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AO Releases Token Economic Model
AR Token Plunges
AO Token Valuation
The parallel computing scheme AO developed by the sustainable storage protocol Arweave development team announced the token economic model yesterday.
According to the official announcement, the token quantity and issuance mimic the Bitcoin network, with a total supply of 21 million tokens, issued every five minutes, and halved every four years.
All tokens will be distributed fairly, with no pre-sales or team quotas:
36% of the total supply will be allocated to AR token holders over time.
Additionally, 64% will be distributed over time to users who cross-chain assets (stETH) to AO to incentivize economic growth.
It is important to note that AO tokens are not issued all at once. As long as you hold AR tokens or cross-chain assets to the AO network, you will continue to receive AO tokens until the last token is minted in approximately 100 years.
Token issuance is retroactively calculated starting from February 27th, and those who meet the above rules will be allocated AO tokens. By the time of the team’s announcement, over 1 million tokens have been issued. However, AO tokens cannot currently be transferred or traded. Token transfer functionality will be enabled once 15% of the total token supply has been minted, which is expected to happen around February 8, 2025.
Users holding AR can check their allocated AO tokens by visiting http://ao.arweave.dev and connecting their self-hosted wallet (such as ArConnect). If stored on an exchange, users may need to wait for further announcements from the platform.
After the announcement, there was a significant drop in the AR token, not only because the market has always been “Sell the news”, but also because the distribution ratio of AR tokens did not meet expectations. While it is understandable that the team allocated a majority to those who cross-chain assets, the 36% allocation to AR token holders still left the community disappointed. Furthermore, the current method of “cross-chaining stETH to AO” allows for more AO tokens to be allocated than holding AR, reducing the short-term incentive to hold AR.
Currently, the market pricing of AO is closely tied to the market value of AR. Since AR holders can receive 36% of the total supply of AO, in other words, the market value of AR (as AR is almost fully circulating) is equivalent to 36% of the fully diluted value (FDV) of AO tokens.
This translates to an FDV of AO equivalent to 5.55 billion US dollars.
Next February, when AO opens, approximately 15% of the tokens will be in circulation. Therefore, the market value of AO at the opening will be 832 million US dollars.
