Hedera (HBAR) tokenomics

Hedera’s native cryptocurrency, HBAR, serves as the foundational utility and security layer for the Hedera Hashgraph network. Launched in 2018, the token is designed to facilitate network operations, secure the consensus mechanism, and incentivize participants within its governed ecosystem.

Issuance Mechanism

The total supply of HBAR is fixed at 50,000,000,000 (50 billion) tokens. These tokens were pre-minted at the network's inception.

• Supply Cap: The total supply is hard-capped. According to the Hedera Hashgraph, LLC amended agreement, this supply cannot be increased without the unanimous consent of the Hedera Governing Council.
• Initial Distribution: At launch, a significant portion of the supply was held in the Hedera Treasury, to be released into circulation over time to fund network operations, ecosystem growth, and various incentive programs.

Allocation Mechanism

The allocation of HBAR is strategically divided among several key stakeholders and initiatives to ensure long-term sustainability and development. As of late 2021 and early 2024, the distribution was structured as follows:

In January 2024, the Council further approved an additional allocation of 4.86 billion HBAR (~9.70% of total supply) specifically for ecosystem development initiatives, with the majority (4.25 billion) directed toward the HBAR Foundation, the Hashgraph Association, and the DLT Science Foundation.

Usage and Incentive Mechanism

HBAR has two primary functions within the network: Network Fuel and Network Security.

Transaction Fees

HBAR is used to pay for all services on the network. These fees are split into three components:

• Network Fees: Paid to the Hedera nodes for processing transactions.
• Service Fees: Paid to the network for the use of specific services (e.g., file storage or smart contracts).
• Node Fees: Paid to the specific node that submitted the transaction.

Staking and Consensus

Hedera operates a permissioned Proof-of-Stake (PoS) network.

• Consensus Nodes: Managed by the Hedera Governing Council, these nodes must stake HBAR to secure the network. As of March 2024, 30 consensus nodes were live, staking approximately 22.63 billion HBAR.
• Staking Rewards: The Council has approved a maximum annual staking reward rate of 2.50%.
• Permissionless Delegation: While nodes are currently permissioned, HBAR holders can delegate their tokens to existing consensus nodes. This increases the node's consensus weight, and in return, delegators receive a share of the staking rewards.

Locking Mechanism and Unlocking Time

Hedera utilizes a structured release schedule rather than a single "unlock" event to manage the circulating supply and prevent market volatility.

• Locking for Employees and Founders: Hedera filed a Form D with the SEC to recognize token grants to employees, founders, and contractors. These grants are typically subject to vesting schedules.
• SAFT Rounds: Approximately 8.72 billion HBAR were allocated across three Simple Agreement for Future Tokens (SAFT) rounds. These tokens were subject to various release schedules outlined in the project's original whitepapers.
• Swirlds Licensing: Under a license agreement, Hedera pays Swirlds, Inc. ongoing monthly fees in HBAR (equivalent to 10% of revenue, with a $625,000 minimum). A one-time allocation of 2.50 billion tokens was also part of this agreement.
• Treasury Release: The Hedera Treasury releases tokens periodically based on Council-approved budgets for ecosystem growth and operational costs.

While specific monthly unlock tables for the entire 50 billion supply are managed dynamically by the Council's Treasury Management & Coin Economics committee, the general trend involves a multi-year distribution plan designed to reach full circulation over several decades. Information regarding the exact current month-by-month unlocking schedule for all categories was not available in the provided data.