Community Writer Series

Kiran Pachhai
May 15, 2018 · 6 min read

Elastos: ELA Tokenomics

Main Purpose of Elastos Blockchain

Before we talk about the tokenomics of ELA, we first need to talk about the core purpose of elastos blockchain.The Elastos main blockchain really only serves one function, being the ID system needed to connect into the Elastos intranet. Looking at it from a sidechain’s perspective, the main chain also serves another more important function — to be the public ledger for all other side chains. The main blockchain doesn’t need to scale as it’s just used for basic transfer payments. The sidechains are what allow other smart contracts like NEO, Ethereum, etc to run on top of elastos after porting their respective VMs(NEO VM, Ethereum VM). This is important as unlike other platform blockchains like ethereum etc which are trying to push millions of transactions through the blockchain (thus resulting in ballooning ledgers and scaling issues). On elastos platform, the transfer of data such as videos, music, games goes through the decentralised secure P2P network. The main chain is not cluttered with unnecessary data so there are no scaling issues. Incentive for DApps to use Elastos does not come from an incentive to use the Elastos blockchain itself. DApps are incentivised to use the Elastos operating system/P2P infrastructure and using elastos blockchain for decentralised IDs is a requirement to use that. And they may create their own sidechains for other tasks such as running smart contracts.

Comparison with the traditional platform

There are over 300 million domain names registered. Each of these domain names cost $10-$35 at a minimum and then maybe a few dollars per year after that. All the websites on elastos will need to pay for this domain name service using ELA. These domain names are like digital assets that can be resold to other people as well.

There are over 900 million twitter handles as of today. If each person on elastos network wanted to get their own handle, they would need to pay with ELA. These unique usernames are like digital assets that can be resold to other people as well, similar to unique domain names.

In order to utilize the storage service on the elastos platform either by a DApp or by regular consumers(for their own personal drive), they’ll have to be paid in ELA. Think of it as having your own personal dropbox but completely decentralized running on top of elastos platform. Users can decide to save the digital assets they purchase on their personal drives.

All in all, user traffic and adoption of the core elastos tech is what will drive the valuation of ELA token. The more users are connected to the elastos platform, the more ELA will be used thereby leading to a healthy growing economy in an ecosystem of itself.

Rewarding the community

Users will be able to participate in token sale projects and products built for elastos platform by participating in them using ELA. Apps built on elastos can also implement their system to process transactions using ELA.

As part of the development efforts, around 16 million of ELA were exclusively reserved for the growth of elastos ecosystem development. These will be given to community members who contribute to the Elastos Bounty Program that was announced during one of the last meetups in San Francisco. You can check out more about the bounty program at Anyone can contribute to the ever growing ecosystem of elastos: be it content creators, users, developers, testers, or leaders.

Why does ELA have an inflationary model?

The total supply of ELA started with 33 million(as created in the genesis block). The circulating supply for ELA can be roughly known by reading the article at About half of 33 million are exclusively reserved to reward the community for their contribution to the elastos ecosystem.

Elastos also has a 4% inflation year to year. All the mining rewards come from this inflation. Because Elastos employs a PoW + DPoS hybrid consensus mechanism, every time an ELA block is mined, the reward is distributed equally among the miners(35%), stakers(35%) and ecosystem development reward(30%).

The inflation is there to also account for all the ELAs that may be lost due to people losing their private keys or misplacing their digital wallets. It is estimated that around 4 million bitcoins have been lost and will never enter the circulating supply. In order to account for this similar loss, 4% inflation is employed by Elastos.

In addition to this, another reason there’s a 4% inflation also has to do with the fact that Elastos is an autonomous ecosystem that needs to keep on running. Bitcoin miners who decide to merge mine elastos are there for profit. There may be more than 6000 or even more than 10000 nodes running that help in the main ledger running autonomously with maximum security provided by the bitcoin network. It’s not only the elastos blockchain ledger that will be running autonomously but also the decentralized peer to peer network that will be running autonomously as well. In order to keep this wheel running for a long time, there needs to be miners for this as well who can provide supernodes as relays to transfer digital media content like video, music, games, etc. And these miners need to be rewarded as well.

Another way to look at the elastos platform is to imagine it being a self sustaining ecosystem. Elastos is building a smart web. A simple example of this is a micro-website(without an ip address) that will be running completely peer to peer. These micro websites need to have domain names, storage service and any other services websites need. All of these services will be paid with ELA. One thing to keep in mind is that proceeds from domain name registrations, etc will be used to fund hard drives(such as IPFS), supernodes for relaying videos, music, etc. Everyone can provide these services and they’re all helping the ecosystem, so they’ll need to be awarded accordingly. This is a self running economy so there needs to be a currency with a healthy economic inflation that can provide a long term sustainment and an equal growth of the entire ecosystem as a whole.

Elastos platform has no gas fees unlike other platforms

On elastos platform, there are no gas fees. Different DApps can build their own sidechains to issue their own tokens for different purposes. It’s up to these sidechains where smart contracts will be run that are going to decide whether they want to charge gas for certain transactions. As an example, if and when NEO or Ethereum VM is ported to work on elastos platform and DApps start getting built for them on top of elatos platform, elastos won’t be charging any gas fees of its own. However, the sidechains themselves may charge gas fees of their own to run smart contracts.


Elastos provides a platform for any kind of DApps to be built that can run directly on the device instead of running on top of the blockchain itself like most DApps today. This creates an incentive to port existing VMs(eg. NEO, Ethereum, etc) from other blockchains to be run on top of elastos, thereby leading to the true interoperability between all the different kinds of blockchains all running under the same umbrella that provides solutions to three of the most common problems faced today by most blockchains and DApps — scalibility, security and decentralization, all without sacrificing anything in the process.


Elastos Official Blog

Kiran Pachhai

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Elastos Official Blog