Tokenomi TIA (TIA)

Celestia’s token economics are designed to support its modular data availability network, incentivize network participants, and ensure long-term sustainability. Below is a comprehensive breakdown of its issuance, allocation, usage, incentive, locking, and unlocking mechanisms, with a detailed table for clarity.

Issuance Mechanism

• Token Name: TIA
• Initial Supply: 1,000,000,000 TIA at mainnet launch (Oct. 31, 2023)
• Inflation:
  • Starts at 8% annual inflation for the first year.
  • Decreases by 10% each year until stabilizing at 1.5% annual inflation from Oct. 31, 2039, onward.
  • 98% of new tokens go to validators as block rewards; 2% to the Community Pool for ecosystem initiatives.

Allocation Mechanism

Usage and Incentive Mechanism

• Network Transaction Fees: All data availability transactions (“PayforBlobs”) require TIA for fees, which are composed of a flat and a variable component based on data size.
• Staking: TIA holders can stake tokens to secure the network and earn inflationary rewards.
• Governance: TIA stakers can propose and vote on on-chain governance proposals (Celestia Improvement Proposals, CIPs) that affect network parameters and Community Pool spending.
• Community Pool: Receives 2% of block rewards, funding ecosystem initiatives via governance.

Locking and Unlocking Mechanism

• Staking: All tokens, whether locked or unlocked, can be staked. Staking rewards are unlocked upon receipt and immediately liquid.
• Unlock Schedules: Each allocation category has a specific vesting and unlocking schedule, summarized below.

Unlocking Table

• Cliff Unlock Event: On Oct. 31, 2024, a major unlock (“cliff”) occurs, releasing 33% of allocations for Early Backers and Core Contributors, significantly increasing circulating supply.
• Continuous Vesting: Remaining tokens for these groups unlock linearly (daily) over the subsequent 1–3 years, depending on the category.
• R&D & Ecosystem: 25% unlocked at launch, 75% unlocks daily over three years starting from the first anniversary.

Implications and Analysis

• Supply Dynamics: The initial cliff unlock introduces a large supply shock, followed by predictable, steady monthly unlocks, which can impact market liquidity and price.
• Incentive Alignment: The inflationary rewards and vesting schedules are designed to incentivize long-term participation and network security.
• Governance and Flexibility: TIA holders have significant influence over network parameters and ecosystem funding, supporting decentralized governance.

References

• For detailed unlock schedules and governance, see the Celestia documentation.
• For the inflation schedule, refer to ADR019.

Celestia’s token economics reflect a careful balance between rewarding early contributors, supporting ongoing development, and fostering a robust, decentralized ecosystem. The combination of inflationary rewards, structured unlocks, and active governance mechanisms aims to ensure both security and adaptability as the network evolves.