Smilo explained — Network economics

Smilo Platform
Jul 12, 2018 · 5 min read

In the ‘Smilo explained’ series we will explain the technology and choices that define the Smilo Platform in an accessible way. In this article of Smilo explained we are going to elaborate on the tokens that drive the network, Smilo’s block rewards and the transaction (Tx) fee.

With the creation of the new Smilo hybrid blockchain platform there will be two types of tokens that drive the network:

  • Smilo (abbreviated symbol: XSM)

The first type is the Smilo token, which will be generated by the Smilodon block — the first block of the blockchain. The second type is the SmiloPay token, which will be generated every block following the Smilodon block.

The tokens fulfil different roles in the network. Smilo tokens are a representation of the stakes held by a user, whilst SmiloPay tokens are the medium to pay for service fees and upkeep of the Smilo network. Owning Smilo tokens serves as a right to earn dividends in the form of SmiloPay tokens.


Smilo tokens are a representation of the stakes held by a user, and as such they represent a user’s ability to influence the Smilo network evolution. In total, 200 million Smilo tokens will be generated. Every Smilo token counts as a vote, so the more Smilo tokens you own, the more influence you will get over the Smilo ecosystem’s evolution. As a Smilo token holder, you have the following privileges:

  • Receive SmiloPay

You will be able to vote for the following:

  • Changing the price of Tx fees

Each block of the Smilo blockchain generates twenty SmiloPay tokens, which will be distributed amongst Smilo holders. Since there are only 200 million SmiloPay tokens, the amount of SmiloPay per block will slowly decrease, more on that later in the article.


SmiloPay tokens are the medium to pay for service fees and upkeep of the Smilo network. Every user intending to register or alter their assets will use SmiloPay for the service fees. This service fee will then be distributed proportionally to all Smilo owners, meaning SmiloPay will be circulated through the system.

After Smilo platform’s mainnet launches, there will be no immediate transaction fees for using the network. At this stage all token holders will receive the maximum amount of SmiloPay per block.

However, after the first million Smilo blocks have been generated, the SmiloPay reward will be decreased slightly. Just like the SmiloPay reward will decrease slightly after two million Smilo blocks, and so on. After ten years, all the 200 million SmiloPay tokens will be distributed and the block reward will consist of transaction fees only, as shown in the chart below.

It is in the main interest of the Smilo nodes to keep transaction fees low in order to lead to more Smilo users, which in turn leads to more registered assets and transactions, and thus resulting in more fees paid to the nodes. Moreover, this mechanism creates a healthy demand for SmiloPay, and a fair competition between the nodes in the network.

Furthermore, full nodes clients will earn additional SmiloPay for executing smart contracts, registering new tokens and other similar executions which creates the incentive to run a full node client.

Block reward and transaction fee

SmiloPay tokens will be generated with every new block created until it equals the total circulating number of Smilo tokens, being 200 million. The initial supply of SmiloPay is zero, which will increase with each block. The amount of SmiloPay generated will slowly decrease while the blocks being generated increases, as shown in the graph below.

Generating a Smilo block takes sixteen seconds, and after the SmiloPay token cap of 200 million is reached, the blocks will stop generating SmiloPay tokens. On average, Smilo tokens will generate 9.5% SmiloPay tokens per year. In other words, the total of 200 million SmiloPay tokens will be distributed proportionally amongst the Smilo token holders portfolio’s.


Owning Smilo tokens is equal to a lifetime membership for ‘free’ usage of the Smilo network. After purchasing Smilo tokens, you will receive SmiloPay tokens as a dividend, and these SmiloPay tokens can then be used to pay for transactions, smart contracts and a lot more.

Apart from the SmiloPay dividend, there are also other benefits to owning Smilo tokens, benefits which other blockchain platforms usually lack. For example, Smilo token holders have privileges such as voting for parameter changes, like transactions fees or smart contract execution fees.

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