Analysis of the XPL economic model: The dual game of ecological incentives and circulation pressure
1. Token distribution and ecological strategy
The total supply of XPL is fixed at 10 billion, of which 40% (4 billion) is explicitly used for ecosystem development. This design breaks through the limitations of traditional public chains that focus more on development than on ecology, attracting developers to build applications with a large reserve of tokens, enhancing market depth for liquidity providers, and involving community governance participants in maintaining network security. The dynamic allocation mechanism of the ecological fund can ensure long-term development resources while avoiding market pressure through phased releases.
2. Inflation-Deflation Dual Spiral
1. Progressive Inflation Design
The initial annual inflation rate of 5% is released through staking rewards, and as the network matures, the inflation rate decreases year by year to 3%. This decreasing inflation maintains incentives for early participants while avoiding excessive issuance that dilutes token value.
2. Transaction Destruction Mechanism
Drawing on Ethereum EIP-1559, XPL destroys 50% of the base fee for each transaction directly. In the early days of the mainnet in 2025, the average daily destruction volume is about 800,000 tokens, resulting in an annualized destruction rate of 3.6% based on current prices, forming a dynamic balance of 'inflation + destruction'.
3. Market Performance and Potential Risks
1. Explosive Growth
Within 24 hours of the mainnet Beta launch in September 2025, the supply of stablecoins exceeded $7 billion, with a total staking amount reaching 2.1 billion tokens (42% of the circulation). This is attributed to its precise positioning as a 'Layer1 dedicated to stablecoin settlement', attracting real demand from scenarios such as cross-border payments and on-chain finance.
2. Unlocking Stress Testing
The team's and investors' tokens (a total of 1.5 billion tokens) will be unlocked in September 2026, while the publicly sold tokens in the US (500 million tokens) will be locked until July 2026. If calculated based on the current circulation of 5 billion tokens, the circulation will expand by 40% after unlocking. However, the staking ratio remains above 40%, indicating a high proportion of long-term holders, which may alleviate selling pressure.
3. Liquidity Management Challenges
Although the supply of on-chain stablecoins is large, it is concentrated in the accounts of a few whales. The top 10 addresses hold 63% of the stablecoins, creating a risk of liquidity stratification. The protocol needs to incentivize market making through AMM, cross-chain bridging, and other measures to disperse liquidity distribution.
4. Sustainability Assessment of the Economic Model
The innovation of XPL lies in:
- Ecological Priority: 40% of token reserves provide ammunition for long-term value creation.
- Controlled Inflation: A decreasing inflation + destruction mechanism forms deflationary expectations.
- Scenario Landing: The demand for stablecoin settlement supports real usage.
However, caution is needed:
- Unlocking Tidal Impact: The release of 2 billion tokens concentrated in 2026 may cause price volatility.
- Regulatory Risk: As a stablecoin settlement chain, it faces scrutiny from anti-money laundering and capital control regulations in various countries.
- Competitive Pressure: Other Layer1s like Solana and Avalanche are also competing for the stablecoin market.
The current annualized staking yield (APY) stabilizes at 8-12%, reflecting the market's recognition of its economic model. If breakthroughs can be achieved in compliance, cross-chain interoperability, and ecological diversity in the future, XPL is expected to become a leading project in the 'stablecoin infrastructure' track. However, the market performance during the token unlocking period will be a key indicator of the resilience of its economic model.
