Strategic Evolution of the Token

#IOST At a critical juncture of transformation to a leading Layer 2 payment solution, this strategic shift urgently requires a comprehensive economic framework to support the grand vision of the future. The evolution of IOST token economics is driven by four fundamental market opportunities: First, the demand for efficient and low-cost payment infrastructure in the Web3 field is exploding, and the transaction volume is expected to leap by an order of magnitude in the future; second, the tokenization trend of real-world assets (RWA) has already emerged, heralding a huge market with a potential value of hundreds of billions of dollars; third, the rise of the decentralized physical infrastructure network (DePIN) marks a fundamental change in the financing, operation and incentive mechanisms of real-world infrastructure; finally, with the popularization of decentralized infrastructure services, economic incentives for node operators and infrastructure providers have become crucial, which is directly related to the reliability and scalability of the network.

The convergence of four major opportunities provides IOST with unprecedented strategic innovation opportunities, allowing it to establish itself as a cornerstone of Web3 payment infrastructure. IOST's exceptional technical strength is demonstrated by successfully processing over 930 million transactions with no downtime, giving it a unique advantage in connecting traditional payment systems with Web3 innovation. However, building this bridge requires a complex economic framework that meets the needs of modern financial infrastructure while maintaining the decentralized spirit of Web3 — — this prompts us to strategically evolve the IOST token economic model.

To seize the above opportunities, IOST officially launches a strategic token evolution plan, which includes the following key components:

1. Enhanced Staking Mechanism: To incentivize long-term participation and infrastructure construction, thus supporting the efficient expansion of network security, IOST introduces a sophisticated staking system. This system employs a dynamic doubling mechanism that rewards not only based on the duration of staking but also takes the staking amount into account, providing a solid foundation for the network's security and sustainable growth.

2. Community Priority Allocation: A new quota arrangement where 97% of the ecosystem growth reserves are used to empower community development, node operations, and ecosystem expansion, with the remaining 3% used for sustainable ecosystem operations. This measure fully reflects IOST's commitment to community-driven growth, ensuring that the benefits of network expansion directly benefit all participants.

3. Multiple Value Protection Measures: To ensure the long-term value of tokens, IOST has implemented a series of mutually reinforcing token burn mechanisms, including transaction fee burns, miner-extractable value (MEV) redistribution, and burns initiated by decentralized autonomous organizations (DAOs). The synergistic effect of these mechanisms will create natural deflationary pressure as network usage increases, providing strong support for token value.

4. Growth Acceleration Pool: Ecosystem growth reserves will focus on supporting the following key initiatives to accelerate network development:

  • Deployment and maintenance of PayPIN node infrastructure

  • Development and operation of cross-chain bridges

  • Geographical expansion into key emerging markets, starting with Latin America (LATAM) and Southeast Asia (SEA)

  • Integration of Real-World Assets (RWA) and Merchant Adoption Plan

  • Developer Grants and Community Incentives

  • DePIN Infrastructure Support and Incentives

  • Layer 2 Sequencer Network Development

  • Security Audits and System Upgrades

The IOST economic framework is further enhanced through multi-layered value protection and growth strategies:

1. Sustainable Scalability: The framework is designed to support exponential growth in transaction volume while ensuring the stable operation of the economic system through carefully designed incentive mechanisms.

2. Infrastructure Investment: A significant amount of resources will be allocated to build and maintain the robust infrastructure needed to support a global payment network, including high-performance nodes, cross-chain bridges, and security systems.

3. Market Expansion: Implementing a series of strategic initiatives to expand IOST's influence in key markets, with a focus on Web3 payment adoption and high potential areas for tokenization of real-world assets (RWA).

4. Technological Innovation: Continuous investment in cutting-edge technology to enhance core network capabilities, including Layer 2 scaling solutions, privacy protection technologies, and advanced security measures.

To support IOST's continued development and ultimately become a global leading payment infrastructure, while maintaining long-term value for all stakeholders, IOST's token economics have been precisely adjusted after extensive market research and in-depth community feedback. This comprehensive strategy aims to ensure that as the ecosystem continues to grow, value can be effectively created and sustained through multiple mechanisms:

1. Transaction Fee Optimization: IOST adopts a dynamic fee structure designed to precisely balance network accessibility with value accumulation for token holders.

2. Staking Rewards: Strengthened staking mechanisms aim to further encourage long-term participation and effectively enhance network security.

3. Burn Mechanism: Various token burn mechanisms will create natural deflationary pressure as network usage increases.

4. Value Capture: Introducing innovative value capture mechanisms to efficiently capture and reasonably distribute the value generated in network activities, including miner-extractable value (MEV) redistribution and fee sharing.

Through this series of comprehensive strategies, we can not only expand the network but also build a sustainable economic model that fully supports the next generation of Web3 payments and creates tangible value for the entire ecosystem. The strategic evolution of tokens reflects IOST's firm commitment to building a resilient, highly scalable network with long-term value.

This carefully designed economic framework lays a solid foundation for IOST to achieve its grand vision of becoming the primary Layer 2 payment solution, while ensuring that all stakeholders can achieve sustainable growth and long-term value retention. Throughout the implementation process, we will always uphold the principle of high transparency and actively encourage community participation to ensure that our development direction remains highly aligned with the fundamental interests of the entire IOST ecosystem.

New Token Economic Model

IOST's brand new token economic model places sustainability, decentralization, and the vibrant development of the ecosystem at its core. A series of adjustments aim to build a fairer token distribution mechanism, effectively incentivize long-term participation, and ensure that IOST's economic framework can effectively support ongoing technological innovation and community-driven growth.

Token Allocation

To ensure the fair rights and active participation of all ecosystem stakeholders, the existing supply of IOST tokens will undergo strategic adjustments:

97% of Newly Issued Tokens for the Community:

  • Staking Rewards: Incentives for validators and node operators to ensure network security and promote long-term participation.

  • Ecosystem Growth: Promoting adoption, optimizing technology, and developing the ecosystem through ecosystem support, partnerships, and community airdrops.

  • Merchant Incentives: Providing financial support for integrating IOST into payment systems, encouraging the promotion and expansion of real-world application scenarios.

3% Reserved for Operating Costs and Team Expansion:

  • Funds for maintaining infrastructure and supporting long-term project visions, ensuring that the core network remains strong, efficient, and secure.

Allocation of Newly Issued Tokens

a) PayPIN Node Rewards (60%)

· Building a strong validator network

· Supporting ecosystem development

· Unlocking in installments over 60 months

b) Airdrop and Staking Airdrop (20%)

· Airdrops to existing IOST holders and ecosystem contributors

· Including liquidity mining programs

· Providing incentives for ecosystem development

· Unlocking in installments over 48 months

c) PayFi Community Incentives (8%)

· Supporting the development of PayFi applications

· Providing subsidies for merchant adoption

· Providing incubation funds for RWA, DePIN, and payment projects

· Marketing Expenses · Unlocking in installments over 36 months

d) Community Developer Grants (5%)

· For infrastructure development

· Supporting technological innovation and research

· Including security audit fees

· Developing developer tools

· Unlocking in installments over 36 months

e) Nexus DAO (4%)

· DAO's Operating Funds

· Incentives for community governance

· Funding support for proposal execution

· Emergency Reserves

· Unlocking in installments over 48 months

f) Team (3%)

· Funding for recruiting required talents for the team

· Achieving development goals

· Maintaining the long-term effective operation of the team

· Incentivizing continuous innovation

· Linear release within 36 months after a 12-month lock-up period

Token Burn Mechanism — Enhancing IOST Value

Token Burn Mechanism to Enhance IOST Value: To maintain network health and economic balance while introducing deflationary factors, we have implemented four interrelated token burn mechanisms:

1. Transaction Fee Burn

· After six months of launching IOST L2, Gas fees will be priced in IOST

· A portion of fees will be automatically burned

· On-chain governance will adjust the burn rate to ensure fair incentives and overall network health

2. Node MEV Burn

· A portion of the profits earned by validators from MEV will be burned

· On-chain auctions ensure fairness and prevent unethical behavior

3. Ecosystem-based Burn

· Ecosystem partners will integrate the burn mechanism into their business models

· IOST Ecosystem Fund supports partners to adopt this feature, reducing token supply as the ecosystem matures

4. DAO Governance Mechanism Burn

· Community-driven proposals and voting will determine additional token burns

· Decentralized governance ensures community management of the long-term value of tokens

· Voting quarterly

Token Burn Impact Analysis

The combination of the above four burn mechanisms is expected to bring significant deflation as network adoption grows. Based on our predictive metrics and market analysis:

1. Transaction Fee Burn

  • Estimated Daily Transaction Volume by the End of 2025: 12 Million Transactions/Day

  • Estimated Average Transaction Fee: $0.0025

  • Burn Rate: 20% of Transaction Fees

  • Annual Burn: $2.19M

2. MEV Burn

  • Estimated MEV Value: 1% of Total Transaction Volume

  • Estimated Monthly Transaction Volume by Q4 2025: $200M

  • MEV Burn Rate: 30% of Extracted Value

  • Annual Burn: $1.8M

3. Ecosystem Expansion-based Burn

  • RWA Tokenization Goal: Expected to exceed $0.5B by Phase 2

  • Average Fee Rate for RWA Transactions: 0.1%

  • Average Number of Transactions Per Token Per Year: 10 times

  • Burn Rate: 15% of Fees

  • Annual Burn: Approximately $1M

4. Burn of Governance Mechanism

  • Based on Network Usage Metrics

  • Conservative Estimate: 0.5% of Network Fees

  • Annual Burn Impact: Approximately $3M

Estimated Total Annual Burn

  • Based on the provided data, the estimated total annual burn by the end of 2025 is approximately $8 million. This indicates that as the network grows and usage increases, there will be significant deflationary effects, which will proportionately strengthen.

The design of the above token burn mechanisms aims to gradually release greater effectiveness as network adoption continues to rise, thus establishing a dynamic natural balance between ecosystem expansion and the long-term maintenance of token value. To provide deeper background analysis, these burn rates are expected to effectively offset a significant portion of newly issued tokens in the ecosystem growth reserves, which not only helps maintain relative stability in token prices but also provides robust support for the ongoing growth of the network.

It is worth noting that the above estimates are based on conservative projections of our initial goals. As the network adoption rate and transaction volume increase, the actual burn impact may significantly increase. The dynamic nature of these mechanisms ensures that increased network usage will automatically lead to more token burns, resulting in a sustainable economic model that aligns with ecosystem growth.

Long-term Stable Unlocking Plan

Long-term Stable Unlocking Plan: A structured unlocking plan ensures the predictable, gradual release of tokens:

  • Gradual unlocking: Preventing oversupply and stabilizing the market over time

  • Ecosystem Funds and Developer Grants: For innovation and collaboration, unlocking quarterly in phases over 3 to 5 years

  • Staking Rewards: Providing continuous rewards for validators and node operators to ensure network participation and security

  • Team and Early Supporters: Long-term unlocking plans closely align their interests with the long-term success of the network

Detailed Unlocking Period

Long-term Impact

Our core goal is to lay a solid foundation for long-term development, ensuring that all participants in the ecosystem can obtain meaningful and sustainable value. To achieve this strategic goal, we always focus on positioning beyond short-term gains; for example, we have introduced structured token burn mechanisms to protect the long-term value of tokens; implemented predictable unlocking plans to encourage responsible ecosystem growth; and optimized incentive mechanisms to ensure that every stakeholder (whether developer, user, or investor) can share the benefits as the network matures.

By creating a community-driven, highly scalable ecosystem, supported by sustainable technological innovation and the core principles of decentralized finance (DeFi), we strive to maintain industry relevance amidst emerging trends and lead broader Web3 ecosystem development trends. In short, every initiative undertaken by IOST is deeply rooted in a steadfast belief: that truly transformative impacts will gradually emerge over time.

Looking Ahead: The Evolving Ecosystem and New PayFi and DePIN

Adjustments to IOST's token economics lay a solid foundation for building a more resilient, community-centered, and value-driven ecosystem. By prioritizing sustainable incentive mechanisms and prudent deflationary strategies, we are committed to fostering an environment conducive to collective innovation, thereby enhancing market confidence and naturally accumulating long-term value.

As we continue to iterate and improve the platform, we are pleased to announce — — the [Node Sale] plan is about to be launched. This initiative will effectively enhance network participation and ecosystem development opportunities. We will continue to work together with every participant to build a stronger and more inclusive ecosystem. Stay tuned for more information!