Strategic Token Evolution
As IOST transitions into a leading Layer 2 payment solution, our ecosystem requires a comprehensive economic framework that matches the scale of our vision. The evolution of IOST’s tokenomics is driven by four fundamental market opportunities: First, the rapidly growing demand for efficient, low-cost payment infrastructure in the Web3 space, where transaction volumes are expected to increase by orders of magnitude. Second, the emergence of real-world asset tokenization, which opens up a potential market worth hundreds of billions of dollars. Third, the explosive growth of Decentralized Physical Infrastructure Networks (DePIN), representing a paradigm shift in how real-world infrastructure is funded, operated, and incentivized. Fourth, the expanding adoption of decentralized infrastructure services, which requires robust economic incentives for node operators and infrastructure providers to ensure network reliability and scalability.
The convergence of these opportunities presents an unprecedented moment for IOST to establish itself as a cornerstone of Web3 payment infrastructure. Our technical excellence, demonstrated through processing over 930 million transactions with zero outages, positions us uniquely to bridge the traditional payment world with Web3 innovations. However, this bridge requires a sophisticated economic framework that can support the demands of modern financial infrastructure while maintaining the decentralized ethos of Web3.
To capitalize on these opportunities, IOST is introducing a Strategic Token Evolution Program that encompasses several key components:
Enhanced Staking Mechanisms: A sophisticated staking system that incentivizes long-term participation and infrastructure support, enabling the network to scale securely and efficiently. This system incorporates dynamic multipliers that reward both duration and amount of stake, creating a sustainable foundation for network security and growth.
Community-First Distribution: A carefully structured allocation where 97% of the Ecosystem Growth Reserve is dedicated to community development, node operations, and ecosystem expansion, with only 3% reserved for operational sustainability. This unprecedented commitment to community-driven growth ensures that the network’s expansion directly benefits its participants.
Value Protection Measures: Implementation of multiple token burn mechanisms, including transaction fee burning, MEV redistribution, and DAO-initiated burns, ensuring long-term value preservation. These mechanisms work in concert to create natural deflationary pressure as network usage increases.
Growth Acceleration Program Pool: The Ecosystem Growth Reserve supports critical initiatives including:
PayPIN node infrastructure deployment and maintenance
Cross-chain bridge development and operation
Geographic expansion into key emerging markets, starting with LATAM, and SEA
RWA integration and merchant adoption programs
Developer grants and community incentives
DePIN infrastructure support and incentivization
Layer 2 sequencer network development
Security audits and system upgrades
Our economic framework is further strengthened by a multi-layered approach to value preservation and growth:
Sustainable Scaling: The framework is designed to support exponential growth in transaction volumes while maintaining economic stability through carefully balanced incentive structures.
Infrastructure Investment: Significant resources are allocated to building and maintaining the robust infrastructure required for a global payment network, including high-performance nodes, cross-chain bridges, and security systems.
Market Development: Strategic initiatives to expand IOST’s presence in key markets, focusing on regions with high potential for Web3 payment adoption and RWA tokenization.
Technology Innovation: Continuous investment in cutting-edge technologies that enhance network capabilities, including Layer 2 scaling solutions, privacy-preserving technologies, and advanced security measures.
The token dynamics have been precisely calibrated through extensive market research and community feedback to support IOST’s evolution into a global payment infrastructure while maintaining long-term value for all stakeholders. This comprehensive approach ensures that as our ecosystem grows, value is created and preserved through multiple mechanisms:
Transaction Fee Optimization: A dynamic fee structure that balances network accessibility with value accrual to token holders.
Staking Rewards: Enhanced staking mechanisms that encourage long-term participation and network security.
Burn Mechanisms: Multiple token burn mechanisms that create natural deflationary pressure as network usage increases.
Value Capture: Innovative mechanisms to capture and distribute value from network activities, including MEV redistribution and fee sharing.
Through this comprehensive approach, we’re not just scaling our network — we’re building a sustainable economic model that can support the next generation of Web3 payments and drive genuine value creation for our entire ecosystem. The Strategic Token Evolution represents our commitment to building a resilient, scalable, and valuable network that can serve as the backbone of the Web3 payment revolution.
This carefully designed economic framework enables IOST to pursue its vision of becoming the premier Layer 2 payment solution while ensuring sustainable growth and value preservation for all stakeholders. As we move forward with implementation, we remain committed to transparency and community engagement, ensuring that our evolution serves the best interests of the entire IOST ecosystem.
The New Tokenomics Model
Our updated tokenomics model prioritizes sustainability, decentralization, and ecosystem development. The changes are designed to maintain a fair distribution, incentivize long-term participation, and ensure that IOST’s economic framework supports ongoing innovation and community-driven growth.
Token Allocation
The current supply of IOST tokens will be strategically adjusted to ensure both fairness and the robust participation of all ecosystem stakeholders:
97% of Newly Issued Tokens for Community Use:
Staking Rewards: Incentivizing validators and node operators to secure the network and foster long-term engagement.
Ecosystem Growth: Grants, partnerships, and airdrops aimed at driving adoption, technical advancement, and broad ecosystem development.
Merchant Incentives: Financial support for integrating IOST into payment systems, encouraging real-world use cases and further expansion.
3% Reserved for Operational Costs & Recruiting:
Funds dedicated to maintaining infrastructure and sustaining the project’s long-term vision, ensuring that the core network remains robust, efficient, and secure.
Breakdown of the New Allocation for Growth
a) PayPIN Node Reward (60%)
Establishes a robust validator network.
Supports ecosystem growth.
Released in installments over 60 months.
b) Airdrops and Stakedrops (20%)
Airdrops for existing IOST holders and ecosystem contributors.
Includes liquidity mining plans.
Incentives for ecosystem development.
Released in installments over 48 months.
c) PayFi Community Incentive (8%)
Supports PayFi application development.
Provides subsidies for merchant adoption.
Incubation funds for RWA, DePIN, and Payment projects.
Covers market promotion efforts.
Released in installments over 36 months.
d) Community Developer Grant (5%)
Funds infrastructure development.
Supports technical innovation and research.
Covers security audits.
Developer tools.
Released in installments over 36 months.
e) Nexus DAO (4%)
Operational funds for the DAO.
Incentives for community governance.
Proposal execution funding.
Emergency reserves.
Released in installments over 48 months.
f) Team (3%)
Funds recruitment of relevant talent.
Tied to the achievement of development goals.
Ensures long-term team commitment.
Incentivizes continuous innovation.
12-month lock-up followed by linear release over 36 months.
Token Burn Mechanisms to Enhance IOST Value 
Token Burn Mechanisms to Enhance IOST Value
To maintain a healthy economic balance and introduce a deflationary element, we’ve implemented four interconnected token burn mechanisms:
1. Transaction Fee Burning
Six months after the launch of IOST L2, gas fees will be denominated in IOST.
A portion of these fees will be automatically burned.
On-chain governance will adjust burn rates to ensure equitable incentives and overall network health.
2. Node MEV Burning
A portion of validator profits from MEV will be burned.
On-chain auctions will ensure fairness and discourage unethical practices.
3. Ecosystem-Based Burning
Ecosystem partners integrate burn mechanisms into their business models.
The IOST Ecosystem Fund supports partners in adopting these features, reducing token supply as the ecosystem matures.
4.DAO-Initiated Burning
Community-driven proposals and votes will determine additional burn events.
Decentralized governance ensures that the community maintains collective stewardship over the token’s long-term value.
Voting is conducted quarterly.
Token Burn Impact Analysis
The combination of our four burn mechanisms is expected to create significant deflationary pressure as network adoption grows. Based on our projected metrics and market analysis:
Transaction Fee Burning
Projected daily transactions by end of 2025: 12M/day
Estimated average transaction fee: $0.0025
Burn rate: 20% of transaction fees
Annual burn impact: $2.19M
2. MEV Burning
Estimated MEV value: 1% of total transaction volume
Projected monthly volume by Q4 2025: $200M
MEV burn rate: 30% of extracted value
Annual burn impact: $1.8M
3. Ecosystem-Based Burning
Target RWA tokenization: >$0.5B by Phase 2
Average fee rate: 0.1% for RWA transactions
Average tx per year per token: 10 times
Burn rate: 15% of fees
Annual burn impact: ~$1M
4. DAO-Initiated Burning
Based on network usage metrics
Conservative estimate: 0.5% of network fees
Annual burn impact: ~$3M
Total Projected Annual Burn:
For the end of 2025 scenario using the provided figures, the estimated total annual burn impact is approximately $8 million. This represents a substantial likelihood of deflationary effect that scales with network growth and usage.
The burn mechanisms are designed to become more impactful as network adoption grows, creating a natural balance between ecosystem expansion and token value preservation. For context, these burn rates would offset a significant portion of any new token emissions from the Ecosystem Growth Reserve, helping maintain price stability while supporting network growth.
It’s important to note that these are conservative estimates based on our initial targets. As we achieve higher network adoption and transaction volumes, the actual burn impact could be substantially higher. The dynamic nature of these mechanisms ensures that increased network usage automatically leads to increased burning, creating a sustainable economic model that scales with ecosystem growth.
Vesting Schedule for Long-Term Stability
Vesting Schedule for Long-Term Stability A structured vesting schedule ensures a predictable, gradual release of tokens:
Gradual Unlocks: Prevent oversupply and stabilize the market over time.
Ecosystem Funds and Developer Grants: Reserved for innovation and partnerships, unlocked quarterly over 3–5 years.
Staking Rewards: Continuous rewards for validators and node operators, ensuring steady network participation and security.
Team and Early Supporters: Multi-year vesting schedules align their interests with the network’s long-term success.
Detailed Vesting Schedule
Long-Term Impact 
Our goal is to build a long-lasting foundation that ensures meaningful, enduring value for all participants in the ecosystem. To achieve this, we’re focusing on strategies that go beyond short-term gains, such as introducing a structured token burn mechanism to preserve long-term value, implementing predictable vesting schedules that encourage responsible growth, and aligning incentives so that every stakeholder — be they developers, users, or investors — benefits as the network matures. By fostering a community-driven and scalable ecosystem supported by sustainable innovation and the principles of decentralized finance, we aim to maintain relevance, adapt to emerging trends, and lead within the broader Web3 environment. In short, every initiative we undertake is guided by the conviction that true, transformative impact unfolds over time.
Looking Ahead: A Growing Ecosystem and A new Species of PayFi + DePin
These adjustments to IOST’s tokenomics lay the foundation for a more resilient, community-focused, and value-driven ecosystem. By prioritizing sustainable incentives and deflationary controls, we aim to foster an environment where collective innovation thrives, market confidence grows, and long-term value accumulates naturally.
As we continue to evolve and refine the platform, we are excited to share that a Node Sale is on the horizon. This upcoming initiative will further enhance network participation and opportunity. Stay tuned for more details as we continue building a stronger, more inclusive ecosystem for everyone involved.
Join Us in Shaping the Future
This isn’t just another blockchain upgrade — it’s a carefully orchestrated evolution positioning IOST at the forefront of Web3 payment. With proven technology, strong partnerships, and unwavering community focus, we’re not just participating in the future of payment — we’re defining it.
The foundation is laid. The technology is proven. The partnerships are secured. Now, it’s time for action.
Welcome to the future of IOST. Welcome to the future of payment.
Join the movement and discover the endless possibilities of the IOST ecosystem
If you would like to hang out with the IOST community on chat or social media or discuss product development, we have something for everyone:
Telegram | Twitter | Japan Twitter | China Twitter | Facebook | LinkedIn | Medium | Reddit
…………………………………………………….
Understanding IOST’s New Tokenomics was originally published in IOST on Medium, where people are continuing the conversation by highlighting and responding to this story.
