Explore the Future of Web3: Shardeum's Whitepaper Released!

SHM Coin & Tokenomics

What is the native coin of Shardeum, and what purpose does it serve?

The native coin on Shardeum is Shard and has SHM as its ticker symbol. SHM is the foundational monetary unit of Shardeum and serves a wide range of functions. Each SHM is divisible to 18 digits, similar to ETH on the Ethereum network. We will also refer to it as the SHM token, since a tokenized version of the coin is also used by smart contracts and to be consistent with common terminology.

SHM is a utility token with various uses, including:
● Staking: Network participants can stake their SHM, increase the network’s overall security and earn rewards for their active participation
● Governance: SHM is a governance token conferring stakers governance rights, allowing them to decide and vote on the future of the network. Shardeum will not use a 1 token 1 vote system
● Reward Token: SHM is given as a reward, for example: via airdrop, ecosystem rewards and network participation
● Gas Token: SHM is a gas token allowing network users to pay fees to execute the required compute units for transactions and other more complex transactions involving smart contracts on the network
● Transaction Fee Burning: All transaction (tx) fees on Shardeum are burned, allowing the network to remove the SHM from the circulating supply
● User Staking: We are considering the possibility of users staking during deflationary periods. Since Shardeum is not based on Delegated Proof of Stake (DPoS), there are no delegation pools

What is the tokenomics model of SHM: inflationary, deflationary, or disinflationary?

The Shardeum monetary policy has been designed with help and feedback from the community since April 2022.  The SHM monetary policy is designed to make the supply stable, predictable, adaptable and scarce under a ‘capped elastic supply model’.  SHM has a fixed max supply of 508 million (508,000,000), making it a deflationary asset.

Further, all transaction fees are burned on Shardeum, with no transaction fees going to any miner or validator nodes, making SHM scarcer by design. SHM tokens from slashed validators are also burned, adding to the scarcity of SHM. Shardeum’s tokenomics have been designed to be programmatically scarce at launch and for the scarcity to increase simultaneously with increased burning, linear scaling and overall adoption, making it exceptionally scarce in the future.  Moreover, capped elastic supply model allows the token issuance schedule to be elastic and not predefined optimizing token issuance in the overall economic climate without reaching maximum supply.

What should I do to participate in early sales, like private or seed sale?

You can write to invest@shardeum.org.  Do include as much info and background as possible.

How are we ensuring a fair distribution of tokens to prevent dominance by a small group of early investors prior to public sale?

As noted in this blog, Shardeum is serious about decentralization from the get go and we had decided to raise funds across a large number of ECA participants and angels. Our goal here is to maximize the distribution of SHM and not to have a select few participants owning a majority of tokens. Our cap table so far includes diverse global institutional, VCs and angels that are motivated to help us build Shardeum and grow the Web3 ecosystem.

Further, we have already started our process to allocate airdrops for our ecosystem and community.  All these factors along with SHM’s elastic capped supply model are designed to make SHM not only scarce but also highly decentralized.

Is SHM stake fixed per node, like 32 Eth per validator in Ethereum?

Yes, some fixed amount of SHM will need to be staked (and could be slashed for misbehaving) to become a validator, although it won’t be too high for an average validator to participate. We really want to democratize the process of operating a node on blockchain. We will announce the stake amount ahead of mainnet.

Since the community will completely run Shardeum, shouldn’t we allocate some % of coin distribution to the community?

Note, the majority of SHM coins, i.e. 51%, is reserved for node mining by network validators and archivers. We further have 5% coins allocated for airdrops & ecosystem. This is planned keeping in mind that decentralization and community are central to the network.

Further we just announced our airdrop plans, which is expected to be executed in three phases for the community.  The Phase 1 is particularly for our early contributors who have been key in Shardeum’s growth ever since the project was announced on February 2nd, 2022. We’ve gone above and beyond to recognize our early contributors, conducting an extensive and unparalleled analysis to ensure as many as possible are rewarded for their support. In addition to receiving USDT, NFTs, POAPs, and opportunities for both learning and earning, our early contributors have been acknowledged in ways unmatched by any other chain. Our commitment to rewarding those who helped us grow sets a new standard in the industry.

Based on feedback  sought and received from community in line with Shardeum’s OCC principle, we are actively exploring ways to reward the unrewarded early contributors through our Shardeum Early Contributors program or ECP.  Phase 2 and 3 will involve airdrops for our upcoming incentivized testnet campaign followed by multiple mainnet campaigns. We are clear community is the CEO of Shardeum. You can read more about our airdrop plan in this blog.

What are the high level details of Shardeum’s tokenomics?

Max supply: 508 million SHM

Distribution:

  • 51% Community – reward to nodes; validators, archive and standby servers
  • 18% Sale – 3 month cliff then 2 years linear vesting
  • 15% Team – 3 month cliff then 2 years linear vesting
  • 11% Foundation – unlocked at Token Generation Event (TGE)
  • 5% Ecosystem & Airdrops – unlocked at TGE

Tokenomics/Issuance Policy:

It is important to note that Shardeum tokenomics has to be unique like the network itself since it scales linearly with the help of standby nodes concept.

Keeping that in mind, Shardeum launched SHM tokenomics model and dashboard with a live demo on 19th April 2023 after a lengthy research. The dashboard will allow community/validators to run node reward simulations and calculate the node income on the website page here – https://shardeum.org/shm-tokenomics/. You can further report any bugs/request for new features as well on the website.

This is an MVP of the SHM issuance policy which basically demonstrates how Shardeum Foundation/DAO (FDAO) will try and ensure there’s always an equilibrium level of SHM supply (less than the max supply), low GAS fees forever, and profitability for validators irrespective of the price and transaction action. Issuance policy is subject to refinement as we the network advances ahead.

What will happen to the Shardus (ULT) token once Shardeum goes live?

ULT will continue to coexist with SHM. To those who are unaware, Shardus will serve as the protocol layer of Shardeum and it has been in active development since at least 2017. The Shardeum project will obtain a license for the Shardus software by allowing Shardus token (ULT) holders to claim 1% of the max supply (5,080,000 SHM) in proportion to the Shardus tokens they hold. We encourage you to read our whitepaper for more details regarding this.