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Tokenomics

This guide covers the economic model of LYTH, the native token of Monolythium.

Token Overview​

PropertyValue
NameMonolythium
SymbolLYTH
Base denominationalyth
Decimals18
Genesis supply514,000,000 LYTH

!!! note "Denomination" 1 LYTH = 1,000,000,000,000,000,000 alyth (10^18 alyth)

Supply Dynamics​

LYTH has a variable supply influenced by:

  1. Inflation (increases supply)
  2. Fee burns (decreases supply)
  3. Validator burns (decreases supply)
Current Supply = Genesis Supply + Inflation Minted - Total Burned

Inflation​

Monolythium uses a fixed 8% annual inflation rate from genesis, with no phased rollout or milestone triggers. This provides simple, predictable economics for validators and delegators.

ParameterValue
Rate8% annually
Active fromGenesis (block 0)
Annual mint (at 514M supply)~41,120,000 LYTH
Daily mint~112,658 LYTH
Per-block mint (2s blocks)~2.61 LYTH
AdjustableYes (governance proposal)

Distribution of Block Rewards​

Block Rewards (inflation)
    │
    ├── 90% → Staking Rewards (to validators and delegators)
    │
    └── 10% → Development Fund

The inflation rate can be adjusted through a governance proposal. See Governance Parameters for details.

Fee Burn Model​

All transaction fees are split by the x/mono module:

PortionDestination
90%Burned permanently
10%Block proposer (direct transfer)

The x/mono module's BeginBlocker intercepts fees each block, burns 90%, and routes 10% directly to the block proposer — not to a community pool or generic fee pool.

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 (~112,658 LYTH/day minted), the network needs:

Daily fee burns to offset: ~112,658 LYTH
Fee burns = 90% of fees
Total daily fees needed: ~125,176 LYTH

With average transaction fees of ~0.001 LYTH, this requires ~125 million transactions daily for neutral supply.

Token Utility​

LYTH is used for:

Use CaseDescription
Transaction feesPay for Cosmos and EVM transactions
StakingDelegate to validators for rewards
GovernanceVote on protocol proposals
Validator bondsSelf-delegation and burn deposit
Gas (EVM)Pay for smart contract execution

Distribution​

Genesis Allocation​

The genesis supply of 514,000,000 LYTH is allocated as:

CategoryAmount%
SXP Community80,500,00015.7%
Custodial Wallets (CEX)373,100,00072.6%
XQR Community24,400,0004.7%
Team6,000,0001.2%
Grants12,000,0002.3%
Reserve18,000,0003.5%

Vesting​

Team and early allocations include vesting schedules to ensure long-term alignment.

Staking Economics​

Staking Returns​

At 8% inflation:

Stake RatioApproximate APR
50% staked~16% APR
70% staked~11.4% APR

These are simplified estimates ignoring fees, commission, and slashing.

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

Validator Economics​

Validators have specific economic requirements:

RequirementAmount
Minimum self-delegation100,000 LYTH
Burn deposit100,000 LYTH
Total to register200,000 LYTH

The burn deposit is permanent, enforced by an ante handler in the x/mono module, and governance-adjustable. See Validator Registration Burn for details.

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​

ViolationSlash
Downtime0.01%
Double-signing5%

Governance Parameters​

Economic parameters that can be modified via governance:

  • Inflation rate
  • Validator burn deposit amount
  • Commission rate bounds
  • Slashing parameters
  • Minimum deposit for proposals
  • Active validator set size

Parameters that cannot be modified via governance:

  • Fee burn ratio (90/10) — requires chain upgrade

See Governance Parameters for the complete list.

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​

ChainModelInflation
MonolythiumFixed 8% from genesis, 90% fee burn8% (governance-adjustable)
EthereumEIP-1559 burn, PoS rewardsVariable
Cosmos HubBonded ratio targeting7-20%
SolanaFixed schedule~8% decreasing

Monolythium's unique features:

  • Fixed inflation from genesis (no phased rollout)
  • 90% fee burn (higher than most)
  • Quadratic proposer selection for fairer fee distribution
  • Mandatory validator burn deposit (100k LYTH)

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.

Can the inflation rate change?

Yes. The inflation rate is governance-adjustable. It currently starts at 8% from genesis and can be modified through a governance proposal.

What backs LYTH's value?

Network utility (fees, staking, governance), economic scarcity (burns), and the security/features of the Monolythium blockchain.