Qubic’s Revolutionary Tokenomics and Halvings

When Qubic introduced Project X’s new emission model, it marked a significant change for the ecosystem. By reducing the max supply, the model focuses on long-term sustainability. What makes it unique is its strategic burning mechanism, which will gradually remove a large portion of coins from circulation, increasing QUBIC’s scarcity. Combined with scheduled halvings and the Supply Watcher feature, this sets the network up for strong growth.

Note: All figures in this post are approximations. Due to the Supply Watcher’s ability to adjust burn rates based on real-time data, emission and burn amounts may fluctuate to maintain network stability and supply balance.

This post will discuss the immediate success of the new model, and explore how the combination of burns, emissions control, and supply reduction is already reshaping Qubic’s ecosystem. It will also look at what’s to come, as Qubic continues to execute its burn strategy and introduces a halving mechanism - both of which promise to benefit all stakeholders.

The 200 Trillion Max Supply Cap: A Strategic Reduction

The Qubic team implemented a significant reduction in the maximum supply of QUBIC, reducing it from 1,000 trillion to 200 trillion - an 80% cut. This is a strategic move designed to align the token supply with the network's long-term goals of scarcity and value preservation.

Currently, the circulating supply is approximately 120 trillion QUBIC, which means more than half of the new total supply is already in circulation. This carefully managed supply aims to balance the network's growth with sustainable tokenomics.

Impact on FDV: Previously, with a higher maximum supply, Qubic’s Fully Diluted Valuation (FDV) was roughly $1.7 billion. With the 80% reduction in the max supply, the FDV has decreased to approximately $340 million. This reduction could make Qubic more accessible and appealing to new investors by potentially improving its market positioning and growth potential.

Emissions and Burnings: A Balanced Approach

A key aspect of Qubic’s new emission model is the use of a controlled burn mechanism. The network continues to emit a set amount of QUBIC each week - 1 trillion - this is not reduced. Instead, a percentage of these weekly emissions are burned, permanently removing these coins from circulation.

For year 1, 15% of emissions are now burned each epoch. This burn process is the start of a powerful cycle of increasing, controlled scarcity, reducing the available supply. During epoch 124, one week after the launch of the new emission model, its first supply burn was executed successfully, with a total of nearly 149 billion QUBIC permanently removed from circulation. This not only demonstrates the practical application of the burn mechanism but also sets the stage for future burns that will further reduce the supply.

Note: The Supply Watcher may dynamically adjust burn rates to maintain network stability, so all emission and burn figures are flexible estimates rather than fixed values. 

Halvings: Controlled Supply Reduction

After the initial 15% total burn of emissions, to further manage supply, Qubic will introduce halvings every 52 epochs. Importantly, each halving will require approval by Quorum to ensure community consensus across all stakeholders.

While the total emissions again remain constant - 1 trillion per week - the proportion of QUBIC that is burned increases each year. This means that as time progresses, more QUBIC is permanently removed from circulation, reducing the effective supply.

In epoch 175, the commencement of the yearly halvings, the burn increases to approximately 28.75 trillion QUBIC, reducing the effective emissions to approximately 21.35 trillion. This process continues, effectively halving the net emissions and progressively reducing the supply, leading to greater scarcity.

Note: The Supply Watcher’s adjustments to burn rates ensure flexibility, so halving and emission figures are intended as approximations rather than guarantees.

The Supply Watcher: Ensuring Stability

A key innovation in Qubic’s new emission model is the "Supply Watcher". This feature plays a crucial role in ensuring that the network remains balanced and that the burning process does not lead to excessive deflation or instability within the ecosystem.

The Supply Watcher adjusts burn rates to prevent excessive deflation and supply instability. It dynamically modifies burn percentages based on real-time supply data, ensuring that QUBIC isn’t removed too rapidly from circulation. Because the Supply Watcher can alter burn amounts, all projected emissions and halving figures are approximations rather than guaranteed reductions. This ensures that the Qubic network maintains balance and flexibility, addressing potential miner concerns over fluctuating rewards by stabilising emission reductions according to network conditions.

Halvings Impact: A Strategic Roadmap

The impact of Qubic’s emission burns, pending Quorum-approved halvings, and the Supply Watcher becomes clearer as we look at the long-term roadmap:

• Epoch 123: Weekly effective emissions are reduced by approximately 15%.

• Epoch 175: With the first halving, effective emissions drop to 21.25 trillion QUBIC as 28.75 trillion are burned. The max supply at the end of the year will be approximately 175.7 trillion QUBIC.

• Up to Epoch 331: The halving process continues, with increasingly larger portions of emissions being burnt. By Epoch 331, the effective emission is just 2.656 trillion QUBIC, and the max supply reaches approximately 194.3 trillion QUBIC.

• Up to Epoch 591: The burn rate continues to rise, eventually surpassing the amount emitted annually, leading to a net decrease in the total supply. By Epoch 591, effective emissions are minimal, with the max supply stabilising at around 196.8 trillion QUBIC.

• Long-term Outlook: As emissions fall to near negligible levels, the burn rate dominates, and the Supply Watcher ensures stability. This process leads to a gradual decrease in total supply, reinforcing coin scarcity and long-term value.

Note: These projections are approximations. The Supply Watcher will adjust burn amounts as needed to align with network conditions, adding flexibility to all figures in this roadmap.

Weekly figures can be found in figure 1 and figure 2.

Figure 1: QUBIC Weekly Emissions Reductions Through Burn Mechanism (Year 1-10)

Figure 2: QUBIC Weekly Emissions Reductions Through Burn Mechanism

Final Thoughts

Qubic’s approach to tokenomics, focused on a capped max supply, strategic emission burns, scheduled halvings pending Quorum approval, and the Supply Watcher, aims to create a sustainable ecosystem. By reducing the total supply while carefully managing emissions, burns, and network stability, Qubic is focused on long-term growth.

Reminder: All emission and burn figures are flexible estimates, as the Supply Watcher dynamically adjusts rates to prevent instability. This flexibility provides resilience to the network, especially for miners and computors who depend on emission consistency.

What benefits do you anticipate from the significant amount of QUBIC being burned annually? How do you see Qubic’s burn and halving strategy impacting QUBIC long-term? Join the discussion and ask your questions in our Discord and Telegram.