Introducing: The HOPR Token
HOPR is a multifaceted project developing bleeding-edge technology for digital privacy, layer-zero data transfer, and decentralized governance.
This is an enormous scope, and everything is tied together by the HOPR token, an ERC-20 token on the Ethereum blockchain.
There’s a lot to talk about here, but this post will cover the basics of the HOPR token: what it does, how to earn it, and broader tokenomic information including overall token supply and our token release schedule.
Subsequent blogs will focus on individual aspects of the token, and more information can be found on Telegram, Discord, and in our Discourse forums.
Token Functions
The HOPR token has three main functions: pay, stake, and vote.
Pay
The primary utility of the HOPR token is to pay for sending data privately through the HOPR network. Let’s say Alejandro’s company sends data privately to a user Zoe in three hops, relayed via Betty, Chāo, and Dmytro. Alejandro’s node will pay HOPR for each packet sent, with each relayer claiming a share of Alejandro’s payment.
Relayers are only paid once they’ve received payment key halves from the previous and following nodes along the route. This is the fundamental mechanism behind HOPR’s proof-of-relay system, which incentivizes everyone and ensures honest behavior.
Stake
Node runners earn tokens via HOPR’s staking mechanism.
The more HOPR tokens you lock up in your node as your stake, the more data you can relay and the more HOPR you can earn. These earnings will come partly through relaying user data (through the pay function, explained above), but also from relaying cover traffic, which accounts for 25% of the total supply (250 million HOPR, distributed over the first two years of the network).
Cover traffic is a crucial part of a decentralized mixnet, providing anonymity and unlinkability even at times when organic network usage is lower. By combining cover traffic with staking, HOPR takes two often arbitrary functions of decentralized networks and builds an incentive system where users are rewarded for holding HOPR tokens while also doing useful data relaying work for the network.
As a result HOPR staking is less passive than other staking programs. It’s not enough to just hold HOPR tokens: you have to run a node and contribute to the network to earn. This is better for overall network health and helps mitigate the problem of disinterested “whales”.
Vote
We believe digital infrastructure is a public good that should be in the control of users, not companies. To facilitate this vision, HOPR is designed to be a fully decentralized network under complete user control. We could dedicate thousands of words to HOPR’s governance system (and we plan to!), but for this post, we’ll focus on what the HOPR token lets you do.
Anyone who holds HOPR tokens will be able to vote on proposals that affect the HOPR network, including HOPR fees and other technical parameters. But that’s not all: anyone who holds HOPR tokens will also be able to apply for membership of the HOPR Association, a Swiss not-for-profit legal entity that allows HOPR to interact with the real world without exposing token holders to legal liability. It’s this crucial factor that separates HOPR from previous attempts at building a DAO.
Association members can vote using their tokens on association-specific things such as how the association spends its money and who gets to be on the board of directors. HOPR is taking a cautious but active approach to tokenized decentralized governance: it’s clear from previous experiments in this space that it’s inadequate, unhelpful, and perhaps even unfair to just abruptly transition to community control.
Different parts of a decentralized community have very different levels of token holding and engagement, and many parts of a project engaged in active development are not compatible with the very basic “proposal / mass community vote” model we see across the crypto space.
HOPR is taking decentralized governance to the next level, but the HOPR token will underpin every part of it.
Token Supply and Release Schedule
HOPR has a total supply of 1 billion tokens, broken down into the following categories:
One billion HOPR may seem like a lot of tokens, but the circulating supply will be much lower.
First, the stake function (explained above) provides strong incentives for HOPR to be locked.
Second, many of the token allocation categories are set to release gradually over a period of four years, as shown in the chart below.
At launch, the actual circulating supply will be 130m HOPR, and we expect much of that to be locked through staking.
Cover Traffic
Of all the categories in the allocation chart, the most important to understand is cover traffic, which accounts for 25% of the total supply (250 million HOPR). Cover traffic is arbitrary data that is sent through the mixnet to provide ‘cover’ for users in off-peak times. The more data being sent through a mixnet, the more anonymous it is, and cover traffic is a way of ensuring there is no way to link data and metadata to particular users. Like organic user data sent through HOPR (as described above in the pay function), cover traffic earns HOPR for node relayers.
The difference is that cover traffic will be directed by our protocol to relay through nodes based on their stake, providing predictable relaying work for nodes with locked HOPR. With 250 million HOPR to issue, this stake function is the primary source of incentives for node runners within the HOPR network, especially at the beginning of our lifecycle.
The precise rates at which cover traffic will be transmitted will partly be governed by network conditions, but will also be eligible for adjustment via the vote function (described above).
Treasury
A further 25.5% of the token supply (255 million HOPR) is allocated to the token treasury. Tokens in the treasury are earmarked for spending on future development and promotion of HOPR technology, usually through the provision of grants.
The precise way HOPR tokens are allocated will be under the control of members of the HOPR Association, of which HOPR token holders will be eligible to apply for membership.
When / Where Can I Get HOPR?
These are the questions that bombard our Telegram channel, and I’m delighted that we will soon be able to answer them. But not quite yet!
This is what I can say for now: After mainnet launch, HOPR can be earned by anyone who runs a node and stakes HOPR. As you relay data, your node will accrue tickets that can be claimed for HOPR via our smart contract on the Ethereum blockchain.
We will have more information about mainnet launch and how to acquire your first HOPR VERY soon. For now, all I’ll say is that it’s definitely worth participating in our final testnet, HOPR Titlis, which will start on Thursday January 14th. Visit our Telegram channel to learn more.
This whistle-stop tour of the HOPR token just scratches the surface, but I hope it’s given you a good first overview of our token utility and broader tokenomics. Look out for more blog posts in the very near future, and please check our documentation and social media channels for more information.
Sebastian Bürgel
HOPR Founder
