Tokenomics and Utility

Validator Rewards and Inflation

Validator rewards and inflation are essential aspects of the Musafir Network’s tokenomics.

EigenLayer operators, or validators, have limited computational and capital capacity. As EigenLayer and the AVS ecosystem grow, attracting operators will require competitive incentives due to increasing competition.

Operators and their staked capital are crucial for maintaining the security of the Musafir Network.

Musafir will incentivize operators in the initial stages through rewards from the $MSK treasury fund. As the network scales and generates more revenue, these subsidies will gradually decrease and be replaced by protocol-generated revenue.

The rewards system is dynamic, adjusting based on the network’s need to attract more restaked assets.

The Musafir Network will mint $MSK rewards for validators who secure and validate the network. The emissions rate can be influenced by network governance, allowing the community to manage inflation and ensure the long-term sustainability of the token and the network.

Staking Mechanism

In Musafir’s Proof-of-Security model, $MSK can be staked or delegated to validators, securing the network and earning rewards. Staked $MSK behaves similarly to restaked $ETH, enhancing validators’ weightage and making the network more secure. Validators are subject to slashing penalties (in case of either asset, i.e. staked $MSK or restaked $ETH) if they misbehave or remain offline for extended periods, which ensures accountability and network integrity.

Staking $MSK also grants governance rights, enabling stakers to influence and contribute to the development and direction of the Musafir Network. This democratic approach to governance allows the community to play an active role in shaping the protocol and making decisions that affect reward distributions, fee structures, and other crucial aspects of the network.

Gas Payments

Initially, the Musafir Network will implement minimal gas payments to cover the costs associated with assets and liquidity balancing across chains. These costs will be divided among all transactions executed on the network. As the network grows and matures, it will begin generating revenue in $MSK and other assets. This capital will be utilized to buy and burn $MSK tokens, effectively reducing the token supply in the market and contributing to the overall value appreciation of $MSK.