Today, we are excited to announce the token economics of the AO decentralized super-parallel computer.
8 Important Facts and Dates About AO Token
AO is a 100% fair issuance token that follows the economic model of Bitcoin.
AO tokens will be used to secure messaging in its network. See the latest AO whitepaper for details.
Minting will be retroactive starting on February 27, 2024 at 13:00 EST (block 1372724). 100% of AO tokens minted during this period have been distributed to Arweave token holders based on balances held every 5 minutes. If you hold AR on an exchange or custodian, please contact them on how to claim your tokens.
In the future, one third (33.3%) of AO tokens will be distributed to AR token holders every 5 minutes in proportion to their holdings. Two thirds (66.6%) of AO will be used to bridge assets into AO to strongly incentivize economic growth.
The first phase of the cross-chain contract is live today (June 13, 2024). During this pre-cross-chain phase, your tokens will remain securely in their native network while you earn AO tokens. Once the second phase of the cross-chain bridge is live, you can deposit your assets into the new cross-chain bridge contract and use them on AO while accumulating rewards. You can deposit staked Ethereum (stETH) tokens in the audited pre-cross-chain bridge contract here.
Cross-chain rewards will begin on June 18, 2024 at 11:00 AM EDT.
You can withdraw tokens from the pre-bridge at any time, but you will only start receiving AO incentives after June 18. Rewards are distributed every 24 hours.
AO tokens will remain locked and will not be released until approximately 15% of the supply has been minted. This will occur on approximately February 8, 2025.
Overview
AO is a 100% fair issuance token modeled after Bitcoin.
Similar to Bitcoin, AO has a total supply of 21 million and a similar four-year halving cycle, with AO distributed every 5 minutes, with a monthly distribution of 1.425% of the remaining supply. As of June 13, 1,038,700 AOs have been minted. This makes it extremely scarce. In comparison, there are 120 million Ethereum, 461 million Solana, and 55 billion XRP in existence.
AO's minting mechanism means that although the number of newly minted tokens is halved every 4 years, the "halving event" does not happen suddenly. Instead, the number of new tokens decreases slightly every month and is released smoothly.
While most token distribution models favor insiders, AO's model adheres to the principles of fairness and equal access, which are core to the crypto revolution. There is no pre-sale or pre-allocation. Instead, the AO token reward mechanism incentivizes two key aspects of a successful ecosystem: economic growth and base layer security.
Here’s how it works:
About 36% (100% in the first 4 months + 33.3% in the future) of AO tokens are minted and distributed to Arweave token holders over time, whose tokens incentivize the security of the AO base layer - Arweave.
About 64% of AO tokens are used over time to provide external benefits and cross-chain assets into AO to incentivize its economic growth. This creates a very strong incentive mechanism to increase the liquidity of the ecosystem and form an economic flywheel.
At the same time, without any token sales, the network funds its own ecosystem development in two ways:
Permissionless ecosystem funding
After the cross-chain bridge is launched, developers can get corresponding AO token rewards by attracting users to deposit eligible assets in their applications. This allows developers to obtain a long-term, permissionless income stream without applying for grants, external investment, or even tokenizing their projects. These developers can also choose to share part of the AO rewards with their users, allowing users to continue to earn AO tokens when using applications in the ecosystem.
Permaweb Ecosystem Development Guild
Additionally, a number of organizations and builders dedicated to ecosystem growth will also share in the native revenue of assets stored in the cross-chain bridge. These organizations and builders work on the AO's core protocol, market operations, and key infrastructure development. This funding gradually decreases as the network's minting rate decays, allowing the network to self-bootstrap while still maintaining its neutral and shared protocol characteristics.
How to check your AO balance
AO token minting has been backdated from 12:00 UTC on the AO testnet launch on February 27, 2024. Minting AO tokens since testnet launch will ensure sufficient supply before circulation, with the goal of reaching approximately 15% of total supply (3.15 million) on February 8, 2025.
If you held $AR in the months following the testnet launch, you would have accumulated approximately 0.016 AO token incentives per 1 AR held as of June 13, 2024. Keep in mind that the current supply of AO is 1/65 of that of AR.
Major exchanges are currently investigating whether and how to pass $AO on to their users. Please contact your exchange or custodian to determine how they manage this process.
If you have been self-custodying your $AR tokens, you can easily check your balance by visiting ao.arweave.dev. Click on the Arweave tab and connect your self-custodial wallet (such as ArConnect).
Earn AO by holding AR
New AO tokens are minted every 5 minutes. Before the pre-cross-chain launch on June 18, 100% of AO tokens were minted by AR token holders. After the pre-cross-chain launch, 33% of AO tokens were distributed proportionally to AR holders, and on average, AR token holders minted about 36% of the total AO token supply over time. This process is automatic.
The following list shows roughly how much AO you can accumulate over the next 12 months based on the amount of AR you hold:
1 AR：0.016 AO
10 AR：0.16 AO
50 AR：0.8 AO
100 AR：1.6 AO
500 AR：8.0 AO
1000 AR：16.0 AO
The amount of newly minted $AO will decrease over time until all AO tokens are minted. AO tokens will be transferable around February 8, 2025.
Pre-cross-chain your stETH to receive AO rewards
Note: AO cross-chain rewards are not available for US users
In the initial stages, stETH (ETH staked through Lido) can be deposited to earn AO token rewards. Other proof-of-stake assets will become eligible as AO opens up to more of the ecosystem.
In this pre-cross-chain phase, pre-cross-chain assets will not be usable in applications on the AO network. Once the second phase of the cross-chain is live, you will be able to use your stETH in AO applications while still accumulating AO token rewards.
When you pre-crosschain stETH to AO, your original stETH deposit will be held in an audited contract on the Ethereum network, while native earnings will be distributed among dedicated ecosystem development organizations and builders in the AO ecosystem to promote growth. At launch, these organizations include Open Access Supercomputing Foundation, Forward Research, Autonomous Finance, Warp Contracts, Longview Labs, and ao/acc. More organizations will be added as the ecosystem grows.
You can withdraw your initial stETH deposit at any time
New AO tokens will be minted every 5 minutes, starting at 11:00 AM EDT on June 18, 2024, exactly 16 weeks after the launch of the AO testnet. After rewards begin, 66% of newly minted $AO will be distributed proportionally to wallets that pre-crossed to AO. This process is automatic.
The amount of AO tokens that yield providers receive is determined by the proportion of assets they deposit into the contract. As AO opens up to more ecosystems and allows multiple proof-of-stake assets to be provided, the amount of AO tokens received will depend not only on the proportion of assets provided, but also on the yield generated by each asset.
The following list shows roughly how many AO tokens you could accumulate based on the percentage of the total yield pool you hold over the next 12 months, assuming the only asset on offer is stETH:
0.01%: 210 AO
0.1%: 2.105 AO
0.5%: 10,524 AO
1%: 21,049 AO
5%: 105,243 AO
AO Tokens will be transferable on or about February 8, 2025.
How to deposit stETH to accumulate AO
Note: AO cross-chain rewards are not available for US users
You can start depositing stETH into the pre-cross-chain bridge today. Rewards will begin accruing on June 18, 2024 at 11am EDT. Rewards are distributed once a day, so it may take up to 24 hours to receive your first reward.
Follow these simple steps to convert your stETH earnings into AO tokens:
Visit the casting page on the AO website.
Click on the Ethereum tab and connect your Ethereum wallet (Metamask or Rabby).
Enter the Arweave wallet address where you wish to receive AO tokens.
Deposit stETH into the audited contract and enter the amount you want to provide. These tokens will remain in a trustless contract on Ethereum and can be withdrawn at any time. If you do not have stETH in your wallet, you will need to convert other tokens into stETH before depositing.
Sign a transaction in your ETH wallet to deposit stETH into the contract.
You will earn AO tokens directly in your designated Arweave wallet.
Smart Contract Security
The pre-bridge contract has been fully audited and is trustless: no one can access your tokens except you. The only privilege is that the Open Access Supercomputing Foundation (the organization that coordinated the launch of the AO token with the Arweave ecosystem organization) is able to move the tokens out of the contract in the event of a security incident, sending them back to the original owner. This feature provides an additional layer of security without placing the pre-bridge assets under the control of any centralized entity.
The contracts themselves are slightly modified versions of the MorpheusAI deposit contracts. These contracts are used to provide a battle-tested base and mitigate any security risks.
Summarize
The AO token minting process introduces a completely new model that rewards users and developers based on the principles of fairness and equal access. The multiple teams behind this project have drawn inspiration from Bitcoin’s groundbreaking innovations and the fundamental principles established by Satoshi Nakamoto.
Over the past fifteen years, the cryptocurrency industry has experienced tremendous growth. However, this expansion has not always been aligned with the broader social good. In order to truly advance the mission of creating a permissionless and decentralized network that ensures the rights of users, it becomes critical to rethink how value and incentives are aligned to achieve these goals. We hope that the principles we promote resonate with you and may inspire you to join this movement as well.
