EOS Changes Its Token System: What Does It Mean For Investors?

Bittime - EOS Network has just announced significant changes to their tokenomics via the EOS System Contracts v3.4.0 update. This change, designed to accommodate the previously released “New EOS Tokenomics Proposal”, aims to stabilize and predictably develop the EOS token economy by implementing a fixed supply model.

Let's discuss the details of these changes:

Towards a Fixed Supply of EOS Tokens

This update will limit the total EOS tokens to 2.1 billion. This ends EOS token inflation and switches to a fixed supply model.

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EOS token vesting schedule

A vesting schedule will be implemented for parties who play an important role in the EOS network, such as Block Producer (BP), Staking Reward, EOS Network Foundation (ENF), and EOS Labs.

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Immediate EOS Token Liquidity

Funds will be allocated for the purchase of 35 million EOS for RAM and 315 million EOS for providing RAM liquidity. It aims to increase the liquidity of EOS tokens as soon as the update is implemented.

REX Transformation 2.0

Look forward to further discussion about REX 2.0 in the next series. This transformation will include shifting system fees to Block Producer, injecting staking rewards into REX, and extending the staking lockup period to 21 days. These changes aim to improve REX functionality and flexibility.

EOS Token System Implementation Steps

• MSIG Approval: This change requires the approval of a minimum of 15 of the 21 active EOS Block Producers via multi-signature (MSIG).
• New Account/Bucket Creation: New accounts and associated contracts will be created to manage token distribution and allocation, namely eosio.reward, eosio.fees, fund.wram, and eosio.mware.
• New System Contract Implementation: The eosio.system and eosio.token contracts will be updated to enable new tokenomics features.
• Scheduled MSIG Execution: MSIG is scheduled to execute no earlier than June 1, 2024.
• Retire Unvested b1 Tokens: Approximately 64 million EOS tokens previously allocated for vesting to b1 accounts will be reclaimed and deactivated.
• Set Maximum Supply and Issue Fixed Supply: The maximum supply of EOS tokens will be set to 2.1 billion. The system will then issue the remaining tokens up to this limit, which is estimated to be around 974.6 million EOS.
• EOS Transfer to Distribution Account: EOS will be transferred to a newly created account to fund ecosystem RAM upgrades (fund.wram) and middleware development (eosio.mware).
• Adjust Inflation Payout Factor and Set Payout Factor: The system will switch from an inflation model to an annual token distribution with a 20-year halving schedule.

Conclusion

These changes to EOS tokenomics aim to bring stability and predictable growth to the EOS ecosystem. The fixed supply model, token vesting schedule, and increased initial liquidity are all designed to create a healthier environment for the EOS token. The upcoming REX 2.0 transformation promises further improvements in functionality and flexibility. Stay tuned for the next series for a deeper discussion of REX 2.0.

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