Sui Chief Economist Deep Dive into Blockchain Economic Model

Recently, we had the honor of interviewing an economics expert in the Blockchain field, discussing how to seek a balance of incentives between network operators and participants, as well as the evolution of the economic model of a well-known public chain.

This economist initially focused on international trade and global value chain research. He found that Blockchain technology is closely related to supply chain management, as it can transparently record the product manufacturing process. The potential of this technology prompted him to shift from theoretical research to practical applications, directly participating in product development.

When designing the blockchain economic model, it is necessary to balance the interests of three key participants: validating nodes, token holders, and users. Validating nodes want to earn revenue through gas fees; users expect low usage costs; token holders are in an intermediate position, hoping for token appreciation while also paying attention to the actual application of the network. The key is to find the appropriate level of gas fees to achieve a balance of interests among all parties.

The unique feature of this public blockchain lies in its horizontal scalability design. When demand increases, validating nodes can expand the Block space, keeping gas fees stable. This stands in stark contrast to traditional Blockchains, where gas fees surge during peak demand. Additionally, the publicly available reference gas price mechanism enhances market transparency and predictability. The permissionless access mechanism for validating nodes also helps maintain reasonable gas fee levels.

Another innovation is the design of the storage fund. Users are required to pay a permanent storage fee in advance, which will be used to compensate the storage costs of verification nodes. This mechanism ensures the long-term sustainability of the network while encouraging users to use storage resources judiciously.

Regarding inflation and deflation, the expert pointed out that these concepts are not only related to the supply of tokens but are also closely related to network activity. The public blockchain adopts a capped token supply model, aiming to continuously enhance network activity. The trend of inflation or deflation will depend on the comparison between the rate of network growth and the rate of token unlocking.

Looking ahead, the economic model of this public blockchain is still continuously adapting and optimizing. For example, the recent storage issues may require adjustments to the storage fund. This reflects the importance of combining theory with practice and demonstrates the determination of this public blockchain to continuously optimize its economic model.