Aleo Token Economics
The Aleo network has developed an economic framework that aligns incentives among all stakeholders and promotes the desired properties of the system
This framework ensures that the native token, Aleo credits, holds meaningful value and serves as the preferred currency for transaction fees and zero-knowledge compute within the network.
Zero-knowledge compute refers to computations performed using zero-knowledge cryptography in Aleo's snarkVM, enabling fully private and efficient applications. Aleo credits represent the cost of computing a fraction of a zero-knowledge proof, and their price reflects the demand for zero-knowledge compute.
Unlike other networks like Ethereum, Aleo allows for calculable fees, eliminating unpredictability. Participants know in advance the exact number of Aleo credits required to run a program, avoiding unexpected expenses.
Aleo credits will be distributed to early backers, builders, and community members, as well as a foundation or entity responsible for grants and network development. New credits will be minted and allocated to miners through the block reward system, ensuring ongoing distribution.
The inflation schedule of Aleo rewards early adopters, promoting network security. Initially, a higher inflation rate is set, which decreases through halvings in the first decade. After year nine, a tail emission of 12.5 Aleo credits per block is introduced to ensure network security and economic stability.
The tail emission serves two purposes. Firstly, it guarantees a reliable source of revenue for miners, incentivizing their participation and ensuring a robust network. Secondly, it maintains a low, predictable inflation rate, which is beneficial for the economy. If an asset is purely deflationary, owners tend to hoard it, reducing demand for applications and decreasing the value of the credits.
Aleo emphasizes decentralization from the network's inception, using a proof-of-work variant to achieve wider token distribution. The network is designed to function independently of the Aleo core team, ensuring long-term survival and security.
The Aleo model introduces a proof-of-*necessary-*work system, where the generated proof serves a useful computation, rather than a random puzzle. This approach limits the energy consumption of mining activities and ensures the work performed is essential for validating state changes.
In summary, Aleo aims to create a decentralized and open-source network that supports the development and deployment of private applications. The stable token economy based on predictable prices and zero-knowledge cryptography provides a strong foundation for the next generation of computing.
Zero-knowledge compute refers to computations performed using zero-knowledge cryptography in Aleo's snarkVM, enabling fully private and efficient applications. Aleo credits represent the cost of computing a fraction of a zero-knowledge proof, and their price reflects the demand for zero-knowledge compute.
Unlike other networks like Ethereum, Aleo allows for calculable fees, eliminating unpredictability. Participants know in advance the exact number of Aleo credits required to run a program, avoiding unexpected expenses.
Aleo credits will be distributed to early backers, builders, and community members, as well as a foundation or entity responsible for grants and network development. New credits will be minted and allocated to miners through the block reward system, ensuring ongoing distribution.
The inflation schedule of Aleo rewards early adopters, promoting network security. Initially, a higher inflation rate is set, which decreases through halvings in the first decade. After year nine, a tail emission of 12.5 Aleo credits per block is introduced to ensure network security and economic stability.
The tail emission serves two purposes. Firstly, it guarantees a reliable source of revenue for miners, incentivizing their participation and ensuring a robust network. Secondly, it maintains a low, predictable inflation rate, which is beneficial for the economy. If an asset is purely deflationary, owners tend to hoard it, reducing demand for applications and decreasing the value of the credits.
Aleo emphasizes decentralization from the network's inception, using a proof-of-work variant to achieve wider token distribution. The network is designed to function independently of the Aleo core team, ensuring long-term survival and security.
The Aleo model introduces a proof-of-*necessary-*work system, where the generated proof serves a useful computation, rather than a random puzzle. This approach limits the energy consumption of mining activities and ensures the work performed is essential for validating state changes.
In summary, Aleo aims to create a decentralized and open-source network that supports the development and deployment of private applications. The stable token economy based on predictable prices and zero-knowledge cryptography provides a strong foundation for the next generation of computing.
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