LP-0083Finaleconomicstokenomicsissuancesupplyinflation

LP-083: Token Economics Model

Abstract

Defines the LUX token economics model. Total supply cap: 1,963,000,000 LUX. Initial circulating supply at genesis: 963,000,000 LUX. Remaining 1,000,000,000 LUX is emitted as validator rewards over a declining issuance schedule. Transaction fees are partially burned (LP-079), creating deflationary pressure that offsets issuance as network usage grows.

Specification

Supply Schedule

| Year | Annual Issuance | Cumulative Supply |

|------|----------------|-------------------|

| 1 | 100,000,000 | 1,063,000,000 |

| 2 | 90,000,000 | 1,153,000,000 |

| 3 | 81,000,000 | 1,234,000,000 |

| 4 | 72,900,000 | 1,306,900,000 |

| 5 | 65,610,000 | 1,372,510,000 |

| 10 | 38,742,049 | 1,651,321,852 |

| 20 | 13,508,517 | 1,878,461,744 |

| inf | 0 | 1,963,000,000 |

Annual issuance declines by 10% per year (geometric decay). Issuance halts when total supply reaches the cap.

Genesis Allocation

| Category | Amount | Vesting |

|----------|--------|---------|

| Foundation | 289,000,000 | 7 annual unlocks |

| Team | 192,000,000 | 4-year linear, 1-year cliff |

| Investors | 192,000,000 | 2-year linear, 6-month cliff |

| Ecosystem | 96,000,000 | Released to community programs |

| Validator bootstrap | 96,000,000 | Initial staking rewards |

| Treasury | 98,000,000 | DAO-governed |

Fee Model

EIP-1559-style base fee with priority tip:

Base fee: dynamically adjusted per block (target 50% block utilization).
Base fee split: 50% burn, 50% treasury (via LP-079, LP-081).
Priority fee: 100% to block producer.

Equilibrium

At steady-state of ~1,000 TPS with 25 gwei average base fee:

Annual burn: ~8.2M LUX
Year 10 issuance: ~38.7M LUX
Net inflation: ~30.5M LUX/year (~1.8%)

As usage grows beyond ~4,700 TPS at 25 gwei, burn exceeds issuance and the supply becomes net-deflationary.

Security Considerations

1. Issuance is enforced at the P-Chain consensus level. No smart contract can mint LUX beyond the schedule.

2. The supply cap is a hard protocol constant. Changing it requires a network fork.

3. Vesting contracts are immutable after deployment. Accelerated vesting is not possible.

4. Fee spikes (base fee surge) temporarily increase burn rate but do not affect issuance.

Reference

| Resource | Location |

|----------|----------|

| Issuance implementation | github.com/luxfi/node/vms/platformvm/reward/calculator.go |

| Genesis allocation | github.com/luxfi/genesis/ |

| Fee handler | github.com/luxfi/evm/core/fee_handler.go |

Copyright

Licensed under the MIT License.