Quickly browse the decentralized supercomputer AO token economics, how to earn tokens that are 100% fairly distributed?

Translation: PANews Editorial Department

On June 14th, AO Foundation officially launched the tokenomics of the decentralized supercomputer AO.

8 Key Facts and Dates about AO Token

1. AO is a 100% fair issuance token that follows the Bitcoin economic model.
2. AO tokens will be used to secure message delivery in its network.
3. The minting mechanism will start to run retroactively from 13:00 Eastern Time on February 27, 2024 (Block 1372724). During this period, 100% of the minted AO tokens will be granted to Arweave token holders based on their respective balances held every 5 minutes. If you hold AR on an exchange or custodian, you should inquire the exchange on how to receive the tokens.
4. In the future, one-third (33.3%) of the AO tokens will be minted to AR token holders based on their ownership every 5 minutes. In the future, two-thirds (66.6%) of the AO tokens will be minted to transfer assets to AO, to strongly stimulate economic growth.
5. The first phase of the bridge contract went live today. During this pre-bridge phase, users' tokens will be securely held on their native networks while also receiving AO tokens. Once the second phase of the bridge is live, users will be able to deposit their assets into the new bridge contract and use them on AO - while also earning rewards. Users can deposit their stETH tokens, which are staked Ethereum tokens, into the audited pre-bridge contract here.
6. The transition rewards will start at 11:00 AM Eastern Time on June 18, 2024.
7. Users can withdraw tokens from the pre-bridge at any time, but can only start earning AO after the rewards begin on June 18th. Rewards are distributed once every 24 hours.
8. The AO token will remain locked until about 15% of the supply is minted. This will occur around February 8, 2025.

Overview: A total of 21 million coins, 100% fair issuance

AO is a token that is issued 100% fairly, modeled after Bitcoin.

Like Bitcoin, AO has a total supply of 21 million tokens, and the halving period is also 4 years. AO is distributed every 5 minutes, with a monthly distribution of 1.425% of the remaining supply. As of June 13, the inventory of AO is 1.0378 million, making them extremely scarce. In comparison, Ethereum has 120 million, Solana has 461 million, and Ripple has 55 billion.

The minting mechanism of AO means that although the number of newly minted tokens will be halved every 4 years, there will be no sudden 'halving event'. Instead, the number of new tokens will decrease slightly every month, forming a smooth issuance schedule.

While most token distribution models tend to favor insiders over the community, AO's model adheres to the principles of fairness and equal access, which is at the core of the encryption revolution. There are no pre-sales or pre-allocations. Instead, the AO token reward mechanism incentivizes two key aspects of a successful ecosystem: economic rise and foundational layer security.

Its working principle is as follows:

~36% (the first 4 months of 100% + the remaining 33.3%) of the AO tokens are minted over time by Arweave token holders, whose tokens incentivize the security of the AO base layer - Arweave.

Approximately 64% of AO tokens are minted over time to provide external yield and bring assets into AO, incentivizing its economic rise. This creates a powerful driver for increasing liquidity in the ecosystem, forming an economic flywheel.

At the same time, without any token sales, the network provides funding for its ecosystem development in two ways:

Permissionless Ecosystem Financing

After the bridge goes live, developers who attract users to deposit eligible assets in their applications will receive corresponding AO token rewards. This provides developers with a permissionless long-term source of income without the need to apply for grants, seek external investments, or even tokenize their projects. If they wish, these developers can also choose to share a portion of the AO rewards with users, allowing them to continue earning AO tokens while using applications in the ecosystem.

Permaweb Ecosystem Development Association

In addition, some specialized ecosystem development organizations and builders will also share the native benefits of the assets stored in the bridge. These organizations and builders are committed to the core protocol, marketing operations, and key infrastructure development of AO. These funds will gradually decrease over time, consistent with the decay rate of network minting, allowing the network to guide but keeping it as a neutral shared protocol.

ARholderAO balance****calculation method

Arweave Token holders' AO token minting has started from 12:00 UTC on February 27, 2024, to trace applications for the AO testnet. Since the launch of the testnet, the minting of AO tokens will ensure that there is sufficient circulating supply before circulation, with the goal of reaching approximately 15% of the total supply (3.15 million) around February 8, 2025.

If you have been holding $AR for several months since the launch of the testnet, as of June 13, 2024, you have accumulated approximately 0.016 AO tokens per AR. Please note that the current supply of AO is 1/65 of AR.

Major exchanges are currently studying whether and how to transfer $AO to users. Please contact the exchange or custodian to understand how they manage this process.

If the user has been storing the $AR tokens on their own, they can check the balance by accessing ao.arweave.dev. Click on the Arweave tab and connect your self-custody wallet (such as ArConnect).

Hold AR for Future Earnings of AO

A new AO token is minted every 5 minutes. Before the pre-bridge launch on June 18th, all AO tokens were 100% minted by AR token holders. After the pre-bridge launch, 33% of AO tokens will be proportionally distributed to AR holders, representing approximately 36% of the total AO supply minted by AR token holders. This process happens automatically.

The following list shows approximately how much AO you can expect to accumulate in the next 12 months for a given AR balance:

1 AR：0.016 AO

10 AR: 0.16 AO

50 AR: 0.8 AO

100 AR：1.6 AO

500 AR: 8.0 AO

1000 AR: 16.0 AO

The newly minted $AO amount will decrease over time until all AO tokens have been minted. AO tokens will be transferable around February 8, 2025.

Pre-bridge stETH to convert earnings into AO

Note: AO transition rewards do not apply to US citizens

At this initial stage, you can deposit stETH (ETH staked using Lido) to accumulate token rewards in AO. As AO opens up to more ecosystems, other Proof of Stake assets will also be eligible.

In this initial stage, pre-bridge assets will not be usable in AO network applications. After the second stage bridge goes live, you will be able to use stETH in AO applications while still receiving AO token rewards.

When bridging a user's stETH to AO, their original stETH deposit will be held in an audit contract on the Ethereum network, while the native yield will be distributed between the dedicated ecosystem development organizations and builders of the AO ecosystem to facilitate growth. At launch, these organizations include the Open Access Supercomputing Foundation, Forward Research, Autonomous Finance, Warp Contracts, Longview Labs, and ao/acc. More organizations will be added as the ecosystem develops.

Users can withdraw their initial stETH deposit at any time.

New AO tokens will be minted every 5 minutes after 11 a.m. Eastern Time on June 18, 2024, which is exactly 16 weeks after the launch of the AO testnet. Once the rewards start, 66% of the newly minted $AO will be proportionally distributed to wallets that have been pre-bridged to AO. This process will happen automatically.

The exact amount of AO tokens that the income providers receive depends on the proportion of assets they deposit in the contract to the total deposited assets. As AO opens up to more ecosystems and can provide multiple proof of stake assets, the number of AO tokens received depends not only on the proportion of assets provided, but also on the income generated by each asset.

The following list shows how much AO tokens you can expect to accumulate in the next 12 months by holding a certain proportion of the total income asset pool, assuming the only asset provided is stETH:

0.01% ：210 AO

0.1%: 2,105 AO

0.5%: 10,524 AO

1%: 21,049 AO

5%: 105,243 AO

AO Token will be transferable starting around February 8, 2025.

How to deposit stETH to get AO

Note: AO transition rewards do not apply to US citizens

Users can start depositing stETH into the pre-bridge today. The rewards will start accumulating on June 18, 2024, at 11:00 AM Eastern Time (ET). The rewards will be distributed once a day, so users may need to wait up to 24 hours to receive the first reward.

Convert users' stETH earnings to AO tokens according to the following simple instructions:

1. Go to the coin minting page on the AO website.
2. Click on the Ethereum tab and connect your Ethereum wallet (Metamask or Rabby).
3. Enter your Arweave wallet address where you want to receive AO tokens.
4. Deposit stETH into the auditing contract by entering the amount you want to provide. These tokens will be held in a trustless contract on Ethereum and can be withdrawn at any time. If you don't have stETH in your wallet, you'll need to exchange other tokens for some stETH before depositing.
5. Sign the transaction in your ETH wallet and deposit stETH into the contract.
6. You will receive AO tokens, which will be directly deposited into your designated Arweave wallet.

Smart Contract Security

The bridge contract has undergone extensive audits and requires no trust: no one can access your tokens except you. The only privilege is that the Open Access Supercomputing Foundation (the organization coordinating the launch of the AO token with the Arweave ecosystem organization) can withdraw tokens from the contract in the event of a security incident and return them to the original owner. This feature provides an additional layer of security without placing the pre-bridge assets under the control of any centralized entity.

These contracts themselves are minor modifications to the MorpheusAI deposit contract. These contracts are used to provide a proven foundation to reduce any security risk.

Conclusion

The AO token minting process introduces a completely different model based on the principles of fairness and equal access, rewarding users and developers. The different teams behind the project draw inspiration from the groundbreaking innovation of Bitcoin and the fundamental principles established by Satoshi Nakamoto.

Over the past fifteen years, the encryption industry has experienced significant growth. However, this expansion has not always been consistent with broader social interests. In order to truly advance the mission of creating a permissionless, decentralized, and user-rights-protecting network, it is crucial to rethink how to integrate values and incentives to achieve these goals.