Chiliz Chain introduces Tokenomics 2.0, improving the utility and longevity of the blockchain with an 8.80% base rate and token burning mechanism, aiming for a minimum annual return of 5.72% APY.
Evolution of Chiliz Chain Tokenomics
In a recent update, Chiliz Chain, a sports blockchain protocol for sports and entertainment, released its Tokenomics 2.0. This change, marking the end of the blockchain’s inaugural year, brings significant changes to the economic strategy of its native digital currency, $CHZ.
Detailed inflation framework
The updated Tokenomics introduced in early 2024 includes an initial annual base inflation of 8.80%, with an estimated decline over the year. This decline is governed by a specific formula, y = 9.24e(-0.250x) + 1.60, which predicts a gradual decline in inflation, eventually stabilizing at 1.88% in year 14. The token supply is expected to shift to a deflationary pattern if the transaction fee burn rate exceeds the annual rate of inflation.
Distribution and utility improvement
With 65% of the inflation supply dedicated to validators and delegators, the Chiliz chain provides significant rewards for those involved in the management and security of the network. An additional 10% is allocated to the Community Vault, $CHZ liquid pools and shared security re-staking rewards. The remaining 25% is focused on ecosystem and operational distribution, highlighting the platform’s commitment to continuous development and support for ecosystem projects.
Strategic implications
The strategic update is aimed at promoting sustainable growth and improving the utility of the $CHZ token. By aligning with the economic strategies of the leading Tier 1 protocols, the Chiliz chain is positioning itself for increased community engagement and long-term viability within the competitive blockchain industry.
The introduction of EIP-1559 also plays a crucial role in the new Tokenomics, where the majority of gas fees will be burned at the protocol level, potentially leading to a deflationary supply model in the future.
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