What is the use of SKALE(SKL) currency?

For securing transactions and network governance, SKALE (SKL) employs its native token, enabling participants to validate transactions and participate in decision-making through a DAO.

Dec 07, 2024 at 02:56 am

What is the Use of SKALE (SKL) Currency?

Introduction

Launched in 2019, SKALE (SKL) is an Ethereum-based Layer 2 network designed to enhance scalability and transaction speed. The SKL token plays a crucial role in the functioning of the network by facilitating various operations, including:

1. Secure and Validate Transactions

• SKL tokens are used to reward network participants, known as Validators, for securing and validating transactions on the SKALE network.
• Validators stake their SKL tokens to participate in the consensus mechanism, which ensures network integrity and the reliability of transaction processing.
• In return for staking their tokens, Validators earn rewards in the form of newly minted SKL tokens and transaction fees.

2. Network Governance

• SKL token holders have the ability to participate in network governance through a decentralized autonomous organization (DAO).
• By voting on proposals, token holders can influence decision-making regarding network parameters, upgrades, and roadmap.
• This ensures that the SKALE network remains responsive to the needs of its users and community.

3. Staking and Delegation

• Token holders who do not wish to directly participate in validation can stake their SKL tokens with existing Validators.
• Staking allows token holders to earn rewards from the network without operating a validator node themselves.
• Validators charge a small fee for delegation, which incentivizes them to maintain high network performance.

4. Transaction Fees

• Transactions on the SKALE network require a small transaction fee to cover the computational resources and network throughput.
• These fees are paid in SKL tokens, further contributing to the network's security and sustainability.
• The transaction fees are distributed among Validators as rewards for their role in processing and securing transactions.

5. Application Deployment and Development

• Developers can use SKL tokens to deploy and develop decentralized applications (dApps) on the SKALE network.
• Smart contracts, the core element of dApps, require SKL tokens to facilitate their deployment and regular use.
• This incentivizes developers to build applications on the SKALE network, contributing to its ecosystem growth.

6. Token Economics and Supply

• The SKL token supply is limited to 10 billion tokens.
• Tokens are released periodically through staking rewards, ensuring a steady supply to support network operations.
• SKL tokens can be purchased on cryptocurrency exchanges, giving users the opportunity to participate in the network's growth.

Additional Information

The SKALE network offers several advantages over the Ethereum mainnet, including:

• Increased Scalability: The SKALE network can process up to 20,000 transactions per second, significantly improving scalability compared to Ethereum.
• Reduced Transaction Costs: By leveraging Layer 2 technology, SKALE provides much lower transaction fees than the Ethereum mainnet.
• Enhanced Security: The SKALE network inherits the security of the Ethereum blockchain, ensuring the safekeeping of funds and data.
• Developer-Friendly: The SKALE network is tailored for developers, offering tools and infrastructure to build and deploy dApps efficiently.