Hedera (HBAR) tokenomika

The native token of the Hedera network, HBAR, was launched in 2018 with a fixed maximum total supply of 50 billion tokens. The token's economics are designed to serve a dual purpose: as the network fuel for transaction fees and as the network protection mechanism through staking. The Hedera Governing Council, a group of up to 39 term-limited enterprises, oversees the network's governance, software changes, and the management of the HBAR treasury.

Issuance Mechanism

The HBAR token supply is fixed and cannot be increased without the unanimous consent of the Hedera Governing Council.

• Total Supply: The maximum total supply is 50 billion HBAR, which were pre-minted at the network launch in August 2018 and moved into the Hedera Treasury.
• Distribution Schedule: Tokens are distributed from the Hedera Treasury following a controlled release schedule. Historically, this distribution has occurred at discrete, quarterly intervals. The distribution schedule was initially planned to extend until 2033 but was later revised in the Hbar Economics Whitepaper (v3) to span from 2019 to 2025, with an estimated release of 34% of all HBAR by 2025.
• Circulating Supply: As of the end of Q2 2023, 32.2 billion HBAR, representing 64% of the total supply, was in circulation.

Allocation Mechanism

The total supply of HBAR is allocated across various categories, primarily focusing on the treasury, ecosystem development, and early contributors.

Note: Allocation figures vary slightly depending on the reporting date (e.g., September 2021 vs. December 2022) due to ongoing distributions and re-categorizations.

Key Allocation Details:

• HBAR Foundation: In September 2021, the HBAR Foundation was allocated 70 billion HBAR (approximately 21.40% of the total supply) to fund development initiatives.
• Recent Ecosystem Allocation: On January 12, 2024, the Council approved an allocation of 4.86 billion HBAR (9.70% of the total supply) for ecosystem development initiatives, with the majority directed toward the HBAR Foundation, the Hashgraph Association, and the DLT Science Foundation.

Usage and Incentive Mechanism

HBAR is primarily used for network operations, security, and ecosystem growth incentives.

Network Utility (Usage)

1. Transaction Fees: HBAR is used to settle network transaction fees, which are split into network fees, service fees, and node fees. Network service fees are denominated in USD but charged in HBAR, providing users with more predictable operational costs.
2. Medium of Exchange: HBAR is used as a medium of exchange within the ecosystem, such as trading on decentralized exchanges (DEXs) or purchasing NFTs.
3. Tokenization: The Hedera Token Service (HTS) allows users to issue and configure native fungible and non-fungible tokens (NFTs) on the platform without using smart contracts, enabling use cases like micropayments and asset tokenization.

Network Security and Incentives

1. Staking (Permissioned PoS): Hedera operates as a permissioned Proof-of-Stake (PoS) network. Consensus nodes, managed by the Hedera Governing Council members, must stake HBAR to secure the network. As of March 6, 2024, 30 consensus nodes were live, collectively staking approximately 22.63 billion HBAR (45.20% of the total supply).
2. Staking Rewards: Consensus nodes accrue HBAR from network transaction fees and staking rewards. The Council has approved a maximum annual staking rewards rate of 2.50%.
3. Delegation (Permissionless): Tokenholders can delegate their HBAR balances to existing consensus nodes via compatible wallets. This delegation contributes to the node's consensus weight (voting power), and delegators receive a share of the associated node’s staking rewards.
4. Ecosystem Grants: Hedera supports developers through various grant initiatives and programs, such as the HBAR Foundation, to accelerate adoption and utilization of the network.

Locking Mechanism and Unlocking Time

The locking and unlocking mechanisms primarily relate to early investor agreements and employee compensation, designed to ensure a gradual release of tokens into the circulating supply.

Locking Mechanisms

• SAFT Agreements: Early investors participated through Simple Agreements for Future Tokens (SAFTs). Holders who accepted the SAFT Exchange Offer received an extended distribution schedule in exchange for an additional allocation of HBAR.
• Restricted Coin Units (RCUs): Hedera compensates employees, advisors, and service providers with Restricted Coin Units (RCUs), which vest into a right to receive HBAR. The RCU plan typically follows a four-year vesting schedule with a one-year cliff. In total, approximately 8.14 billion HBAR (16.30% of the total supply) were allocated to the RCU plan.
• Treasury Release Schedule: The Hedera Treasury implements a token release schedule to mitigate the risk of any single entity assuming control of one-third of the network stake, as network consensus is coin-weighted.

Unlocking Timeframe

The overall distribution of HBAR from the Hedera Treasury is scheduled to continue until 2025. The release of tokens occurs at discrete, quarterly intervals.

• SAFT and RCU Unlocks: The specific vesting schedules for SAFT investors and RCU holders (employees/service providers) dictate their individual unlocking times, often spanning several years.
• Future Unlocks: In Q3 2023, an additional 3.7% of the HBAR total supply was scheduled to be unlocked to support ecosystem programs, investors, and core contributors.

Information regarding specific future token unlock events for Hedera was not available.