Announcement on the Token Economy 2.0

Hello, this is LINE Blockchain at LTP.

On December 22nd, thanks to the support and interest of many people, we successfully launched the 3rd-generation mainnet Finschia.

As an optimized mainnet for open networks, the Finschia Network has greatly enhanced critical issues faced by the existing blockchain technology to optimize the operation of an open network and large-scale services in which anyone can participate. To solve several problems and obstacles that exist in the current blockchain market, a contribution-based yet new Token Economy 2.0 will be initiated to bring the popularity of the real Web3 into full swing. Please read further for details on the Token Economy 2.0 strategy.

1. Zero Reserve

LINE Blockchain is moving to the “zero reserves” strategy of no pre-minted supply, and the up-to-date amount of 6,734,458 LN — a predictable inflation mechanism in which new tokens are transparently issued by the protocol — will be introduced to the degree of activation of the ecosystem. Again, LN will be issued in line with an inflation system, and no other forms of issuance will be produced, meaning that even early validators of the LINE Blockchain ecosystem, including LINE itself, would be involved in activities with LN obtained from the market. With the inflation mechanism, reserve-based reckless investments will be fundamentally blocked, and the circulation cap of 110 million LN that has been kept for years under the issuance policy of LINK will also be permanently abolished. (as of 2022)

The essence of blockchain technology is to create demand for tokens by making more products and activating services. Since blockchain technology has functioned as an investment infrastructure rather than a service, leverage-based investments made by issuing large amounts of reserves and people’s tendency to wish for good luck were too common in the community. This negative sentiment has led the market to focus on external expansion rather than the intrinsic attributes of services that would naturally drive intrinsic growth and has resulted in a massive pool of short-term speculative products that exceeded the number of real, sustainable, good services. The number of rug pulls has increased as well, and the public resistance towards blockchain technology has also grown, but in adverse ways.

Putting all of these negative results behind us, Finschia aims to become high-quality service infrastructure that creates large growth rather than positioning itself as an investment tool. We highly believe that it is critical to provide continuous reward compensation as we support both the services and users as the service grows and sublates leverage investment. With all of these in the right position, more use-cases for Web3 and LINK’s value will grow to an unlimited extent. From this point of view, we’ve decided that procuring large reserves was unnecessary, but adopting a strategy of “zero reserves” is needed to move forward.

2. 80% Allocation for Staking and Payment

80% of the Finschia chain’s protocol-based inflation system is distributed by factors that lead to direct demands and service growth, such as LINK staking and payment rewards. The remaining 20% is distributed for the purpose of mainnet development and ecosystem vitalization as reserves.

When Finschia supports LINK payment, a reward system will drive the value of LINK while promoting the growth of the service at the same time. Finschia will not follow previous cases of using inflation for investment purposes and instead intends to allocate 80% of the inflation to create a foundation for service growth as well as an essential token economy contribution of retention and payment.

The detailed distribution plan of the Finschia inflation system is as follows.

A. Network Contribution Reward (Block Generation and Verification: 50%)

50% of total inflation will be allocated to validators and users who have staked LINK and participated in block generation and verification. General users can stake LINK on validators’ nodes and claim rewards by being entrusted. Up to 30 enterprises that can contribute to the ecosystem will be nominated as validators, and more strategies will be developed to expand the number of validators and the participating environment by advancing policies in the future.

B. Service Contribution Reward (LINK Payment and Use: 30%)

30% of total inflation will be used as a reward for acts that contribute to LN payments and transactions, mostly to service developers. Service developers will claim rewards within the service contribution reward pool in proportion to the amount of LINK payments generated. After claiming the rewards, the developers can pay the rewards back to the service users who made the payments to advance and improve the models that allow for more rewards to be claimed by the service developers as the amount of user return increases. This will promote active payment and growth within the service and lead users to further contribute to LINK demand as they will regard this reward system as an effective discount promotion for LINK payment.

C. Reserve (Boosting Development and the Ecosystem: 20%)

20% of the total inflation will be used for ecosystem vitalization and marketing purposes, including the R&D and infrastructure costs required for the operation of the ecosystem. Without a pre-minted amount of reserves, it will be used for various gross programs and global marketing within the LINK issuance limit.

3. Decreasing the Inflation Rate

The inflation rate of the Finschia network will be set within a range of 5% per year. A maximum of 15% per year will be initially set to activate LINK staking and payment and will be decreased each year for network stability. Once the inflation rate is determined on the network, LINK will be automatically issued at the time of each block creation and distributed to the network contribution reward (50%), service contribution reward (30%), and reserve pool (20%).

Finschia will implement LINK gas fees to ensure the stability of the open network and to promote LINK demand. The LINK gas fee will initially be set within about 2% of Ethereum, and the gas fee received will be added to the LINK issued by system inflation to be evenly distributed for three (3) different types of the Finschia inflation system. When the token economy stabilizes, we will advance the gas fee-based LINK value model with upcoming validators.

To aim for a more robust and competitive blockchain ecosystem and to initiate the Token Economy 2.0, the 3rd generation mainnet of LINE Blockchain — Finschia was launched, and the foundation establishment is also on the way. More details regarding the new governance system will be shared through a white paper that will be updated soon. In addition, we plan to deliver more news about the LINE Blockchain through official channels, including Discord (http://discord.gg/2WKdP9a8HP), so we hope you’ll stay up to date on what’s happening.

LINE Blockchain has done its best to achieve the vision of Designed for Everyone and build a firm foundation in many countries, and will continue to do so in the future. As a result, we were able to start building an NFT ecosystem in 2022 with over 90 partners: 30 globally and 60 in Japan. Our partnerships include SoftBank Corp., NAVER, NAVER WEBTOON, CJ ENM, and more. We also have gained more than 1 million wallet users (as of December 2022) in major LINE business countries or regions like Japan, the United States, Korea, and Southeast Asia. LINE has focused on laying the groundwork for blockchain popularization and has never capitalized on newly issued LINK or promoted LINK-based leverage businesses. We plan to continue this in the future, and thanks to your trust in the long 4-year journey of LINE Blockchain, the new Token Economy 2.0 will be revealed to overcome the failures, problems, and difficulties still being faced in the current blockchain market.

In 2023, with Token Economy 2.0, we plan to expand the global ecosystem and focus on the essence of blockchain service growth and the creation of token demand. We will keep doing our utmost to achieve the vision of blockchain popularization and become the global №1 Web3 service infrastructure.

Thank you for spending your time with us. In 2023, we look forward to having more opportunities to interact with everyone in the community. We hope for your continuous interest in and support for LINE Blockchain.

LINE Blockchain Team at LTP

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