network krest, including inflation, transaction fees, and some of the reward mechanisms. The estimated base fee for a simple token transfer will stand at less than $0.00025, while inflation begins at 2.5% and decreases every year by 10% until it reaches 1%. The network also provides innovative incentives to reward machines that create value on the network.

Why is it important?

An ecosystem’s viability relies on its economic model, which should set the incentives for stakeholders into equilibrium. With the launch of peaq’s economics on krest, this model gets its first live-fire test, which is crucial for fine-tuning and polishing ahead of the peaq mainnet launch next year.

What does this mean for the community?

Finally, you can learn more about the key figures of the peaqosystem, which includes transaction fees, inflation rates, and the innovative approach to incentivizing machines as well as DePIN and dApp builders.

In case you didn’t know, krest is more than a network. It’s a battleground. It’s the zone where everything is tested and polished for peaq’s mainnet, and the economic model underpinning it is crucial for the peaqosystem’s viability. Achieving the perfect balance between transaction fees, inflation, and rewards isn’t easy. 

Innovation is key, and peaq’s approach is to not only incentivize node hosts, but also machines, DePINs, dApps, Liquidity Providers, and people and communities looking to connect their devices to the network. The rewards for all of these network participants will come primarily from transaction fees. The purpose? To incentivize important stakeholders helping the Economy of Things on peaq thrive.  

In other words: generate value, earn rewards. So let’s get into the numbers.

Overview of key economic figures

Transaction fees: The transaction fees on peaq will include the basic fee and an optional fee you can add on top of it to try and get the transaction validated faster. The basic fee will depend on how much computation your transaction requires. The estimated base fee for a simple token transfer will stand at less than $0.00025, which is pretty affordable.

Inflation: Inflation refers to expanding the token supply over time to accommodate network growth and the resulting activity increase. peaq’s economics picks up a disinflationary approach, which means the inflation will be reduced over time, rewarding early backers. The inflation begins at 2.5% and decreases every year by 10% until it reaches 1%, which will become the fixed long-term rate.

Rewards: The exact distribution of rewards between different stakeholders is being tested on krest as preparation for the peaq mainnet launch next year. Intensive research has been dedicated to the economics behind peaq, and the team has spent time consulting industry experts and following best practices from proven L1 blockchains while also innovating on top.

As you can probably tell, this model has been specifically designed to reward all stakeholders contributing to the growth of the Economy of Things on peaq — both users and machines. Anyone transacting on the network, connecting their devices, launching a dApp or a DePIN on it, providing liquidity, or engaging in other useful endeavors ultimately creates more on-chain activity on peaq. 

This activity results in rewards for everyone that makes the ecosystem tick, and these rewards scale as network activity does. All of this makes up a potent foundation for growth, with more machines joining in to bring more rewards to all network stakeholders, not just their owners, and more dApps and DePINs tapping peaq to make use of its innovative economic model.

The Economy of Things on peaq is drawing nearer by the day, and testing its underpinnings on krest is crucial to make it as efficient, scalable, and inclusive as possible.

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