0chain Supply Overview and Miner Calculator
Ahead of the 0chain mainnet launch, we want to share with our community an overview on ZCN token supply metrics. As most of you may already know, current ERC-20 ZCN tokens running on Ethereum blockchain will be swapped for native ZCN tokens after the 0chain mainnet is live and running. All information regarding mainnet and token swap will be communicated timely, so please just follow 0chain social media. If you have any questions meanwhile, come and join our Telegram channel https://t.me/Ochain. Figures and calculations in this article are not final and may be updated ahead of the mainnet launch.
The maximum supply of ZCN tokens is 400 million and it will take about 100 years until they are fully released. Currently, there are around 60 million ZCN in circulation: 40 million from private- and pre-sale and around 20 million team and seed investor tokens which are gradually unlocking over a four-year period.
Let’s determine what are the drivers that will increase and decrease the actual circulating supply of ZCN tokens once mainnet is live and running. In particular, there are 4 factors that will affect the circulating supply, of which three are inflationary (increase circulating supply) and one deflationary (decreases circulating supply):
1) Reward for Service Providers (inflationary)
Service Providers are miners, sharders and blobbers. In brief, Service Providers make sure that transactions, storage and compute functionalities of 0chain work as intended. In order for Service Providers to be financially motivated to deliver performance, an average 2 million ZCN per year are allocated for them as a reward, for the next 100 years. We say average as there may be short-term fluctuations depending on several factors such as number of tokens locked or amount of content stored. The rewarding process will mainly start once the dStorage and dCompute feature are live on the 0chain mainnet. For more information on the role of each Service Provider and their rewarding visit our previous article here or read the Economic Paper. In the calculations here, we assume mining begins on January 01, 2019.
2) Unlocking of vested tokens (inflationary)
Team and seed investors’ tokens are vested over a 4-year period. In total, there are 100 million team and 20 million seed investors’ tokens. This means that 25 million team and 5 million seed investors’ tokens will be unlocked annually until end of 2021.
3) Release of reserve tokens (inflationary)
Currently, there are 40 million reserve tokens (10% of total supply) eligible to be released to public for sale earliest in Jan 2020 (50%) and Jan 2022 (remaining 50%). However, team will NOT consider unlocking this reserve until market price of ZCN reaches at least $10.
4) ZCN tokens locked by Service Providers and staked by Users (deflationary)
This is a very important long-term parameter. As described in this article, Service Providers (blobbers, miners and sharders) are required to lock their ZCN tokens for a certain amount of months in order to provide services. Likewise, when a user wants to use these services, a certain amount of ZCN will have to be staked in the wallet. Any tokens locked and staked are essentially not part of circulating supply since the user does not have access to these. Therefore, locking and staking ZCN tokens decreases the circulating supply or, in other words, it is not an inflationary but deflationary parameter.
It is difficult to predict the amount of locked and staked tokens. The 0chain team will lock 20m ZCN on provider side after mainnet launch and estimates another 2m on user side to be locked. This is the minimum amount (conservative) that will be locked as it does not include any ZCN locked by any other Service Providers. 0chain is a permissionless blockchain so any party will be able to lock ZCN tokens by being a Service Provider.
Having described all 4 factors that affect ZCN supply, let’s see how these four impact the supply at future dates.
End of 2018 Pre-stake/lock supply = 40m pre-sale and private sale tokens + 25m unlocked team tokens + 5m unlocked seed tokens. This is simple as there is no locking and staking yet (remember, mainnet is not live in 2018 yet). Therefore, End of 2018 Pre-stake/lock supply supply = End of 2018 actual circulating supply.
End of 2019 and 2020 supply calculation includes inflation coming from rewards (see Reward for Service Providers) as well as deflation from locking and staking over time. In brief:
Pre-stake/lock supply = private sale + pre-sale + team + seed + reward for Providers + reserve tokens
Actual circulating supply = Pre-stake/lock supply - locked and staked tokens
This implies that Actual circulating supply will always be less than the Pre-stake/lock supply, the difference being the amount of ZCN that will continuously be locked. This results in a positive price effect for ZCN tokens, i.e. price appreciation as less ZCN coins are available on the market. Let’s do the end of 2019 and 2020 supply calculations.
In order to make these calculations more flexible and easier to visualise, we show 3 scenario cases depending on supply and ETH price.
Lastly, the source file used for all calculations in this article can be found here. You can download it, go through all calculations and steps as well as edit if you wish to do so.
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