Made with Huly®

Article IV. Token Distribution and Economics

Section 1. Token Types and Total Supply

The Huly ecosystem shall consist of two interchangeable token types:

  1. eHULY: Ethereum-based tokens
  2. nHULY: Native tokens on the Huly blockchain

The total supply of Huly tokens shall be capped at 120 million. Under no circumstances will the total supply exceed this cap. The tokens will be distributed as follows:

  1. 54 million eHULY tokens for free market distribution and staking rewards
  2. 72 million nHULY tokens to be mined over time
  3. 6 million tokens to be burned by the Foundation

Additionally, 72 million eHULY tokens and 54 million nHULY tokens will be locked on their corresponding networks for eHULY ↔ nHULY bridging operations. This locking mechanism ensures that the interchangeability between eHULY and nHULY is maintained at a 1:1 ratio at all times, preventing any disbalance in the token ecosystem.

Section 2. eHULY Token Distribution

The 126 million eHULY tokens shall be allocated as follows:

  1. Free Market Distribution: 24 million tokens

    1. Huly Foundation is obligated to distribute these tokens to the free market through decentralized exchanges (e.g., Uniswap) according to the following schedule:
      1. 240,000 eHULY tokens will be released weekly for 100 weeks, starting January 3, 2025.
    2. Assets received by Huly Foundation from this distribution will remain in the free market, providing liquidity for Huly token traders.
    3. While the Foundation will act as an initial liquidity provider to ensure market stability and accessibility, it will actively encourage and support the participation of other liquidity providers to foster a diversified and decentralized market.

  2. Staking Rewards: 30 million tokens

    1. Distributed to token holders participating in the staking program. The distribution schedule is as follows:
      1. Weeks 1-150: 12 million tokens (80,000 per week)
      2. Weeks 151-300: 9 million tokens (60,000 per week)
      3. Weeks 301-450: 6 million tokens (40,000 per week)
      4. Weeks 451-600: 3 million tokens (20,000 per week)
    2. The staking program will commence on January 10, 2025.
    3. The Huly Foundation will hold these 30 million tokens initially and will participate in the staking pool to support its operations.
    4. Tokens held by the Foundation for staking rewards are exclusively for distribution to participants according to the staking schedule and cannot be sold or transferred directly to the market.

  3. Bridging Pool: 72 million tokens locked in smart contracts to facilitate 1:1 exchanges between eHULY and nHULY. This pool ensures that the interchangeability between eHULY and nHULY tokens is maintained at all times, supporting the stability and balance of the Huly token ecosystem.

Section 3. nHULY Token Distribution

The 126 million nHULY tokens will be created as follows:

  1. Mining Rewards: 72 million tokens

    1. Distributed to miners over time through Proof of Work consensus.
    2. The network will adjust difficulty to ensure that the equivalent of 24 million nHULY tokens will be mined during the first 100 weeks of Huly Blockchain operations, then halved every 200 weeks. Thus, a total of 72 million nHULY tokens will be produced.
    3. nHULY mining will commence 100 weeks after the start of the eHULY distribution program (January 3, 2025).

  2. Bridging Pool: 54 million tokens. These tokens will be created with the Genesis block and used for eHULY ↔ nHULY bridging to support the 1:1 interchangeability mechanism.

Section 4. Staking Program and Foundation Participation

  1. 30 million eHULY tokens shall be allocated for the staking rewards program.
  2. The distribution schedule for staking rewards is detailed in Section 2 of this Article.
  3. Staking rewards distribution will commence on January 10, 2025.
  4. The Foundation will participate as the initial staker, staking the entire 30 million token allocation. This serves several critical purposes:
    1. To provide operational funding for the Foundation through earned staking rewards.
    2. To prevent market manipulation by ensuring the staking pool is not initially empty, which could otherwise allow participants to cheaply acquire a disproportionate share of rewards.
  5. By staking the full allocation initially, the Foundation creates a fair and competitive environment for all participants from the outset, requiring significant investment to obtain a large position in the staking pool.
  6. The Foundation’s participation in staking is subject to the following conditions:
    1. The Foundation will be subject to the same rules and reward rates as all other participants.
    2. These tokens cannot be used for market trading or direct transfer by the Foundation.
    3. As staking rewards are distributed to participants, the Foundation’s stake will gradually decrease.
  7. This mechanism incentivizes the Foundation to maintain its stake as long as possible while ensuring that the allocated tokens are used solely for participant rewards over the duration of the staking program.

Section 5. Token Burning

  1. The Foundation shall burn a total of 6 million tokens over 600 weeks.
  2. 10,000 tokens will be burned every week, starting from January 10, 2025.
  3. The burning process will be executed through a publicly verifiable smart contract.
  4. The purpose of token burning is twofold:
    1. To reduce the Foundation’s stake in the Huly ecosystem to a target of 3.95% of the total supply (excluding the Foundation’s expenditures). The actual stake will depend on market activity, especially within the staking program, and the Huly Foundation’s spending.
    2. For detailed calculations supporting 3.95% target percentage, please refer to Appendix A. Note that the theoretical maximum stake of the Foundation is 20%; reaching this level would indicate the failure of the Huly Project.
    3. To gradually distribute tokens over time, thereby minimizing the risk of sudden supply shocks and price volatility.

Section 6. Market Capitalization and Liquidity

  1. The Foundation shall use crypto assets received from the free market distribution to provide initial liquidity on decentralized exchanges.
  2. The Foundation shall not act as a central market maker or attempt to manipulate token prices.

Section 7. Bridging Mechanism

  1. A 1:1 bridging mechanism between eHULY and nHULY shall be maintained to ensure price parity.
  2. The bridging process will be facilitated through smart contracts on the Ethereum blockchain, and will be natively supported by Huly blockchain.
  3. 54 million nHULY tokens will be locked at the Huly Blockchain launch within the Genesis block to support the bridging mechanism.

Section 8. Mining of nHULY

  1. nHULY mining shall commence 100 weeks after the start of eHULY distribution.
  2. Mining difficulty will be adjusted to ensure that 24 million nHULY tokens are mined during the first 100 weeks.
  3. Mining rewards will be halved every 200 weeks thereafter, with a total of 72 million nHULY tokens produced.

Section 9. Transparency and Reporting

  1. The Foundation shall provide real-time, on-chain data on token distribution, staking, and burning.
  2. Quarterly reports on token economics, including distribution progress, staking participation, and mining statistics, shall be published by the Foundation.

Section 10. Modifications to Token Economics

  1. Any proposed changes to the token distribution model or economic parameters must be approved through the DAO voting process as outlined in Article III.
  2. Such proposals shall be classified as Major Proposals, requiring a 2/3 majority to pass.

Section 11. Total Supply Cap

The total supply of Huly tokens shall never exceed 120 million. This cap is absolute and ensures the long-term stability and predictability of the Huly token market. Under no circumstances will additional tokens be minted beyond this cap.