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ASTR is the native token of the Astar blockchain and serves several purposes vital to the success of the network. It’s currently in the top 100 biggest cryptocurrencies with a market cap of $270m USD.
Staking
dApp staking is Astar Network’s main selling feature for developers. Without it, the network would likely resemble any other smart contract platform.
Therefore, ASTR tokens are the fuel that powers the entire ecosystem. They can be locked up in dApp staking towards a specific smart contract (decentralised application) deployed on the network. So, dApp stakers can browse the various projects and select one they think has merit to support its developer. Then, block rewards generated by locking up ASTR tokens are split evenly between the project developer and the dApp stakers.
Even though stakers only receive half of the full block reward, the dApp staking mechanism still incentivizes them to commit their tokens to a dApp. Increasing the amount of money allocated to specific projects increases Astar network’s underlying value, which may affect ASTR price. In addition, staking tokens means removing a large sum of ASTR from circulation. The fewer ASTR in circulation, the greater the chance supply and demand metrics will swing in favor of token holders.
Governance
Astar has built a decentralised autonomous organisation (DAO) to help govern the project as it evolves over the coming years. This will allow community members, stakeholders and dApp developers to propose new ideas to benefit the Astar ecosystem, and for others to vote on important governance suggestions. The exact framework of the Astar DAO isn’t clear, but it’s likely ASTR nominators will be in the box seat for contributing to the project’s administration.
ASTR Tokenomics
ASTR max supply – as is also the case with Ethereum and Dogecoin – is infinite, meaning there’s no cap on the number of ASTR tokens that may eventually be minted. Tokenomics of this sort, when left unchecked, can potentially be a recipe for runaway inflation should the economics of the system not be managed properly.
To avoid this, ASTR’s tokenomics are set up to burn 80% of all transaction fees. This results in an approximate gap of 50% between ASTR’s total and circulating supply (as about half of all ASTR thathas been minted is eventually burned). In addition, Astar’s developers have added a new mechanism to dApp staking that burns block rewards if they aren’t assigned to specific projects.
Important to Remember
Although ASTR has an infinite maximum supply, its tokenomics reduce risk of inflation by burning 80% of all transaction fees.
Upon launch, Astar released roughly8 billion ASTR tokens that were distributed as follows:
Users & early adopters: 30%
Parachain auction: 20% (used to secure Astar’s place on Polkadot’s relay chain)
Parachain auction reserve: 5%
Protocol development: 10%
Early investors: 10%
Astar Foundation: 10%
On-chain DAO: 5%
Marketing: 5%
Team: 5%
About 800,000 ASTR were reserved for public sale.
Recently, Astar Tokenomics 2.0 proposed to modify the inflation rate so it is dynamically adjusted, to ensure the ecosystem benefits both users and dApp developers.
Token financials
Astar’s market cap currently sits at $310m, placing it in the top 100-ranked cryptocurrencies in the industry by market cap. As a relatively new project, if Astar succeeds in the coming years, the market cap could increase substantially, but like all cryptocurrencies, nothing is guaranteed.
Initially, 7 billion ASTR were distributed among community members, investors and project developers. Since then, the total supply has steadily increased (currently at 8 billion) while the circulating supply has decreased due to token burning (currently at 4.5 billion).