• Tokenomics
• Supply
• Genesis Block Date
• Target
• Max Supply
• Halving Schedule
• Data Credits and Burn-and-Mint Economics
• Data Credits Price Is Fixed
• When A Data Credit Is Spent, HNT Is Burned
• Net Emissions
• Cap On Number Of HNT That Can Be Created Via Net Emissions Per Epoch
• Epoch
• Analysis
• Supply
• Mint
• Burn
• Demand

Tokenomics

On the token economics of Helium

HIP20 is the present-day monetary policy for Helium and utilizes tried and true crypto economic mechanisms: capped supply and halvings ( github). Thrown into the mix are the concepts of Burn & Mint equilibrium and Net Emissions. Understanding the network outlook boils down to answering one simple question: are the total number of HNT growing or shrinking?

dewigo.com

New Models for Utility Tokens

There are three types of cryptoassets: stores of value, security tokens, and utility tokens. General-purpose stores of value should be valued using the equation of exchange because these currencies are independent monetary bases. Examples include Bitcoin, Bitcoin Cash, Zcash, Dash, Monero, and Decred.

multicoin.capital

Supply

Genesis Block Date

July 29, 2019

Target

At launch genesis block, the Helium Network targeted 5,000,000 HNT per month.

Max Supply

And since the community approval of HIP 20, the Helium blockchain uses a two year halving schedule, with a maximum supply of 223,000,000 HNT.

Halving Schedule

So far, about half of all of the HNT that will ever be minted has been minted.

Data Credits and Burn-and-Mint Economics

Data Credits Price Is Fixed

As noted above, Data Credits are a $USD-pegged utility token derived from HNT in a burn transaction and used to pay all transaction fees on the Helium Network. One Data Credit will always cost $0.00001. Or, $1.00 will always buy you 100,000 Data Credits. —Helium Docs

When A Data Credit Is Spent, HNT Is Burned

But, as noted above, Data Credits are produced by burning HNT. And the market price of HNT will of course fluctuate. This HNT to DC relationship is based on a design commonly called a burn and mint equilibrium and is intended to allow for the supply of HNT to respond to network usage trends such that, when equilibrium is found, the amount of HNT that exists remains static month on month. (Helium borrowed heavily from Factom’s usage of this design though other blockchains have also used it.) The amount of Data Credits produced by burning HNT will move up and down based on the USD price of HNT as reported by the HNT Oracles. Let's look at a few examples of how this works on-chain. —Helium Docs

Net Emissions

At this point, the astute reader might be asking themselves the following question: If HNT supply is capped at 223,000,000 AND the Network is constantly burning HNT to mint Data Credits to enable transactions, won't we run out of HNT? Yes. This is where the idea of Net Emissions comes in. Along with Max Supply, HIP 20 also introduced the idea of Net Emissions. Net Emissions give the protocol enough HNT to reward consensus group members and Hotspots in perpetuity. The complete Net Emissions discussion in the HIP is the best resource on this, but we'll provide a quick summary here: - Using Net Emissions, the blockchain would monitor how many HNT were burnt for Data Credits in a given epoch and add them to the number of HNT to be minted that epoch. For example, if 10 HNT were burned for Data Credits in an epoch, the system would mint 10 more HNT than were expected in that given epoch. - Because HNT produced via Net Emissions do not add to the total outstanding, they do not violate max supply. - However, Net Emissions would counteract the desired, deflationary effect of Burn and Mint. If the system replaces all the HNT that are burned to create Data Credits, there is no resulting reduction of supply. - Because of this, when implemented, there will be a cap on the number of HNT that can be created via Net Emissions per epoch. When the HNT burned for DCs exceeds this cap, there will be a reduction in supply.

Cap On Number Of HNT That Can Be Created Via Net Emissions Per Epoch

DC Burn is the core function of the network, and what we’re all here trying to do. Less understood is that there are two types of DC burn functions and the accounting is different for each. - Data transfer (not deflationary, up to a point) - Non-data transfer (deflationary) Since the value of a data transfer DC burn is paid to the hotspot routing traffic, by definition it does not deflate the total supply of HNT until the total DC transfer in a 30 minute period (epoch) exceeds the allocation codified in HIP20. Today, this amount sits at 35% of total HNT emission per epoch, or approximately 1712 HNTT * 35% ~ 600 HNT. Due to nascent network utilization, true consumption is less than a 1/10th of a single HNT per epoch, so the unused portion is generously given to PoC participants. Non-data transfer DC burns are from actions such as HNT transaction fees, onboarding fees and location assert fees. Since nobody is the recipient of these fees, there is no connection with Burn & Mint, and they are by definition purely deflationary. —Dewigo

Translation

Cap on number of HNT that can be created via net emissions per epoch: 35% of total HNT emission per epoch

Epoch

An epoch is the target time period for which a given group of Miners is elected to serve as the consensus group. The target time for an epoch is currently 30 blocks, as defined in the election_interval chain variable. Approximately every 30 blocks mined marks the passing of an epoch, after which a new group of Miners is elected to form the next consensus group. Mining rewards are distributed per epoch (as opposed to per block in most blockchain-based systems). At the conclusion of each epoch, the consensus group will distribute all the $HNT produced in that block via the rewards transaction. —Helium Docs

Analysis

The price of the Helium token is determined by supply and demand. The price of the token increases when:

• Supply goes down
• Demand for tokens goes up

Supply

Mint

New supply is created based on a 2-year halving schedule with a max of 223M HNT (we’re currently around 120M).

Burn

They do burn HNT whenever a data credit is purchased. However, these are added back to the supply at the end of every epoch. There will be a cap on the number of HNT that can be created via net emissions per epoch. I don’t see this number shared anywhere, but it is a key number.

Demand

• Speculators