What is the issuance and circulation of SKALE (SKL) coins?

SKALE (SKL) coins are initially issued during network bootstrapping and investment rounds, and their circulation is regulated through a token release schedule, staking rewards, and the participation of SKALE Manager Nodes.

Dec 07, 2024 at 08:21 am

Understanding the Issuance and Circulation of SKALE (SKL) Coins

SKALE (SKL) is a decentralized, elastic blockchain network designed to empower developers with the ability to create and deploy scalable decentralized applications (dApps). SKL coins, the native cryptocurrency of the SKALE network, play a crucial role in securing the network, facilitating transactions, and incentivizing participation. This article delves into the intricate details of SKL coin issuance and circulation, providing a comprehensive understanding of these fundamental aspects.

Issuance of SKL Coins

The total supply of SKL coins is capped at 10 billion. The issuance of SKL coins followed a carefully orchestrated plan, with different phases designed to cater to specific objectives and ensure a fair distribution.

1. Genesis Block Creation (March 2020):
   A genesis block is the very first block in a blockchain, marking the inception of the network. With the creation of the SKALE genesis block, 1 billion SKL coins were minted and allocated for network bootstrapping, including early contributors, advisors, and strategic partners.
2. Seed Round (March 2020):
   The seed round aimed to raise funds for the project's initial development and secure early support from investors. During this round, 1 billion SKL coins were sold to seed investors, providing crucial capital to jumpstart the ecosystem.
3. Private Round (March 2020):
   The private round, exclusive to a select group of investors, offered 2 billion SKL coins. This round further strengthened the financial foundation and fostered strategic partnerships.
4. Strategic Round (March 2020):
   The strategic round involved investment from industry giants and ecosystem partners. In this round, 1 billion SKL coins were allocated to entities dedicated to the long-term growth and adoption of the SKALE network.

Circulation of SKL Coins

Unlike the fixed supply, the circulating supply of SKL coins is dynamic, representing the amount of SKL actively traded and used within the network. The circulation process involves several key mechanisms:

1. Token Release Schedule:
   To ensure an orderly distribution and prevent market volatility, SKL coins are subject to a phased release schedule. Over time, a portion of the allotted tokens are gradually released into circulation, managing the availability and preventing excessive supply.
2. SKALE Manager Nodes:
   SKALE Manager Nodes (MNs) play a critical role in managing the circulation of SKL coins. MNs stake SKL coins to participate in the network's consensus mechanism, securing the blockchain and earning rewards. The number of MNs and their stake size influence the circulation supply.
3. Transaction Fees:
   The SKALE network utilizes a fee structure for transactions. Users pay fees in SKL coins to cover the computational resources consumed on the network. These fees are distributed to MNs, contributing to the circulation supply.
4. Staking Rewards:
   MNs receive staking rewards for contributing to the network's security and participating in consensus. These rewards are distributed in SKL coins, increasing the circulating supply and incentivizing active participation.
5. Delegating and Unstaking:
   Coin holders who do not wish to run MNs can delegate their SKL coins to active MNs. Delegators receive a portion of the MN's staking rewards, representing another channel for circulation. Unstaking, or withdrawing SKL coins from an MN, adds to the circulating supply.

Conclusion

The issuance and circulation of SKL coins are carefully designed components of the SKALE network's ecosystem. These mechanisms ensure a controlled distribution, foster sustainable growth, and incentivize active participation. As the SKALE network continues to evolve, the issuance and circulation of SKL coins will adapt to meet the evolving requirements of the ecosystem, facilitating the creation and adoption of scalable dApps.