Economics

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Inflationary Mechanism

• Annual Inflation Rate: The TOWNS token features an annual inflation rate of 8% beginning after year 1, which is programmed to decrease linearly over a period of 20 years, reaching a final inflation rate of 2%. This gradual reduction is intended to decrease the rate of new token issuance over time, aligning with the expected maturation and growth of the network. The DAO can vote to lower inflation only.

• Epoch-Based Distribution: Inflation rewards are distributed bi-weekly to all active Node Operators in the system. Each operator receives rewards proportionally based on the total tokens staked to their nodes. Operators retain their defined commission, after which the remaining rewards are passed to delegators. Delegators then receive their portion of rewards proportional to the number of tokens they have staked with that operator.

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Reward Allocation and Fees

• Node Operator Fees: Each Node Operator has the ability to set a percentage fee for their services. This fee is subtracted from the total inflation rewards allocated to the Node Operator for the epoch.

• Distribution to Delegators: After the deduction of the Node Operator’s fee, the remaining inflation rewards are distributed pro-rata among the delegators of that Node Operator. This mechanism ensures that both Node Operators and their delegators are rewarded for their contribution to the network’s security and operability.