Tokenomics
This guide covers the economic model of LYTH, the native token of Monolythium.
Token Overview
| Property | Value |
|---|---|
| Name | Monolythium |
| Symbol | LYTH |
| Base denomination | alyth |
| Decimals | 18 |
| Genesis supply | 780,000,000 LYTH |
!!! note "Denomination" 1 LYTH = 1,000,000,000,000,000,000 alyth (10¹⁸ alyth)
Supply Dynamics
LYTH has a variable supply influenced by:
- Inflation (increases supply)
- Fee burns (decreases supply)
- Validator burns (decreases supply)
Current Supply = Genesis Supply + Inflation Minted - Total Burned
Inflation Schedule
| Phase | Rate | Trigger |
|---|---|---|
| Phase 0 | 0% | Genesis |
| Phase 1 | 0.9% | rewards_start_height |
| Phase 2 | 8% | switch_8pct_height + Guard |
See Milestones and Guard for details.
Annual Inflation Impact
At 780M supply:
| Phase | Annual Mint | Daily Mint |
|---|---|---|
| Phase 0 | 0 | 0 |
| Phase 1 | 7,020,000 LYTH | ~19,200 LYTH |
| Phase 2 | 62,400,000 LYTH | ~171,000 LYTH |
Fee Burn Model
All transaction fees are split:
| Portion | Destination |
|---|---|
| 90% | Burned permanently |
| 10% | Distributed to stakers |
Deflationary Pressure
High network usage creates deflationary pressure:
If Fee Burns > Inflation Mint → Supply decreases
If Fee Burns < Inflation Mint → Supply increases
Break-Even Analysis
At 8% inflation (~171k LYTH/day minted), the network needs:
Daily fee burns to offset: ~171,000 LYTH
Fee burns = 90% of fees
Total daily fees needed: ~190,000 LYTH
With average transaction fees of ~0.001 LYTH, this requires ~190 million transactions daily for neutral supply.
Token Utility
LYTH is used for:
| Use Case | Description |
|---|---|
| Transaction fees | Pay for Cosmos and EVM transactions |
| Staking | Delegate to validators for rewards |
| Governance | Vote on protocol proposals |
| Validator bonds | Self-delegation and burn deposit |
| Gas (EVM) | Pay for smart contract execution |
Distribution
Genesis Allocation
The genesis supply of 780,000,000 LYTH is allocated as:
!!! note "Allocation Details" Specific allocation percentages will be published before mainnet launch.
Typical allocations include:
- Core team and contributors
- Community treasury
- Ecosystem development
- Early supporters
- Public distribution
Vesting
Team and early allocations typically include vesting schedules to ensure long-term alignment.
Staking Economics
Target Stake Ratio
The protocol incentivizes a healthy staking ratio through inflation:
- Low stake ratio → Higher effective APY → Encourages staking
- High stake ratio → Lower effective APY → Encourages other uses
Staking Returns
| Phase | Inflation | If 50% Staked | If 70% Staked |
|---|---|---|---|
| Phase 1 | 0.9% | ~1.8% APR | ~1.3% APR |
| Phase 2 | 8% | ~16% APR | ~11.4% APR |
These are simplified estimates ignoring fees and slashing.
Validator Economics
Validators have specific economic requirements:
| Requirement | Amount |
|---|---|
| Minimum self-delegation | 100,000 LYTH |
| Burn deposit | 100,000 LYTH |
| Total to register | 200,000 LYTH |
The burn deposit is permanent and demonstrates long-term commitment.
Economic Security
Stake at Risk
Network security depends on stake at risk:
Total Security = Staked Amount × Slashing Risk
Higher stakes and meaningful slashing penalties create stronger security guarantees.
Slashing Parameters
| Violation | Slash |
|---|---|
| Downtime | 0.01% |
| Double-signing | 5% |
Governance Parameters
Economic parameters that can be modified via governance:
- Commission rate bounds
- Slashing parameters
- Minimum deposit for proposals
Parameters that cannot be modified via governance:
- Fee burn ratio (90/10)
- Inflation rates (require upgrade)
- Guard threshold (require upgrade)
Supply Queries
Total Supply
monod query bank total --denom alyth
Circulating Supply
# Circulating = Total - Locked (vesting, staked, etc.)
# This requires calculating multiple components
Burn Total
# Query burn module or burn address balance
monod query bank balances mono1qqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqnrql8a
Economic Scenarios
Bull Case (High Usage)
- High transaction volume
- Fee burns exceed inflation
- Supply becomes deflationary
- Increased scarcity
Bear Case (Low Usage)
- Low transaction volume
- Minimal fee burns
- Supply inflates at 8%
- Staking yields remain attractive
Equilibrium
- Moderate usage
- Fee burns partially offset inflation
- Gradual supply growth
- Sustainable validator economics
Comparison to Other Chains
| Chain | Model | Inflation |
|---|---|---|
| Monolythium | Milestone-based, 90% fee burn | 0-8% |
| Ethereum | EIP-1559 burn, PoS rewards | Variable |
| Cosmos Hub | Bonded ratio targeting | 7-20% |
| Solana | Fixed schedule | ~8% decreasing |
Monolythium's unique features:
- Guard-gated inflation increase
- 90% fee burn (higher than most)
- Inverse rank rewards
- Mandatory validator burn deposit
FAQ
Is LYTH inflationary or deflationary?
It depends on network usage. With high transaction volume, fee burns can exceed inflation, making it deflationary. With low usage, it's inflationary.
Why 90% fee burn?
High burn rate creates stronger deflationary pressure, aligning fee-payer interests with long-term holders.
Can the fee burn ratio change?
Not through governance. It would require a chain upgrade approved via governance.
What backs LYTH's value?
Network utility (fees, staking, governance), economic scarcity (burns), and the security/features of the Monolythium blockchain.
Related
- Milestones - Inflation schedule triggers
- Guard - 8% inflation gate
- Fee Model - Detailed fee mechanics
- Staking Overview - Staking fundamentals