- Astar shifts to fixed supply Tokenomics 3.0, capping ASTR at 10.5B and using exponential decay to gradually reduce emissions.
- 50% of Astar network fees will be burned permanently, adding long-term deflationary pressure and increasing token value.
- Astar adopts Protocol-Owned Liquidity to fund DOT staking, reduce reliance on crowdloans, and promote ecosystem sustainability.
Astar Network revealed that it is shifting to a fixed supply tokenomics structure through Tokenomics 3.0. This change is intended to enhance the network’s economic model’s durability over the long term, prioritizing control over inflation and creating better alignment with institutions’ preference for dependable values. The total number of ASTR issued tokens will be approximately 10.5 billion. A gradual reduction in token emissions will be implemented using an exponential decay mechanism.
The development aims to cater to the growing demand from enterprises and institutions looking for blockchains with deflationary features and blockchain’s economic principles. Astar wants to provide a kinder environment for investors, developers, and participants in the ecosystem by ridding itself of this endless inflation and striving towards a fixed supply.
Optimizing Incentives and Ecosystem Stability
Astar will sustain builders and validators while not significantly relying on emissions. These distributions will be done through dApp staking, with Supplemental reserve support during the transitional phase. If the staker participation rate is 50%, the APR for stakers is expected to decrease from about 17% to 11% annually over the next two years.
This predictable yield structure also provides a stable reward ratio for builders and validators while avoiding the emissions peak. Astar has stated that the collators involved in the block production but not the network’s security will still be eligible for dynamic emissions.
Protocol-Owned Liquidity for Financial Independence
Due to the dynamics of the Polkadot ecosystem and the need to increase the degree of financial decentralization, Astar is using a Protocol-Owned Liquidity (POL) model. This initiative will enable Astar to purchase and stake DOT tokens instead of relying on crowdloan to obtain core time slots in the Polkadot.
The POL operations will be managed through the AFC using 20% of the network fee, unclaimed staking rewards, and expired ones. These funds will create and sustain the ASTR-DOT liquidity on the chosen platforms. Thus, all the revenues from POL will be reinvested to expand the ecosystem in the long term. There has also been established reporting where Key Performance Indicators continue to be reported monthly and recorded on the public KPI Dashboard which captures Liquidity and Coretime.
Fee Burn Mechanism Strategy: Strategic Ecosystem Partnerships
Besides the fixed supply and the purpose of launch (POL) strategies, Astar will pass on some advanced features, including fee burn, to decrease the circulating supply. Tokenomics 3.0 involves igniting 50% of the network transaction fees eternally. This is believed to continue exerting deflationary pressure on ASTR tokens while improving the overall value of the token in the long term.
The transaction fees will be distributed between the collators (30%) and the ecosystem fund (20%). The position will cover grant funding, builder support programs and POL funding. It does this while ensuring it sustains itself as an independent entity that does not contribute to inflation.
Astar’s refreshed economic model involves examining its position in the large Web3 ecosystem, particularly its integration with Soneium, a Layer 2 solution offered by Sony Block Solution Labs. ASTR will be the global stablecoin with use cases throughout Soneium’s DeFi environment on Ethereum and Polkadot.
