Kaspa (KAS) tokenomics

Kaspa (KAS) is a decentralized, open-source Proof-of-Work (PoW) network that utilizes a blockDAG (Directed Acyclic Graph) architecture. Its token economics are designed to mirror the fair-launch principles of Bitcoin, characterized by a lack of pre-mining, no central governance, and a deflationary monetary policy.

Issuance Mechanism

Kaspa employs a unique emission schedule known as the Chromatic Phase. This mechanism is designed to reduce the block reward geometrically over time, ensuring a predictable and deflationary supply.

• Initial Reward: At launch, the block reward was set at 500 KAS per block.
• Reduction Schedule: Unlike Bitcoin's four-year halving cycles, Kaspa's rewards decrease every month. The reward is reduced by a factor of (1/2)^(1/12) each month. This means that over the course of one year, the block reward effectively halves.
• Maximum Supply: The total supply is capped at approximately 28.7 billion KAS.
• Emission End Date: Based on the current geometric reduction, the maximum supply is expected to be fully mined by approximately the year 2057.
• Future Adjustments: With the planned transition to the Rust programming language, Kaspa aims to increase its throughput to 10 blocks per second (BPS) and eventually 100 BPS. To maintain the same emission schedule, the reward per block will decrease proportionally as the blocks per second increase (e.g., if 10 BPS yields 13.08 KAS per block, 100 BPS would yield approximately 1.31 KAS per block).

Allocation Mechanism

Kaspa is distinguished by its Fair Launch model. There were no private sales, venture capital allocations, or team pre-mines.

As of early 2024, the top 10 wallet addresses held approximately 13.69% of the maximum supply, with significant portions held by exchange wallets such as Gate.io and MEXC.

Usage and Incentive Mechanism

The KAS token serves as the native utility and security asset of the network.

• Peer-to-Peer Payments: KAS is used as a medium of exchange for decentralized, borderless transactions.
• Transaction Fees: Users pay fees in KAS to have their transactions processed. These fees are calculated based on the transaction size in UTXOs (0.0001 KAS per UTXO).
• Miner Incentives: Miners are incentivized to secure the network through two primary streams:
  1. Block Rewards: Newly minted KAS tokens provided for every valid block added to the DAG.
  2. Transaction Fees: All fees included in the transactions within a block are awarded to the winning miner.
• Governance: While there is no formal on-chain governance for the protocol itself, the Kaspa DAO and community voting channels (such as Discord) allow KAS holders to vote on the allocation of community funds for marketing, development, and exchange listings.

Locking Mechanism and Unlocking Time

Because Kaspa is a pure Proof-of-Work network with a fair launch, it does not feature the traditional "locking" or "vesting" schedules common in Proof-of-Stake (PoS) or VC-backed projects.

• Staking: There is no native staking or liquidity provisioning mechanism that requires locking KAS tokens to earn rewards.
• Vesting: Since there was no team or advisor allocation, there are no scheduled "unlock events" where large quantities of tokens are released into the market.
• Community Treasury: Funds raised through community crowdfunding are typically held in multi-signature wallets (e.g., a 2/4 multi-sig) and are released only when specific development or marketing milestones are met, as determined by community vote.
• Wrapped Kaspa (wKAS): While not a native locking mechanism of the Kaspa protocol, users can "lock" KAS with third-party custodians to mint wKAS on other chains (like Ethereum or BNB Chain) to participate in DeFi. This is a 1:1 backing and can be "unwrapped" at any time.