Economics

This artcile describes the cryptoeconomies of Kulupu.

The effective total supply of Kulupu is expected to be no more than 210 million KLP.

Kulupu implements fee market, which is a method to have more predictable transaction fees. With this method, the base transaction fees are burned instead of paid to miners. Miners only retain the tips. Burning the base fee is important as it avoids giving miners incentives to create artifical transactions to manipulate the fee.

Kulupu may also implement a treasury and voluntary taxation system. With this implementation, the treasury funding gets burned every spending cycle.

In a proof of work blockchain, a popular theme is total supply, in which block rewards initially dominate, and then gradually switch to a fee only system. However, with burning methods like fee market and treasury spending, a direct translation of total supply will result in deflation.

The effective total supply of Kulupu is the total coins in circulation with both emissions and and burns considered. Assuming blocks in the future consumes on average half of the total block weight, the burn each block will be 8 KLP. As a result, an emission scheme with eventual tail emission of equal or less than 8 KLP will have fixed effective total supply.