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Disclaimer: This article explores the tokenomics of the Kroma and is provided only for informational purposes. Itās important to note that we are the creators of Kroma and have a vested interest in its success. Please be aware that this article does not constitute financial or investment advice, and readers are encouraged to conduct independent research and seek professional advice before making any decisions related to Kroma. Additionally, readers should recognize the cryptocurrency marketās volatility, understand that Kroma evolves, and be responsible for compliance with applicable regulations. We disclaim any liability for losses arising from the use or reliance on the information in thisĀ article.
TL;DR
- Kroma is transitioning to simpler, more effective tokenomics by minting 100% of KRO tokens at the Token Generation EventĀ (TGE).
- We are increasing the total community airdrop allocation up to 17%, and the initial airdrop amount will be 7% of the totalĀ supply.
- These changes aim to address previous limitations and better fulfill our community and ecosystemās needs.
Background
Previous KRO MintingĀ Logic
In our initial announcement of KRO tokenomics, we introduced a decaying emission model with a reduction factor of 7.88%. This model was designed to gradually decrease the emission of new tokens over time, aiming to balance supply and demand while incentivizing early adopters.
Limitations of the PreviousĀ Model
Insufficient Initial Airdrop Allocation
One significant limitation of the decaying emission model is its impact on airdrop allocations. Airdrops, which are crucial in the early stages of a project to build a robust community and reward early supporters, can be constrained by this model. The decaying model sometimes limits the capability to provide sufficient incentives at the necessary times. Early-stage funds, like airdrops, need a larger allocation upfront to maximize their effectiveness.
Unsustainable Financial Model
Another challenge with the decaying emission model is its long-term sustainability. While it aims to control inflation, it also reduces the effective amount of tokens available over time. The current model, in which only about 80% of the total supply would be available even after six years, leads to a higher inflation rate in the early stages. This structure may be suitable for meme tokens without utility, but for Kroma, which plans to utilize KRO tokens to boost the ecosystem and secure the network, it poses challenges.
In a decentralized and trustless ecosystem, economic incentives are crucial for participant engagement. As Kroma thrives and grows, increasing economic incentives will be essential to maintain the system. However, relying on a decaying supply model implicitly assumes that the price of KRO tokens will increase exponentially over time. This assumption is risky as the token price is determined by the market, not by us. Therefore, the decaying model is not ideal for a utility token likeĀ KRO.
Simple is theĀ Best
Saying Goodbye to Zero-start Tokenomics
To address these challenges, we have decided to discontinue the zero-start tokenomics model. This means that all KRO tokens will be minted at the Token Generation Event (TGE). Each fund will be meticulously managed to serve its purpose optimally. Some funds will have lockups enforced by smart contracts, others will be managed by the DAO, and some will be distributed immediately. We will publish a detailed article explaining each aspect of this new approach.
Increased Initial AirdropĀ Amount
Listening to our community, we recognized concerns about the small initial airdrop allocations. We also shared these concerns internally and decided to increase the total allocation for community airdrop and the initial airdrop amount. The Community Airdrop Fund will have 17% of the total token supply(a 10% increase!), and the initial airdrop amount will be 7% of the total token supply. This will give us more flexibility and capacity to reward our community members who have contributed to building the Kroma ecosystem. Specific details about the initial airdrop criteria and allocation will be announced before theĀ TGE.
We are preparing some exciting and transformative updates to overall tokenomics and allocations, so stay tuned for moreĀ details!
More toĀ Come
As always, the Kroma team is diligently working to bring more exciting news to our community. We have many great updates and developments in the pipeline, so stay connected with us for the latest announcements and initiatives.
Thank you for your continued support and enthusiasm for Kroma. We are excited about this new chapter and look forward to building a brighter future together.
About Kroma
As Asiaās leading game-centric Layer 2 solution, Kroma is an Optimistic Rollup with a ZK fault-proof system based on the OP Stack and utilizing Scrollās zkEVM. Kroma will transition to a universal ZK Rollup once the generation of ZK proofs becomes more cost-efficient and fasterāāāusing our original project,Ā Tachyon.
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Revising Tokenomics for a Sustainable Kroma Ecosystem was originally published in Kroma on Medium, where people are continuing the conversation by highlighting and responding to this story.
Disclaimer
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