$NGL Burn: Ensuring Tokenomics Stability

Learn about the recent $NGL burn.

$NGL Burn: Ensuring Tokenomics Stability

As leaders of this innovative technology, it is our responsibility to ensure the integrity and stability of our tokenomics. With this in mind, we want to take a moment to shed light on an important aspect of our protocol: the periodic burning of tokens.

As you may already know, the Entangle blockchain is built on the Cosmos Tendermint STK, utilizing its Proof-of-Stake (PoS) mechanism. This system is instrumental in securing our network and validating transactions, however, it also presents us with a unique challenge regarding token supply.

On Chain Governance

$NGL was designed with a supply cap of one billion tokens, however, due to the mechanics of Cosmos there is a rate of inflation of approximately 0.24%. This rate will vary depending on a number of factors such as the total amount of $NGL delegated. To address this discrepancy and maintain the integrity of our tokenomics, we have implemented periodic token burns. These burns involve the permanent removal of excess tokens from circulation, effectively reducing the total supply back to its intended cap of one billion. These burns will need to be approved through our on-chain governance process, requiring voting by active validators. A threshold of 33% is needed to pass the proposal and proceed with the burn.

Staking Reward Framework

As part of the initial distribution of $NGL, 21% of the supply was set aside for staking rewards. These rewards are primarily for those who run Agents in the Entangle Network, as well as those community members who choose to delegate to Agents, rather than Validators.On the other hand, Validator’s rewards, as well as the the yield for Entanglers who delegate to Validators, come from a combination of network fees, a portion of the Staking Reward Pool, and the token emissions.

These emissions are common to all blockchains built using the Cosmos SDK, and contribute to the network’s security by:

  1. Incentivizing Validators: By issuing new tokens as rewards to validators, they are incentivized to actively participate in securing the network and validating transactions. 
  2. Attracting New Validators: Token emissions serve to attract new validators to the network. As more validators join, the network becomes more decentralized and resistant to attacks. 
  3. Ensuring Economic Security: By gradually releasing new tokens into circulation, a healthy balance between supply and demand can be maintained, which in turn helps sustain the economic security of the network.

First $NGL Burn

We believe that transparency and community engagement are paramount in this process, aiming to keep you informed and involved every step of the way. As such, we are excited to share that our inaugural validator proposal and token burn has now been successfully completed. This marks an important milestone for Entangle as the mechanisms for on-chain governance are integral to Entangle having the flexibility and resilience to evolve as the industry scales, ensuring that governance is done in a decentralized manner which enhances the stability of the Entangle Blockchain by distributing decision-making authority across a diverse set of stakeholders.

With the Entangle Blockchain explorer you can view the burn transaction, which marks the next step in Entangle maturing into a fully fledged blockchain, here.

Through these burns we not only uphold the principles of decentralization and our tokenomics’ stability, but also demonstrate our commitment to the long-term success of Entangle.

Stay tuned for further details and updates regarding upcoming burn events. In the meantime, feel free to reach out to us in the Discord or Telegram with any questions or concerns you may have.