The MultiversX Economic Evolution: A blueprint for growth and strategic expansion

I. Executive Overview

This paper outlines the evolution of the MultiversX economic model, transitioning from a capped-supply model to a tail-inflation model with a burn mechanism. This new design is engineered to ensure the network's long-term security, and stimulate vigorous network growth. The proposed changes target a set of concrete and instrumental outcomes: (a) attract new liquidity, (b) increase network usage, (c) generate material revenue at the protocol level, (d) create an economic model to drive reflexive value accrual and (e) forge a direct, unbreakable link between network utility and a perpetual demand for EGLD.

MultiversX is financially resilient, operating with a lean structure and a multi-year runway. Its technology ranks among the most advanced Layer-1 architectures in the industry. Yet even the strongest networks must evolve. This is such a moment, one that calls for collective focus and decisive coordination to unlock the next phase of growth.

What single, decisive action could set the entire economic engine in motion?

We propose a targeted, milestone-based mechanism to unlock new economic potential across the ecosystem for investors, users, validators, builders, and new entrants:

Target 1: Capital Inflow

1. Net new capital inflow: Attract >100 Million USD in net new capital inflow
2. Idle capital conversion: Attract >20% of idle exchange supply and convert it to active onchain stakers
3. Tighten liquid supply: Increase staked capital > 65% to strengthen network security and lower circulating supply
4. Strengthen participation: Increase monthly active delegates > 50,000
5. Boost onchain activity: Channel >30% of staked EGLD into productive yield strategies, compounding ecosystem growth through active participation.

Target 2: Revenue Growth

1. Revenue engine: Grow network revenue by 100x; begin with a target of $100k/day
2. Entrepreneur growth: Grow number of entrepreneurs to >1,000
3. App growth: Grow number of apps to >1,000
4. Activity and engagement growth: Grow number of monthly active users to 1m

Target 3: Competitiveness and Reflexive investments

1. Maintain frontier protocol capabilities in terms of speed, bandwidth, revenue
2. Create virtuous economic cycle via buybacks, strategic investments, and real-world asset strategies

Solution mechanisms:

1. Introduce a general annual emission rate, which provides a robust budget for (I) competitive staking rewards and network security, (II) active yield incentives, (III) ecosystem and network revenue growth, and (IV) competitive protocol development.
2. Couple this with novel fee market structure which directs 90% of base transaction fees to builders, burns the remaining 10%, and opens a priority fee market for validators, meant to drive 10x in revenue and usage.
3. Leverage the above with a community-driven growth fund that ensures the long-term alignment of incentives and desired outcomes for builders, users, and investors of the network.

By refining incentives, reallocating resources with precision, and introducing mechanisms that capture and reinvest value, the framework is designed to accelerate liquidity, expand usage, and increase protocol revenue. These outcomes, taken together, establish a durable path for EGLD value accrual and long-term ecosystem alignment.

This is a deliberate evolution: proactive, competitive, and aimed at ensuring MultiversX can scale into new markets and harness new growth for years to come.

II. The Economic Evolution: From Passive to Productive Scarcity

A. From Scarcity to Growth

Core Principles

The foundational economic model of MultiversX was predicated on a capped maximum supply, a design that effectively established initial scarcity and a clear value proposition. However, for a Layer 1 protocol to achieve true longevity, its economic architecture must guarantee a perpetual security budget. A finite issuance schedule eventually forces a network to rely solely on transaction fees to incentivize validators, a revenue stream that can be volatile and potentially insufficient to secure a global-scale infrastructure.3

The new economic framework is built upon two foundational and complementary principles designed to create a robust, self-reinforcing system:

1. Robust Perpetual Security: At the core of any L1 protocol is the non-negotiable requirement for unwavering security. The new model commits to a permanent, reliable, and predictable security budget funded by a low, constant rate of tail inflation with a burn mechanism.
2. Productive Value Accrual: The second principle mandates a transition from value derived from passive scarcity to value created through active, usage-driven economic productivity. It establishes that all economic value generated by the network's core functions and protocol-owned applications must be programmatically and transparently channeled back to the native asset, EGLD. This is achieved through a systematic buyback mechanism, creating a direct, quantifiable link between the protocol's utility and the value of its token. As the MultiversX economy grows, this mechanism ensures that EGLD holders are the primary beneficiaries, transforming every new application and transaction into a source of structural, programmatic buy-pressure for the native asset.

The Economic Flywheel Concept

These core principles combine to create a dynamic system best described as the Economic Flywheel. This flywheel conceptualizes the MultiversX economy as a perpetual motion engine, where each component reinforces the others, leading to compounding growth and value creation. The flywheel operates in four distinct, interconnected stages:

1. Secure the Base: The process begins with the foundational layer of long-term economic security. The tail inflation model is designed to provide a constant and reliable incentive for validators, ensuring the network remains robust, decentralized, and trustworthy. This is the bedrock upon which all other economic activity is built.
2. Incentivize Growth: With a secure foundation, the protocol aligns the incentives of users and investors to stimulate ecosystem development through an economic partnership with builders. A 90% builder revenue share provides a powerful, direct financial incentive for the creation of high-value, revenue-generating applications. This attracts top-tier talent and capital, fostering a rich and diverse application layer where EGLD is the indispensable unit of account and primary collateral.
3. Capture Value: The proliferation of valuable applications and services drives onchain activity, generating a steady stream of protocol revenue. This revenue is captured from a wide range of sources, including transaction fees, token issuance fees, and earnings from protocol-owned liquidity and applications.
4. Reinforce the Core: This captured revenue is then programmatically converted into EGLD through open-market, buybacks and direct conversion into liquid staked EGLD via transparent, time-weighted, non discretionary open smart contracts..

This flywheel model transforms MultiversX into a self-funding, self-sustaining, and self-reinforcing economic system, designed to thrive and grow in perpetuity.

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B. New Emissions Model: Engine for Security and Growth

To ensure the network's long-term security and incentive alignment, MultiversX will adopt a tail inflation model with a burn mechanism.

1. Inflation Rate and Burn Mechanism

The protocol will implement a decaying inflation with an increasing burn mechanism. This solution provides a predictable and sustainable budget for critical network functions as well as a new mechanism to attract new liquidity and incentivize long-term capital alignment and growth. This decision is data-driven. Over four years of network operations show a direct correlation between token emissions and measurable ecosystem growth. Conceptually, this model mirrors the successful economic strategies of the 20th and 21st centuries, where growth was catalyzed by directing capital inflows and expansionary policy toward innovation and productive enterprise.

The framework presents an opportunity to enhance sustainability through demand-driven emissions, this introduces a refined emission model starting at a *8.757% maximum theoretic inflation for the first year, adaptively decaying toward a *2-5% floor based on verifiable KPIs including aggregated DeFi activity (TVL and volumes), a 65-70% staking ratio for security, revenue proxied by onchain burns, with moderated weighting to account for volatility. It employs a phased formula that slows decay above 5% during high-growth phases and enables bidirectional adjustments when inflation is under 5%, in order to curve emission according to growth.

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*****The theoretical maximum can never be reached, as every transaction will burn from the supply, furthermore 40% of the emission is locked in case there is no measurable growth.

KPI Selection and Aggregation for Demand-Driven Adjustments (technical expression)

To make inflation responsive, four KPIs are selected: DeFi activity (aggregated TVL and volumes), staking ratio, protocol revenue via burns. These metrics are onchain verifiable, with quarterly evaluations using 3-month rolling averages to smooth volatility.

• Staking Ratio: Targets 65-70; current ~49-50% (14.2-14.3M EGLD staked, avg APR 6.5%). Score: (Ratio - 50%) / 20%, clamped 0-1.
• Protocol Revenue via Burns: Burns (10% of base fees) proxy revenue, reflecting transaction-driven deflation. Target >10% QoQ growth; pre-implementation data from Q3 2024 shows stable fees. Score: Growth / 10%, normalized.
• DeFi Activity: Aggregates TVL (locked capital) and volumes (circulation) to capture ecosystem depth and velocity. Formula: DeFi_G = 0.6 × (TVL_growth / 10%) + 0.4 × (Volumes_growth / 15%), clamped 0-1. As of October 2025, TVL is 80.32M,with 24h volumes 628K and 7d volumes 4.48M. Base case target 250M TVL, 10M 24h volumes.

Composite G (growth) = 0.3 × DeFi_G + 0.3 × Staking_G + 0.4 × Revenue_G. This weighting prioritizes ecosystem metrics over market signals, aligning with tokenomics best practices where revenue and activity drive sustainability.

Inflation Adjustment Formula

The model employs a phased decay model, ensuring slow decay in high-growth phases and faster in low, with bidirectional flexibility at lower levels:

• High-Rate Phase (Inflation > 5%):
  • Inflation{t+1} = max(5%, Inflation_t - 0.25% × (0.5 + 0.5 × (1 - Growth))).
  • Decay ranges from 0.125% (G=1) to 0.25% (G=0).
• Low-Rate Phase (2% ≤ Inflation ≤ 5%):
  • Inflation{t+1} = Inflation_t+ 0.5 × (2% + 3% × G - Inflation_t).
  • Targets 5% (high G) or 2% (low G), with 0.5 adjustment rate for smoothing.

This design promotes reflexivity: high Growth sustains emissions for incentives, low Growth enhances scarcity via decay and burns. Adaptive burns can increase to 50%, when no growth, further countering emission rates.

Simulation Projections and Comparative Analysis

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Table using the formulas to make a set of simulations on the numbers: MVX Emission Simulator INTERACTIVE

*All inflation numbers are maximum theoretical values, actual inflation (how many new tokens enter the chain) is less as the accelerator fund part can be released only if well defined KPIs are met and the burn mechanism of the transaction fees starts.

2. Emissions Distribution Model

The EGLD generated from annual emissions will be programmatically allocated across four key areas to create a balanced and productive economic loop:

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APR Calculations of the new model and comparison with the old model: APR Calculation

APR figures are indicative only and may vary based on network participation, governance votes, and market conditions. They do not represent a guaranteed or fixed return.

This distribution model ensures that new issuance is actively channeled to secure the network, incentivize productive network usage, and fund future growth.

Evaluation, rebalancing, governance

Every year, the distribution model, along with its KPIs and targets will undergo a governance vote to adjust distribution for the next year based on the newest available data. Through this process, allocation buckets can be changed or removed, new allocation buckets can be added, and allocation percentages can be changed based on agreed-upon targets. A full governance vote will take place each year, with an annual report for the existing system publicly shared, recorded onchain, audited, and verified.

C. The Value Accrual Flywheel: Fee market and reinvestments

The new economic model introduces a sophisticated, dual-pronged approach to value accrual that combines a deflationary fee-burning mechanism with a revenue reinvestment strategy.

1. Updated Fee Market and Burn Mechanism

MultiversX will implement a fee market structure inspired by proven models like that of Ethereum's EIP-1559, which divides transaction fees into two components: a base fee and a priority fee.7

• The base fee is a protocol-set minimum fee. It is split as follows:
  • 90% to Builders: This portion is directed to the smart contract authors, creating a direct revenue stream for developers. This establishes one of the most competitive builder incentives in the industry.
    • When one transaction calls multiple smart contracts, the VM calculates the gasUsed exactly by each of the contracts, and the fees are directed towards each of them according to the gasUsed.
  • 10% is Burned: This portion is permanently removed from circulation, introducing consistent deflationary pressure that is directly proportional to network activity.
  • Every year, the base fee structure changes, builders get 5% less, 5% more is burned. This is done for 8 consecutive years, resulting in a split of 50% to builders, 50% to burn.
  • The split of the fees will be additionally re-evaluated every year via a governance vote. Audits and reports will be created for each item to determine whether KPIs were reached or not.
  • The base fee from transactions which do not call smart contracts (asset transfers, data transfers, recording data) will be burned completely.
  • The fees for the failed transactions are completely burned, both base fee and priority fee.
• Priority Fee: An optional fee paid by users to incentivize faster transaction inclusion. This entire fee is paid directly to the validators (10% to the leader, rest to the consensus members), rewarding them for their role in processing transactions and creating a competitive market for blockspace that directly reflects the real-time economic demand for the network's processing power. This clearly targets more revenue for validators and more opportunities for validators to build more. With growing revenue, the validators can choose to lower the fees on the staking provider side, creating benefits for the users, to share the fees with users, or to deploy those into DeFi.
  • The shard split algorithm takes into consideration multiple parameters. Available block space, used block space, pending validators in the auction list. This indirectly means that creating new shards happen only when that makes sense economically for all the actors in the network and when there is demand for bigger blockspace. Thanks to sharding, priority fees remain low, allowing users to enjoy dApps at minimal cost.

The scope of this structure thus creates a powerful dual-engine for value: builders are incentivized to create utility that drives transaction volume, and every single one of those transactions permanently increases the scarcity and baseline demand for EGLD. Allocating 90% of fees to builders unlocks new types of applications and user experiences, encouraging them to cover transaction costs for their users through relayers. This share is meant to enable the creation of high frequency apps, activities, and bots, as the chain’s architecture provides sufficient block space. When blocks are full, validators can capture additional rewards from the priority fees.

*The capacity of the blockchain after the SuperNova upgrade is 1 Billion Gas per second. Filling up one shard with smart contract transactions in one day costs 864 EGLD, which would yield 86.4EGLD in burns per shard, thus the cost is high enough for deter attacks. In year 8, it would be 432 EGLD burned per day per shard.

2. Protocol Revenue Reinvestment Strategy

All revenue generated by the protocol is used to programmatically acquire and stake more EGLD. This creates a sovereign economic engine that perpetually strengthens the network's security and capital base.

This mechanism functions as a self-reinforcing loop:

1. Revenue Capture: The protocol treasury captures revenue from various sources (e.g., fees from protocol-owned applications, a portion of ESDT issuance fees).
2. Acquire and Stake: Non-EGLD captured revenue (e.g., in USDC) is used to buy EGLD on the open market, via transparent, time-weighted, non-discretionary contracts with published parameters, which also prohibit interventions. This EGLD is then staked.
3. Liquid Staking: To maximize capital efficiency, the staked EGLD is converted into a Liquid Staking Derivative (LSD) token. This LSD represents staked EGLD, accrues staking rewards, and can be used in low-risk yield strategies to increase returns. It effectively transforms the protocol's own treasury into its largest and most active DeFi participant, creating a perpetual, sovereign demand engine that constantly works to strengthen the EGLD market

D. Catalysts for Growth: The Accelerator

The emissions distribution model establishes powerful, community-governed funds to accelerate ecosystem growth and the protocol development fund. The funds go into open sourced, labeled DAO smart contracts and the tokens are released based on the well defined KPIs and exact formulas programmatically and only when the DAO members sign that the KPIs are met.

Decisions concerning the allocation of strategic emissions are inherently objective and tied to measurable network growth. The structure of the DAO, including the DAO member election and process definition, will be voted via full governance by all EGLD stakeholders. To ensure impact-driven allocation, the tokens designated for the Accelerator funds (Ecosystem Growth and Growth Dividend) are programmatically locked if there is no measurable growth. Emissions are released only when builders/DeFi strategies demonstrate impact by achieving predefined, onchain verifiable Key Performance Indicators (KPIs) related to metrics like active users, transaction volume, and TVL.

1. Ecosystem Growth Fund

This fund is dedicated to nurturing the developer ecosystem. A DAO, governed by EGLD stakeholders and operating under the oversight of MultiversX Foundation, will oversee the distribution of these funds through a structured grants program. Funding decisions will be tied to clear, measurable Key Performance Indicators (KPIs) to ensure accountability and impact-driven allocation. The underlying philosophy is simple: protocol emissions must be used to fund the creation of applications that, in turn, create sustainable, long-term demand for EGLD.

Example KPIs for grant recipients could include:

• User Adoption: Monthly active users, new wallet creation.
• Onchain Activity: Transaction volume, smart contract interactions.
• Economic Impact: Total Value Locked (TVL), protocol revenue generated.
• Community Growth: Social media engagement, developer onboarding.

The underlying goal is to fund applications that create sustained demand for EGLD. To ensure emissions are utilized productively, several guardrails are added. Milestone based grants and Lock mechanism.

Milestone based grants as used in growth games is a proven method where builders and the protocol are aligned and strict timelines and KPIs are proposed, signed and verified at each milestone. If a milestone is not reached, further grants for the project are locked until the milestone is achieved or the funds are reallocated to other builders.

Lock Mechanism for unused tokens is triggered by failure to meet predefined KPIs, thereby tying allocations to verifiable network growth. Oversight by the MultiversX Foundation and EGLD stakeholders via DAO ensures transparency and accountability:

• Trigger Conditions: If no qualified grant applications are received in a quarter, or if recipients fail to achieve at least 80% of targeted KPIs (e.g., <10% QoQ growth in TVL or transaction volume), the unused tokens are locked for future usage.
• Lock Calculation: Unused tokens = Allocated emissions - Distributed grants. Lock 100% of unused tokens at quarter-end, prorated if partial KPIs are met (e.g., 50% lock for 50% KPI achievement).
• Process: DAO reviews applications and performance reports; locks executed via smart contract. If demand exceeds supply, locked tokens roll over to the next quarter.

This ensures emissions are released only when builders demonstrate impact, preventing wasteful allocation and promoting high-quality projects.

2. Growth Dividend Fund

The Growth Dividend represents a new mechanism to reward network users for their participation in the network economy. For this, the MultiversX economic model distinguishes between two fundamental activities: Simple Staking and Active Yield Strategies.

• Simple Staking is the foundational layer of network security. It is a passive activity where users delegate their EGLD to validators, contributing to the consensus mechanism and earning a baseline reward for their participation. This is essential for the network's stability and integrity.
• Active Yield Strategies, in contrast, represent a dynamic and high-yield paradigm for onchain participation. This framework is designed to transform the capital securing the network into a powerful engine for economic growth - a departure from legacy models where staked capital remains economically inert. It achieves this by channeling a portion of the emissions (20%) to incentivize users who deploy their staked assets in DeFi strategies. These strategies are explicitly designed to increase EGLD's utility, onchain velocity, and direct market demand. Users deploying their capital to participate in such productive activities will be rewarded directly via a Growth Dividend. Any user will be able to participate in the active yield strategies, via one-click solutions, from low to high risk DeFi activities, open source, permissionless, trustless.

Like the Ecosystem Growth Fund, this Growth Dividend Fund is managed and overseen by a DAO governed by EGLD stakeholders. To participate, no specialized knowledge is required on the user end. By simplifying access to yield, the Growth Dividend Fund aims to convert the network's entire staked supply into a potential source of active liquidity, creating an immense and readily deployable capital base that programmatically drives demand for EGLD within DeFi.

The underlying goal is to fund applications that create sustained demand for EGLD. To ensure emissions are utilized productively, several guardrails are added. The bucket incentivizes deploying staked EGLD into DeFi to boost utility, velocity, and demand, accessible via one-click, permissionless solutions, which drives back direct revenue to EGLD. One-click solution to migrate from staked EGLD to active strategies will be developed as well.

Safeguarding the Ecosystem: Open source, audits, security

To ensure that the rewards program supports only high-quality, secure protocols, a clear set of criteria must be met for any LST, DEX, Lending or other DeFi protocols to qualify for the boost. This directly addresses the need to ensure LSTs are in good hands.

Basic Criteria for Participating Protocols:

• Fully Open-Source: All code must be publicly available for review.
• Professionally Audited: Must have undergone and passed rigorous security audits from reputable firms.
• Secure Upgradability: All contract upgrades and privileged owner calls must be controlled by a Multi-Signature (MultiSig) wallet, preventing unilateral control by a single entity.
• Clear alignment of economics: auto flywheel mechanics of preserving revenue in a decentralized and transparent way, funds to stay on chain, to have a treasury contract, extractive mechanics can be penalized by the DAO and suspend distribution

These criteria establish a high standard of security and decentralization, protecting users and the network.

The Core Principle: Boosting New Liquidity, Not Staking

Staked EGLD or LSTs act as a prerequisite—a key to unlock rewards on a separate, vital contribution. The boost is a reward calculated on the new, external capital (like USDC or wBTC) that a user brings into the DeFi ecosystem or how he uses other capitals in DeFi and how many DeFi activities he does.

• Analogy: Think of your staked EGLD/LST as your membership card to an exclusive club. The card itself has its standard benefits (base staking rewards). The "boosted rewards," however, are earned only when you use that membership to bring a valuable guest (your USDC/wBTC liquidity) to the party.

Example: If you have 1,000 EGLD staked and separately supply $10,000 USDC to an approved lending pool, you will receive boosted rewards calculated on the amount of EGLD equivalent to that $10,000. The boost is for the USDC, which is a critical component for a thriving DeFi ecosystem. The one-click strategies can be made in such a way that one person brings the staked EGLD, the other person brings the external capital and the boost if split between the two, as an example.

Lock Mechanism for unused tokens is triggered by failure to meet predefined KPIs, thereby tying allocations to verifiable network growth. Oversight by the MultiversX Foundation and EGLD stakeholders via DAO ensures transparency and accountability:

• Trigger Conditions: Lock activates if DeFi strategies fail to maintain stables and BTC in active positions at least equal to the value of Liquid Staked EGLD (e.g., stables/BTC TVL ≥ Liquid Staked EGLD value), or if Liquid Staked EGLD does not grow QoQ (e.g., <5% increase).
• Lock Calculation: Unused tokens = Allocated emissions - Distributed dividends. Lock 50-100% based on shortfall severity (e.g., 50% for partial mismatch, 100% for no growth or severe imbalance), assessed at quarter-end.
• Process: DAO monitors on-chain metrics (e.g., TVL in stables/BTC pools vs. Liquid Staked EGLD); locks via automated smart contract. Eligible users claim dividends proportionally to their DeFi contributions.

This ties rewards to ecosystem liquidity, converting staked capital into active economic drivers while locking idle emissions to maintain scarcity.

Overview of exemplary Active Yield Strategies: A Catalogue of Active Yield Strategies

3.Protocol Sustainability

This fund is dedicated to core operations and fundamental advancements of the MultiversX protocol. The primary goal of this bucket is to ensure protocol competitiveness by funding a world-class engineering team and a research and development department. This crucial investment aims to place the network at the frontier of innovation. The funds already go into the labeled multiSignature contract, this part remains as it was from the genesis, and it will receive transparency reports on how it is used. The technical development roadmap for the next releases after Supernova will be shared and followed and re-evaluated every quarter.

The Foundation systematically ensures proper management and accountability through concrete reporting mechanisms and community involvement. Specifically, it:

• Establishes guardrails in collaboration with stakeholders: category caps, SLOs/SLA targets, audit cadence, and lock/rollback conditions.
• Submits plans for community review: presents its quarterly/annual Sustainability plan to the community for feedback, assessing it against the approved guardrails and KPIs to ensure alignment.
• Monitors delivery with constant oversight: tracks execution (roadmap, audits, incident response, infra SLOs), publishes detailed dashboards and quarterly reports for transparency, and recommends locks/reallocations for stakeholder vote if thresholds aren’t met.

E. Expected Outcomes and Scenarios

The redesigned MultiversX economic framework is engineered to meet the ambitious targets set for the protocol. By shifting from a scarcity-based model to one of growth-driven productivity, the compounding effects of the incentivized economic activity unlocks a sustainable engine capable of scaling inflows, revenues, and growth.

1. Capital Inflow
   • The combination of competitive staking yields (9–12% APR), the additional Growth Dividend for active participants, and DAO-driven incentives for liquidity provision creates a superior return profile compared to both passive exchange holding and competing Layer1s.
   • This advantage is designed to convert idle capital into active staked EGLD, reducing liquid supply while strengthening security. With around 50% of supply already staked, incremental improvements to yield and ease of participation are sufficient to reach 65–70% staking ratios.
   • The programmatic incentives for user-friendly yield strategies make scaling to >50,000 monthly delegates and >30% productive staked capital a realistic outcome.
2. Revenue Growth
   • Redirecting 90% of base fees to builders creates one of the most competitive revenue engines in the industry, while the 10% burn ensures that economic activity translates into EGLD scarcity.
   • Protocol-owned revenue, reinvested via liquid staking, generates compounding effects: revenue funds more EGLD, which funds more security and liquidity, which in turn drives usage.
   • Under conservative growth assumptions, network revenues can expand from current levels to $5,000–7,000/day in a base case, with $100k/day achievable in a high-activity scenario. These levels of revenue are sufficient to sustain both core operations and reflexive investments, while incentivizing developers and entrepreneurs to deploy their apps and build businesses on a network that offers not just best-in-class technology but compelling growth opportunities.
3. Competitiveness
   • The emission model guarantees validator incentives, protecting frontier performance in speed, bandwidth, and reliability.

F. Implementation Schedule (tentative)

Phase 1: Governance (October 2025)

This phase is dedicated to community review, feedback, and formal approval of the new governance framework.

• October 3: First Draft of the governance proposal is presented.
• October 3 - 19: Open Forum Sessions & Debates for live revisions and integration of community feedback.
• October 20 - 31:
  • The Grand Assembly convenes all stakeholders and community members.
  • The Final Governance Proposal is published.
  • The official Governance Vote takes place.
  Phase 2: Technical Development & Initial Rollout (Q4 2025)

In case the governance vote passes, the focus will shift to technical specification and the deployment of foundational updates, otherwise phase 2 is not started.

• October 30: Publication of the Technical Implementation Paper for Staking V5 + Accelerator.
• Mid-November (Tentative): Launch of Staking V5.
  • This update introduces a new emission model, updated distribution mechanics, and MultiSig smart contracts for DAOs (ecosystem growth, growth dividend, protocol sustainability).
  • Practical token distribution rate is 4.3782%, as the accelerator will accumulate locked tokens until Supernova is activated and until the first KPIs are reached by the Ecosystem Growth and Growth Dividend funds.
• November 15: Publication of the Technical Implementation Paper for the Updated Fee Model, Coded KPIs.
• DAO member election and DAO process definition in November, voted via full governance by all stakeholders.

• A New Genesis: SUPERNOVA, tentative December 2025

• Phase 3: Core Protocol Upgrades & Future Roadmap (Q1 2026)

The final phase will see the implementation of the new economic models and the unveiling of the project's long-term vision. This phase will happen only after Supernova and only if the governance vote has passed.

• January 15, 2026: Implementation of the new Fee Model and coded KPIs for the emission model. Full setup of DAOs, public measuring tools and dashboards for growth.
• January 15, 2026 (Tentative): Release of the New Project Roadmap.

G. Section Summary

This new economic framework marks a strategic maturation of the MultiversX protocol. By implementing an emission model with a burn mechanism, it guarantees the network's long-term security and provides a sustainable budget for demand-driven economics focused on growth. The introduction of a priority fee market with a burn component creates a direct link between network usage and deflationary pressure.

Complemented by DAO-governed funds for ecosystem development and a disciplined mechanism for strategic capital formation, this framework establishes a robust, self-reinforcing economic flywheel. It is an economy designed to perpetually grow, adapt, and compound value for all its participants, where every measure of success—from a single transaction to a billion-dollar TVL—is ultimately and inevitably reflected in the intrinsic demand and value of EGLD.

III. Strategic Capital Formation: Reflexive Strategic Investments

A. Strategic Rationale

The Reflexive Strategic Investment (RSI) is a new financial primitive that enables a more deliberate and systematic way of engineering and jump-starting new growth phases for the network. This primitive introduces a structured and community-aligned way for the protocol to deploy strategic capital into external or adjacent initiatives that can generate immediate, significant and reflexive benefits for EGLD and the broader ecosystem. By design, RSI complements the existing economic model, functioning as an governance-gated growth switch that can be activated through stakeholder approval.

Its purpose is to strengthen the network’s position, accelerate its expansion, and increase stakeholder value through targeted strategic moves. The proposed activations focus on three key initiatives: the Digital Asset Treasury Deal (DAT), the Exchange-Traded Fund (ETF) framework, and the MultiversX U.S. Labs. Together, they aim to position EGLD as a leading asset in the most important strategic market, the United States of America, expand institutional and retail access, and establish partnerships that drive sustained adoption and value creation.

Beyond the changes to the core economic model, RSI establishes a new mechanism for strategic capital formation. This community-aligned value creation framework enables the protocol to deploy capital following clear governance approval and detailed community review. Each activation represents a deliberate strategic decision rather than a recurring process, ensuring that any newly created EGLD enters the ecosystem as productive, staked, and locked assets rather than liquid supply.

RSI is not a recurring budget but a rare high-leverage instrument reserved for extraordinary opportunities. It equips the network with the capacity to pursue transformative initiatives such as securing a DAT deal or establishing an ETF without affecting regular operations or the perpetual incentive system. In this way, RSI complements the emissions model: one sustains continuous growth, while the other enables strategic action when high-impact opportunities arise, amplifying long-term value for EGLD and its stakeholders.

B. Activation Framework

Clarification Note: Only the present section is subject to the activation protocol described below. The preceding economic model section (Section II) is treated as a distinct governance component, not included in this dual-stage process.

The reflexive strategic investment primitive is a novel mechanism designed to capitalize on market opportunities and accelerate strategic outcomes. Its implementation is governed by a structured framework grounded in core principles and rigorous safeguards.

Core Principles

• Context: All relevant information will be made available to stakeholders and ecosystem participants to ensure informed decision-making.
• Transparency: The entire process will be conducted with a high degree of transparency to maintain alignment among all involved parties.
• Protection: Robust measures will be implemented to safeguard the community and ecosystem assets before, during, and after the activation of this primitive.
• Intentionality: Based on the established principles, actions will be executed with a clear and unified purpose to seize time-sensitive opportunities.

Activation Protocol

The activation steps for the Reflexive Strategic Investment are as follows:

• Activation Step 1: Double opt in governance, a dual mechanism for alignment and commitment
  • a) Preparatory Build-Up Phase: First, comprehensive context shall be presented to all key community members and stakeholders clearly outlining the objectives, mechanisms, and intended outcomes. Approval shall be sought through open and transparent governance to authorize: (a) the RSI framework, (b) its scope and strategic direction, and (c) a mandate to advance the preparatory efforts necessary for developing the prospective deal structures within the reflexive investment bucket. This stage shall henceforth be referred to as the Preparatory Build-Up Phase, and will focus exclusively on essential ‘preparatory’ matters such as identifying strategic deal partners, defining deal terms, establishing legal structures, and outlining the technical processes. Importantly, this phase shall exclude any token minting or activation, which will be addressed separately in a distinct decision phase.
  • b) Decision Phase: Second, following the approval of the initial governance proposal and the establishment of a tentative deal structure with soft commitments, a dedicated brief shall be issued for each specific instrument, such as the DAT, ETF, or U.S. Labs LLC. The brief will provide contextual and technical information, detailing the proposed mechanics, objectives, and implications, and will serve as the foundation for a new, explicit governance decision by the community and key stakeholders. After this information has been transparently disclosed and approved through a second governance vote, the process advances to the Execution Phase.
  • c) Execution Phase: Third, once both the first governance vote and the second governance decision have passed, the full execution process will begin in accordance to the activation steps provided.
• Activation Step 2: Transparency and use of funds
  • a) All funds created via this primitive are subject to a 3-year lockup and may be used only for their designated purpose, as stated in this proposal: (i) DAT funds, (ii) ETF funds, (iii) US Labs LLC funds.
  • b) Before any funds are seeded into the three entities, an overview of the mandate, objectives, and tentative timelines will be provided to the community, in accordance with the guidelines mentioned under Activation Step 1).
  • c) For each of the three designated use cases, a quarterly transparency report will be published, providing context on the use of funds in line with the mandate.
• Activation Step 3: Security and protection
  • a) Subject to legal and public-markets compliance, a transparent overview of locked funds and their addresses will be publicly available and updated quarterly.
  • b) Funds will be held in segregated multi-signature wallets, following the highest standard of industry security practices to ensure robust protection and compliance.
  • c) Any material decision or policy change with respect to the funds shall be subject to a separate governance proposal if it is beyond the scope of the initial mandate. If a decision is within the initial mandate, it will be communicated with 1–2 weeks’ prior notice.
• Activation Step 4: Swiftness and intentionality
  • a) Once an instrument’s agreements are reached and committed, a public notice will be shared with the community, confirming the agreement, and proceeding to the second community governance vote. Once this has successfully concluded, a notice shall be presented, on the scheduled movement of funds, and immediate objectives, and next steps for each particular track and mandate.
  • b) Once the first governance vote has successfully passed, all necessary preparatory work will be carried out in parallel to bring each track to an executable state (documentation, compliance, custody, routing). Upon successful conclusion of the second governance vote, the implementation of this governance proposal with the execution of the seed investments shall be executed and the program shall move at full speed.

With these concrete and proactive activation points in place, the system provides a grounded mechanism for lockstep progress and community alignment.

C. Reflexive Strategic Investment Instruments

This mechanism provides a disciplined yet instrumental tool to finance targeted, transformative, momentum-building initiatives that can significantly accelerate external demand, global adoption and market presence for the network.

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• Funds for the strategic investments will only be made available after the entity receiving the allocation has been thoroughly vetted and a contract with all the necessary partners has been reviewed, approved, and signed. The minting event will happen only after the public signing of the legally binding contractual agreements.
• The locked EGLD entered into DAT and ETF are not eligible for governance voting. All the locked tokens are clearly labeled, managed in multisignature smart contracts, and cannot be moved. This is ensured programmatically.
• Part of the locked EGLD can enter into staking, but will receive only locked EGLD. The locked EGLD is only eligible for the 50% of simple staking emission and cannot participate in the other emission rewards lowering the emission rate. If DAT and ETF obtain regulatory approval to use their locked tokens in staking, the locked tokens will receive locked rewards only. The investors from the funding round (point 2) will receive their locked token and they decide whether to use it in staking or not. As these locked tokens are from labeled multiSig contracts, all of the rewards can be easily tracked.

The Reflexive Strategic Investment (RSI) mechanism is designed to convert strategic opportunities into long-term advantages. Each activation is initiated and approved through governance and executed only once a clear mandate and structure have been established. This ensures capital deployment occurs transparently, purposefully, and in full alignment with stakeholder consensus.

Unlike traditional fundraising or uncontrolled token emissions, RSI follows a strict governance framework with locked issuance and targeted deployment into transformative projects. This creates alignment across stakeholders and guards against dilution fears. Every minted token is locked for three years, eliminating sell pressure while signaling a long-term commitment to ecosystem growth.

The three strategic activations proposed under the RSI framework are deliberately focused on initiatives that can redefine market perception and expand EGLD’s reach into mainstream finance:

• Digital Asset Treasury (DAT): A large-scale, demand-side deal that creates sustainable buy-side pressure and a permanent treasury structure for EGLD.
  • Executed via negotiated block purchases, structured forwards, or special purpose vehicles (SPVs).
  • Integrated with institutional-grade custody, compliance, and liquidity frameworks.
  • Can include staking, lockups, or yield components, turning static exposure into productive capital.
• Institutional ETF Partnership: An opportunity to integrate EGLD into institutional capital flows, enhancing both liquidity and credibility at a global scale.
  • Pursued through strategic alliances with leading global asset managers and ETF issuers.
  • Involves the creation and listing of a physically-backed (spot) product on major, regulated stock exchanges.
  • Built upon a robust framework of regulated custodians, market makers, and auditors to meet stringent exchange and regulatory requirements.
  • Bridges the gap between decentralized finance and traditional capital markets, making EGLD accessible via standard brokerage and retirement accounts
• MvX Labs US LLC: A raise and capital injection from big US investors, market visibility, marketing, entering new markets. Enabling a list of integrations: the premier institutional custodian in the US, enable global leader in cross-chain bridging and liquidity flow, and the world’s foremost stablecoin issuer as a starting point.

RSI maximizes impact per unit of minted supply. It ensures that newly created EGLD serves as productive capital instead of idle overhead. Each RSI activation reflects a collective decision by EGLD stakeholders to pursue initiatives that strengthen the network’s position and long-term economic resilience.

D. Expected Outcomes

The Reflexive Strategic Investment mechanism ties new issuance to a clear governance protocol, ensuring that capital formation only occurs when external demand is validated and community alignment is ensured. This transforms periods of strong sentiment into long-term structural advantages (e.g., Digital Asset Treasury deals, ETF integration).

By design, these reflexive levers amplify adoption and create a feedback loop of rising price, increased capital formation, and expanded ecosystem growth.

E. RSI Governance & Implementation Phases

Phase A — Framework Approval (this proposal): Publish the RSI Framework brief for stakeholder review and a governance vote authorizing the framework, scope, and preparatory work. No minting of locked tokens or activation at this stage.

Phase B — Governance Briefing & Proposal: Identify or activate prospective partners and structures for DAT, ETF, and MultiversX U.S. Labs. Publish a dedicated brief per activation with proposed mechanics, custody, compliance, lock rules, budgets, and reporting.

Phase C — Activation Governance Vote: Hold a separate governance vote for each activation based on its brief. Approval authorizes minting locked tokens and deployment only within the voted mandate.

Phase D — Execution & Deployments: New release on mainnet executes seed deployments into segregated multisig addresses as per the approved mandate on the activation epoch. All issued EGLD is locked for 3 years (DAT, ETF) or as specified (U.S. Labs) and can be staked as locked EGLD per stated rules.

Phase E — Transparency & Reviews (Quarterly): Publish addresses, balances, progress vs. mandate, and any proposed mandate adjustments for governance review.

F. Section Summary

This section proposes:

• A new strategic investment primitive (RSI): a governance-gated growth switch mechanism that enables the protocol to deploy strategic capital into high-impact initiatives which grow the MultiversX ecosystem and the EGLD economy.
• A dual-stage activation framework: ensuring that every RSI initiative proceeds only after comprehensive disclosure, community review, and stakeholder approval.
• Three distinct instruments: the Digital Asset Treasury Deal (DAT), the Exchange-Traded Fund (ETF) framework, and MultiversX U.S. Labs, each designed to expand EGLD’s reach, adoption, and institutional presence.

Together, these measures aim to enhance strategic positioning, accelerate ecosystem growth, deepen integration with global financial systems, and create new channels for capital inflow and utility for EGLD. The expected outcome is a stronger, more globally recognized MultiversX economy with increased participation, institutional alignment, and long-term value accrual for all stakeholders.

IV. Conclusion

This proposal introduces a durable, economic growth model designed to secure the network, reward participation, and channel every measure of success back into EGLD. It establishes clear mechanisms that link activity, productivity, and demand, transforming emissions and fees into engines of sustainable expansion.

Building on this foundation, the framework adds a strategic capability: collective, decisive action through the Reflexive Strategic Investment primitive to accelerate adoption and long-term value creation. Together, these components form a complete framework for a self-reinforcing economy which balances continuity with adaptability, stability with growth, and anchors the next phase of MultiversX in a clear, measurable, adaptive, and future-proof design.

V. Appendices

A. Mathematical Formalization

The Perpetual Movement Function represents the comprehensive mathematical formalization of the protocol's economic evolution, transitioning decisively from a passive, capped-supply model based on scarcity to an active, tail-inflation model built for long-term security and productive value accrual. This framework is engineered to create a self-sustaining Economic Flywheel, ensuring that network utility and verifiable growth drive the underlying monetary policy. The rationale is rooted in the necessity for robust perpetual security, funded by a predictable budget, while simultaneously channeling capital and expansionary policy toward innovation and productive enterprise, a concept drawn from modern economic thought. The core mechanism introduces reflexivity by coupling all dynamic elements—adaptive inflation decay, conditional emission locks, and deflationary burns—to the Composite Growth Score (G). This ensures that high growth sustains incentives, while low growth automatically triggers scarcity via accelerated decay, programmatic emission locks (the Accelerator Lock), and adaptive burns, thereby establishing a direct, unbreakable link between network utility and a perpetual demand for the native asset, EGLD. The system's behavior is formalized through a set of coupled difference equations, where the measured network performance (Gt) acts as the primary reflexive input, governing the total supply trajectory St+1.

I. System State Variables and Total Supply Dynamics

The system's condition at any discrete time step t is defined by a state vector, and its evolution is governed by difference equations. The Total Token Supply S(t) evolves based on newly minted tokens ($M( t + 1) $) and tokens burned ($B (t + 1) $) during the interval t:

S(t+1) = S(t) + M(t+1) − B(t+1)

The Total Theoretical Annual Emission (Eannual,t) is derived from the current supply (St) and the current theoretical annual inflation rate (It):

Eannual,t =It × St

The Composite Growth Score (G): The Forcing Function

The Composite Growth Score (Gt) acts as the primary reflexive input, modulating the system's dynamics in response to verified network health and activity. G is clamped between 0 and 1 (G∈). The score is calculated as a weighted average of on-chain verifiable KPIs, with weight prioritized toward ecosystem activity and revenue:

Gt = (0.3 × DeFiGt) + (0.3 × StakingGt) + (0.4 × RevenueGt)

The KPIs are evaluated using 3-month rolling averages, a time-domain technique that functions mathematically as a low-pass filter, smoothing volatility (noise) to ensure monetary policy responds only to strategic, long-term trends (the signal).

II. The G-Modulated Inflation Decay Function

The theoretical annual inflation rate (It), starting at a maximum of 8.757 , adaptively decays toward a 2−5 floor . The adjustment mechanism is phased and G-modulated, ensuring slow decay during high growth and accelerated decay during low growth.

1. High-Rate Phase (It>5)

This phase ensures a slow decay during high growth and a faster decay during low growth . The decay rate (ΔIt) is inversely proportional to Gt .

It+1=max(0.05,It−ΔIt)

Where the Modulated Decay Rate (ΔIt) is : ΔIt = 0.0025 × MDecay = 0.0025 × (0.5 + 0.5 × (1 − Gt))

• If Gt = 1 (High Growth), ΔIt = 0.00125 (minimum decay / deceleration) .
• If Gt = 0 (Low Growth), ΔIt = 0.0025 (maximum decay / acceleration) .

2. Low-Rate Phase (0.02 ≤ It ≤ 0.05)

This phase allows for bidirectional adjustments , stabilizing the rate toward a G-dependent target and acting as a first-order smoothing filter .

It + 1 = It + 0.5 × (Itarget (Gt) − It)

Where the G-Dependent Target Inflation (Itarget) is: Itarget(Gt) = 0.02 + 0.03 × Gt

• If Gt = 1, Itarget = 0.05 (5% ceiling) .
• If Gt = 0, Itarget = 0.02 (2% floor) .

Continuous Approximation (ODE)

The discrete low-rate phase can be approximated by a first-order linear ordinary differential equation (ODE), confirming its stability and filter properties:

dIdt = 0.5 ⋅ (( 0.02 + 0.03G (t)) − I)

This ODE confirms that the system relaxes toward the G-modulated target (Itarget) with a relaxation rate of 0.5 per year . In the frequency domain, this system acts as a low-pass filter on the input signal G(t), attenuating high-frequency volatility in the inflation rate .

III. Conditional Emission Buckets and Programmatic Locks

The emissions budget is programmatically allocated across four buckets . The Accelerator Funds (Ecosystem Growth and Growth Dividend, 40% combined) are programmatically locked unless measurable growth (G) is achieved . The Actual Annual Emission (ΔSnew,t) that enters the supply is the sum of the guaranteed release (Simple Staking 50% + Protocol Sustainability 10%) and the conditional release of the Accelerator funds (40%), which is directly modulated by Gt:

ΔSnew,t = Eannual, t × (0.6) + Eannual, t × (0.4 × Gt) Δ Snew, t = Eannual, t ×(0.6 + 0.4 × Gt)

Formalization of Lock: The conditional release factor (0.6 + 0.4 × Gt) formalizes the programmatic lock .

• If Gt = 1, 100 of Eannual,t is released.
• If Gt = 0, only 60 of Eannual,t is released, automatically locking 40 of the theoretical budget to enhance scarcity .

IV. The Burn Mechanism and Net Supply Dynamics

The burn mechanism introduces deflationary pressure directly proportional to network activity (usage) . The Generated Burn (ΔSburn,t) is a function of transactional activity (Ntx), transaction cost (Ctx), and the adaptive Burn Rate (Brate,t) :

Δ Sburn,t = Ntx,t × (Days in Year) × Ctx × Brate,t

The base fee split is adaptive, increasing the burn fraction (BurnFracy) by 5 annually for 8 years, starting at 10 : BurnFracy = min(0.1 + 0.05 (y−1), 0.5)

Crucially, adaptive burns can accelerate to 50 when G<0.5 , further enhancing scarcity during periods of lagging growth.

Net Supply Change: The Economic Flywheel Output

The Net Supply Change (ΔSt) dictates the overall supply trajectory and formalizes the goal of demand-driven deflation:

ΔSt = ΔSnew,t − ΔSburn,t

The system is designed to achieve ΔS≤0 when network usage (generating burns) is sufficiently high and growth (G) is low enough to trigger both emission locks and accelerated decay .

V. Formalizing the System as a G-Modulated Perpetual Movement

The MultiversX economy is a self-reinforcing, dynamic system where monetary policy is reflexive . Reflexivity Summary:

• Low Growth (G↓): Triggers accelerated It decay, locks 40 of emissions, and increases burn rates, thereby enhancing scarcity .
• High Growth (G↑): Sustains higher It (slower decay) and maximizes emission release, funding growth incentives justified by corresponding high utility and burn potential .

The Harmonic Element (Frequency Domain)

The system's response to G(t) can be analyzed in the frequency domain . Since G(t) is complex, incorporating long-term trends and cycles (like the 4-year market cycle), its effect on output variables like inflation (I) and burns (B) can be represented by Fourier series . The Growth-Modulated Inflation Component ($I_{\text{growth}}(t)$) and Burn Rate ($B(t)$) can be represented by a sum of weighted and phase-shifted cosine waves over a fundamental period P (e.g., 4 years) :

Igrowth(t) =f(G(t)) ≈ A0 + ∑n = 1NAncos ⁡(2πnPt − ϕn) B(t) = g(G(t)) ≈ C0 + ∑n = 1NCncos⁡ (2πnPt − ψn)

The coefficients (An,Cn) quantify the system's sensitivity (amplitude) to cyclical variations at frequency n/P, and the phase shifts (ϕn,ψn) quantify the time lag in response . The explicit inclusion of dominant market cycles (e.g., the 4-year cycle component) transforms the projected supply trajectory into a wave-like pattern superimposed on the long-term disinflationary trend .

VI. Final Synthesis: Comprehensive Mathematical Formalization

The following table summarizes the system's core mathematical structure, highlighting the dependencies on the discrete time index t.

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B. Illustrative Scenarios & APR Table

The redesigned MultiversX economic framework is engineered to meet the ambitious targets set for the protocol. By shifting from a scarcity-based model to one of growth-driven productivity, the compounding effects of the incentivized economic activity unlocks a sustainable engine capable of scaling inflows, revenues, and growth.

Scenarios

• Bear Case: Even under conservative adoption, staking rises above 55%, network revenues grow 10–20x from current levels, and TVL doubles to ~$120m.
• Base Case: Capital inflows of $50–70m, >500k monthly active users, $250m TVL, and revenues of $5–7k/day establish a self-sustaining growth path.
• Bull Case: Exceeding $150m inflows, >1.5m active users, $1b TVL, and daily revenues of $100k/day—conditions sufficient to fund a durable revenue generating engine, strategic investments, and mainstream institutional entry.

The proposed model does not rely on speculative scarcity; it creates productive scarcity—staking, yield strategies, and burn mechanisms that make EGLD both more useful and more scarce as adoption grows. This is a shift from passive store-of-value dynamics to an active economic flywheel that compounds growth across capital inflows, revenue generation, and reflexive reinvestments.

By aligning incentives across users, builders, validators, and investors, MultiversX transforms its economic base into a perpetual motion machine for value accrual. Thanks to the structural advantages of the new design, these outcomes are as ambitious as they are achievable.

Below we present three scenarios with possible outcomes based on a few key assumptions and variables:

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*The numbers are illustrative, taking into consideration current statistics from the chain, also taking into consideration a starting supply from 15th of November 2025.

At the current moment, ~1.8m EGLD (about 12.5% of the total EGLD staked) are participating in productive yield strategies via liquid staking to generate economic activity and value for the protocol. Through the Active Yield Growth Dividend, we are aiming to channel up to 50% of the total staked EGLD into such productive strategies, boosting TVL and driving transaction volume.

The boosted strategies provided by expert DAOs and chosen by the users can range from low-risk options with lower additional rewards to higher-risk and reward strategies with extra protocol incentives.

C. The Economy Flywheel: How the Accelerator Drives EGLD Value

The Growth Dividend is designed to transform staking from a passive activity into a driver of network-wide economic expansion. Liquid staking tokens (LSTs) compound two effects: they secure the network by locking EGLD while simultaneously keeping capital productive in DeFi. By pairing staked EGLD (via LSTs) with external assets such as USDC or wBTC, users inject new liquidity into the ecosystem. This creates the foundation for deeper markets and more resilient DeFi infrastructure.

• More Liquidity → More DeFi: Builders can design advanced products and strategies when liquidity is abundant and reliable.
• More DeFi → More Opportunities: A richer landscape attracts arbitrage, trading, and innovative use cases.
• More Opportunities → More Transactions: Onchain activity accelerates as users, bots, and protocols engage with these markets.
• More Transactions → More Revenue & Scarcity: Every action generates fees for builders and the protocol while the burn mechanism ensures each transaction makes EGLD more scarce, creating a direct feedback loop where usage itself is the engine of value

In short, protocol emissions are no longer a passive subsidy but are instead precisely targeted capital injections, designed to bootstrap a perpetual cycle of liquidity, utility, and transaction growth—ensuring that the network's emissions are constantly being met by an even greater, protocol-driven demand.

The Ecosystem Growth Fund for Builders (EGF) drives EGLD value by functioning as a targeted, performance-based stimulus for network utility. Its contribution to EGLD value accrual can be summarized by these concrete mechanisms:

• Incentivizing Revenue-Generating Apps: The EGF provides direct financial grants to builders based on achieving clear Key Performance Indicators (KPIs), such as active users, transaction volume, and Total Value Locked (TVL). This ensures protocol emissions fund the creation of applications that generate long-term demand for EGLD.
• Programmatic Lockup and Alignment: The funds are programmatically locked and released only when builders demonstrate measurable impact by hitting these predefined, onchain verifiable KPIs. This prevents wasteful allocation, maximizes scarcity when growth lags, and ensures alignment between incentives and growth.
• Fueling the Flywheel and Burn: By fostering the creation of high-value applications, the EGF stimulates massive onchain activity. This activity generates transaction fees, which subsequently fuels the EGLD burn mechanism, creating structural, programmatic buy-pressure for the native asset and contributing to demand-driven deflation.
• Fostering Dynamism (Phelpsian Engine): The fund acts as a structural incentive for grassroots innovation, cultivating a competitive application layer and preventing stagnation, which is critical for sustainable, long-term economic growth.

D. Theoretical & Economics References

This paper draws conceptual inspiration from prominent economists who advocate prioritizing economic growth over strict inflation control, particularly by channeling resources (e.g., via stimulus or expansion) toward innovation and productivity. Here is a list of authors and books.

• Paul Krugman (Nobel Prize, 2008): Argues in End This Depression Now! for using emissions for productive recovery and growth, which parallels crypto networks funding development despite short-term price pressures.
• Mark Blyth: Critiques austerity in Austerity: The History of a Dangerous Idea, advocating instead for expansionary policies to invest in growth, a concept similar to avoiding artificial scarcity in crypto through productive token issuance.
• Edmund S. Phelps (Nobel Prize, 2006): Emphasizes in Mass Flourishing that grassroots innovation is the core of economic growth, justifying inflation when it fuels entrepreneurship, as seen in crypto grants and builder rewards.
• Tyler Cowen: Posits in Stubborn Attachments that maximizing long-term, compounding growth is a moral priority, a principle that applies to creating sustainable, innovation-focused economic models in crypto.

(!) Disclaimer: This document is not investment advice. It is intended solely to describe protocol-level mechanics under the applicable legal regulations.