When I set out to write a post about the tokenomics of this project, I was surprised to find that it was quite challenging to locate any relevant information. However, I found their unconventional approach and design for the blockchain economy to be quite fascinating and well-planned. To better comprehend the material I will present, it is advisable to first read the Cryptoeconomic Whitepaper. Please note that this post may be rather difficult for beginners. At the bottom, you'll find links to a more comprehensive technical analysis of the current tokenomics provided by the team.
Storing anything on Nervos L1, be it smart contracts, addresses, NFTs, or custom tokens, requires locking up CKB. One byte of on-chain storage or state requires 1 $CKB (1$CKB = 1byte). As more people adopt and use L1, more CKB gets locked up, increasing its scarcity and value in the long run.
On-chain storage is subject to state rent, which is charged indirectly through an opportunity cost and paid for from CKB's tail emission. CKB holders and miners benefit from this issuance, with an increase in CKB value incentivizing miners and improving network security.
Developers are encouraged to make responsible use of L1 resources due to the opportunity cost of state rent. Data must be useful or profitable enough to justify its presence on chain. If it isn't, it's more cost-effective to move it to a higher layer.
As adoption, demand, and scarcity increase, so do these incentives, effectively countering the state bloat that plagues Ethereum and successfully capturing the value of the network. This results in L1 becoming a store of increasingly valuable assets, benefiting from high security, decentralization, and flexibility.
But what happens if the value of $CKB increases significantly, making it too expensive to deploy on L1?
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First, any $CKB deposited or deployed on L1 is returned to its owner once the on-chain storage is no longer needed.
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Second, whole applications do not need to be stored on chain, only the smart contract. Finally, not all user accounts and dApps need to be on L1, and upper layers may offer lower costs. If we assume a standard smart contract size of 20 kilobytes, the cost to deploy it on L1 would be $20,000 (assume $CKB is priced at $1). For a development team working on high-value decentralized applications, this cost may not be prohibitive. Additionally, if an individual developer has a promising idea, they could apply for support from the treasury.
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In the future, it's possible that users won't need to interact with L1 since not all user accounts and apps have to be on L1, and many of the costs associated with using L1 don't apply to upper layers.
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This creates an opportunity for CKB holders to rent out their tokens to users or developers who need to use L1 for a certain period of time.
In summary, the tokenomics of $CKB are highly compelling, and its distribution model is well-designed. We see that the team has approached the issue of economics very responsibly.
Source: docs.nervos.org; medium.com/nervosnetwork; github.com/nervosnetwork; reddit.com/r/NervosNetwork Show Less
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