Fuse token

Fuse token is required to be paid to the network to approve transactions. The Fuse network is using the token to create circulation between users that look to validate transactions on the network and validators who invest computing resources and maintain it. Every block created on the Fuse chain is creating new Fuse tokens rewarded to the validators. This creates a 5% yearly inflation rate of Fuse tokens in circulation.

Fuse holders can lock it and delegate it to a validator in order to protect against inflation and get rewarded with Fuse tokens. The holders can select their favorite validator and validators are selected based on having the most Fuse tokens staked.

The native Fuse token is represented via an ERC-20 token on Ethereum mainnet and can be moved between the Fuse chain and Ethereum using the bridge.

Fuse token utility:

  • Validation Token holders can stake Fuse to become a validator. The minimal staking requirement is 100K. The network is growing, currently there are 50+ validators. (https://health.fuse.io/)

  • Voting Validators vote on protocol changes with their staked Fuse. Which means validators with higher amounts of Fuse staked can have a bigger vote on network upgrades and governance changes (until phase 2 where delegation is activated)

  • Fees The Fuse token is the native currency on the Fuse blockchain and is required to pay fees to the network in order to approve transactions.

  • Delegation - Activated Q3 2020 Delegation for token holders will be activated. This will allow any Fuse token holder to delegate their tokens to a validator to earn rewards. Validators compete between themselves to receive Fuse delegated from token holders. Validators with the most Fuse tokens are elected to validate on Fuse.

Inflation

  • 5% inflation in the network is distributed between the validators. Each cycle (A cycle is all transactions conducted in 48 hours) the validators with the highest amount of Fuse tokens staked will split the rewards based on their stake.

  • A fixed inflation rate also helps with stabilization of the token price. At phase 2 of the network an upgrade to a differential inflation schedule will be proposed and voted on by the validators to optimize the inflation/fee price policy.

  • Large users on Fuse can participate more closely in the governance and the operation of the network and plan ahead so instead of having high operation costs, they can become a stakeholder and benefit from the network’s growth.

Fees

  • The network charges fees on every transaction that goes to the validators and is capped at 1 cent $ per transaction.

  • While the network has unfilled blocks the cost per transaction will be lower than 1 cent.

  • The fee cost per transaction in Fuse will be adjusted to be a maximum of 1 cent US dollar once the blocks start to fill up. At this stage simple transfer transactions will be moved off-chain.

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