AirDAO Implements Deflationary Tokenomics with 6.5 Billion AMB Cap

The AirDAO project has undergone a significant tokenomics update aimed at addressing long-standing challenges with the AMB token, which had previously experienced a downtrend due to inflationary pressures. On November 15, 2023, the first phase of the upgrade was initiated at block height 27,690,000, marking a pivotal shift in the project’s approach to token supply and distribution [1]. A hard cap of 6.5 billion AMB tokens has been set, meaning no new tokens will be minted with the generation of new blocks, effectively creating a deflationary supply model [1].

This change is expected to enhance the value proposition for validators and stakers, who previously favored liquidating their rewards due to the low price of AMB. With inflation eliminated, the average annual percentage yield (APY) for stakers is currently around 20%, potentially making staking more attractive and profitable [1]. The updated tokenomics also streamline block reward distribution through smart contracts, allocating a portion of the total AMB supply to validator nodes [1].

Alongside the tokenomics upgrade, AirDAO has introduced several improvements to the user experience for node operators. The top 150 nodes, determined by stake size and a dynamic limit adjusted via MultiSig, are now responsible for block generation and receiving rewards [1]. A queue system has been added to allow non-top nodes to ascend in the rankings by increasing their stake or if top nodes reduce theirs [1]. Additionally, a 15-day withdrawal delay for Apollo validator nodes has been implemented to enhance network stability and security [1].

The update also includes a streamlined node installation and management process, with the introduction of three new address types—node owner, node address, and reward receiver address—offering increased security and flexibility [1]. An intuitive front-end interface has been developed for node installation, and a dedicated Apollo nodes dashboard, integrated into the explorer, allows node owners to adjust stake sizes and update addresses without restarting the node [1]. A Telegram bot has also been launched to provide real-time status notifications to users [1].

Looking ahead, the tokenomics upgrade is the first of several planned enhancements to the AirDAO ecosystem. Stage Two is expected to focus on refining the incentives and rewards system for node operators, including an upgraded AirBond marketplace with improved functionality and the distribution of block rewards in both AMB and BOND tokens [1]. The network fee structure will also be reworked, introducing three new fee types and diversifying revenue streams for the AirDAO treasury [1].

The previous tokenomics model, which allowed for an unlimited supply of AMB tokens, had created downward pressure on the coin’s price as validators and stakers liquidated rewards. The new capped supply aims to stabilize the ecosystem and shift focus toward broader development and utility. With these foundational changes in place, AirDAO is now positioned to attract new development teams and expand its Web3 ecosystem [1].

Source: [1] Pivotal AirDAO Tokenomics Update (https://www.coingecko.com/learn/pivotal-airdao-tokenomics-update)