Oxen has a robust token burning scheme designed to keep inflation under control
A crucial consideration for any tokenomics system with an indefinite emissions tail is how to keep inflation under control. In short: How can we keep rewarding service nodes indefinitely without also ending up with so much $OXEN floating around that the token becomes worthless?
$OXEN solves the inflation problem through a robust token burning scheme. This means that the effective net emissions are lower than they may seem, because most routine interactions with the Oxen network, including Blink transactions and ONS name purchases, provably burn a certain amount of $OXEN.
- Blink fees are 0.05 $OXEN per transaction output, plus a very small per-byte amount of $OXEN; all transactions have at least 2 outputs (recipient(s) and change), so the effective fee is around 0.101 $OXEN for a typical simple transaction
- Of that fee, 40% goes to the service node that constructs the block validating the transaction (forming part of that service node’s reward), and the remaining 60% (i.e. around 0.06 $OXEN for a typical transaction) is burned
- Basic ONS registrations burn 7 $OXEN (for Session/Wallet namespace registrations, a registration lasts forever; for Lokinet, a basic registration lasts for 1 year)
- You can also buy 2, 5, and 10-year Lokinet registrations for 2x, 4x, or 6x the basic fee, respectively
We periodically reevaluate and adjust fees and burn amounts to maintain reasonable levels relative to the price of $OXEN. For example, in the Valiant Vidar hardfork, the Blink fees and burn ratios were adjusted from approx. 0.2 $OXEN fee with 80% burned in a typical transaction to approx. 0.1 $OXEN fee with 60% burned.