Economics

peaq’s economics are a result of an in-depth analysis of established and proven Layer 1 blockchain economics following best practices as well as innovating on them.

Security & decentralization​

Standalone Layer 1 blockchain needs to spend a significant amount of network revenue and inflation on securing and decentralizing the network. The security and decentralization of the peaq Layer 1 is inherited by the Polkadot Layer 0. Through winning a parachain slot, the security and decentralization are taken care of until June 2025. Once Polkadot 2.0 is implemented, a small portion of network revenue and inflation will be allocated to buy core time on the Polkadot Layer 0 which allows peaq to scale speed and throughput as required.

Transaction fee structure​

Transaction fees in the peaq network will comprise two components:

Base fee: The base fee will be determined based on the computational resources needed to process the transaction. This base fee serves as a mechanism to prevent the network from being overwhelmed by spam or low-value transactions.

Priority fee (optional): In scenarios where the network usage surpasses its maximum throughput capacity, a priority fee can be included. This optional fee allows users to pay an additional amount for time-sensitive transactions, helping to prioritize their processing. The priority fee provides a means to balance the network load during periods of high demand.

The transaction fee for a native token transfer will be as low as $0.00025, the cost of other transaction types will be on a similar scale.

Inflation model and the initial supply​

The inflation model adopted for peaq is designed to be disinflationary, which means that the rate of inflation will decrease gradually over time. This approach benefits early participants in the project, while also providing the network with flexibility in incentivizing the community during its initial stages.

Initially, the inflation rate will be set at 2.5%, ensuring sufficient incentives for early adopters. However, this inflation rate will decrease annually by 10% and will be stable once we reach 1% inflation. The objective is to strike a balance where the inflation rate aligns with the growth of network transactions. Ultimately, the long-term goal is to achieve a sustainable balance between inflation and network revenue.

The initial supply is 4.2bn $PEAQ.

Distribution of transaction fees and new tokens​

All transaction fees and newly minted tokens will be distributed between network participants, who actively engage in the network activity and comply with requirements. Eligibility for these rewards will be based on criteria such as value created by a machine or liquidity provided to the network. This approach aims to ensure fairness, attract community participation, and create a vibrant ecosystem.

krest

• Treasury - 15%
• dApps - 15%
• Collators & Delegators - 30%
• Liquidity Providers 15%
• Machines - 15%
• Parachain Lease Fund - 10%

peaq vs krest economic parameters​

peaq and krest networks share nearly identical economic parameters, both designed to incentivize various participants (e.g., machine owners, dApp builders, etc.) to actively use the networks. While their economies are similar, there are a few differences that need to be mentioned:

• Initial supply: 4.2bil of $PEAQ vs 400mil of $KREST

• Token distribution and release schedule: WIP to be shared in the upcoming weeks