We find YTP compelling because it provides a comprehensive framework for evaluating an individual blockchain or comparing multiple blockchains.It is important to note that all revenues and costs are denominated in the L1’s native token. And, while unlocks and staking rewards boththe number of tokens in circulation, the difference between transaction fees and the portion of those fees paid to proof-of-stake validators is what is used to burn or reduce the number of tokens in circulation.
Then, by using the same set of growth rate assumptions for each chain , we can make comparisons across chains and explore more deeply what drives YTP. For example, while APT has a high YTP, this is partially because the chain is relatively new and therefore its revenues are smaller than those of other more established chains. SOL has modest inflationary schedules compared to blockchains like NEAR or ICP. In all examples, a blockchain’s ability to burn tokens is helpful for managing YTP.
In conclusion, YTP serves as a crucial metric in evaluating the profitability and sustainability of L1 blockchains. By carefully designing tokenomics , balancing supply dynamics and incorporating burn mechanics, L1 blockchains can aim to reduce YTP and build a more sustainable blockchain economy.
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