8. Tokenomics
The economic architecture of MIZUHIKI is designed to serve three objectives simultaneously: to secure the network through validator incentives, to support the paymaster and fee market as described in Section 5, and to align the long-term interests of token holders with the growth of the network itself. This section sets out the native MIZU token, its supply and allocation, its issuance schedule, and the fee mechanism that ties network activity to token economics.
8.1 The MIZU Token
MIZU is the native token of MIZUHIKI. It serves two functions. First, it powers the execution of transactions on the network: every transaction, regardless of how the user pays its fees at the user interface, is ultimately settled in MIZU at the validator layer. Second, it secures the network: validators stake MIZU and receive rewards, in MIZU, for their role in validating the network.
8.2 Token Supply and Allocation
The initial supply of MIZU is 500,000,000 tokens, distributed across five groups at genesis. Each allocation is subject to vesting conditions and unlock schedules, which are to be publicised prior to MIZUHIKI mainnet launch.
| Group | Allocation | MIZU Tokens |
|---|---|---|
| Investors (AltX Research) | 25% | 125,000,000 |
| Team | 25% | 125,000,000 |
| Foundation — Ecosystem and Growth | 20% | 100,000,000 |
| Validators | 20% | 100,000,000 |
| Public Sale | 10% | 50,000,000 |
| Total | 100% | 500,000,000 |
In-line with other global 'Stablecoin L1s' such as Plasma1 or Stable2, MIZUHIKI's token allocation reflects two explicit priorities. First, a substantial share of supply is held in Foundation treasury, to be deployed in service of the ecosystem over time rather than distributed at launch. Second, the allocation to the MIZUHIKI team and investors (AltX Research) have been set to attract the top caliber of investment and fintech professionals. MIZUHIKI's goal is not to just provide and maintain the sovereign L1 blockchain infrastructure, but to become the mainstream payment rails in Japan, which requires a deep focus on integration with Japan's largest corporations and payment distribution networks.
Investors (AltX Research) (25%)
Building and launching an L1 requires significant investment of time and resources. MIZUHIKI is supported by major Japanese and international investors. The AltX Research allocation of 125,000,000 tokens is set aside as an incentive for MIZUHIKI investors and allows AltX to continue to access external capital to build and grow MIZUHIKI.
Team (25%)
The Team allocation is set aside as an incentive for the MIZUHIKI founders, developers, and core team members to recognize their contributions and align their interests with the project's long-term success and growth.
The vesting schedule of the team allocation is to be publicised before mainnet launch.
Ecosystem & Growth (20%)
Of the initial token supply, 20% will be allocated to the Foundation treasury to be specifically earmarked for the ecosystem and growth. This allocation is designed to support the growth and development of the MIZU token ecosystem by funding community-driven projects, events, and initiatives.
Validators (20%)
20% of the genesis supply (100,000,000) is earmarked for validator operator stakes. At launch, a minimum of 10% will be staked and locked indefinitely.
Public Sale (10%)
Of the initial token supply, 10% is earmarked for eventual sale to the public on international and domestic exchanges. The Public Sale portion is the share of tokens that will be offered in tranches over time. These tokens are not vested as public sales will be conducted through exchange listings and offerings.
8.3 Issuance and Rewards
Staking rewards in MIZU are paid to validators for securing the network. Rewards comprise two components: a per-block reward (new issuance), and a transaction-fee component (paid by the transacting user), reflecting priority fees collected on network activity. Base fees are also paid by transacting users, but are burned by the protocol, which has a secondary effect of decreasing supply inflation produced by the block rewards.
Block Rewards (Consensus Layer)
The target annual reward rate (non-compounding) for validators is approximately 14.5% at network launch, declining over time to 10% as the staked amount of MIZU tokens increases.
The block reward has been carefully chosen to balance compensation to validators for securing the network and tempering excessive issuance.
The token projected supply inflation rate from block rewards will be 1.4% in the first year of mainnet. Over time, as more tokens are staked, the total block rewards will increase, but the annual inflation rate is modelled to never exceed 2.0%.
Priority & Base Fees (Execution Layer)
Each transaction pays a base fee, set by the protocol as a function of recent block fullness, and an optional priority fee, determined by the user to encourage timely inclusion. Both components are denominated in MIZU at the protocol layer.
8.4 Demand Drivers for MIZU at Launch
Demand for MIZU arises from two main structural sources at launch.
Staking demand: Validators and Stakers must acquire and lock MIZU to earn network rewards. The 20% of genesis allocation earmarked for validators represents a considerable part of the total value locked, and offers an attractive yielding position for MIZU token holders.
Transaction demand: The gas token for all transfers, transactions and smart contract deployment is MIZU. For retail-facing users, paymasters will be used as default so that the end-user does not need to buy/hold MIZU directly. The Foundation and other approved marketplaces will facilitate payment of gas in stablecoins and will provision pool(s) of MIZU over time. For crypto-native users, MIZU token can be used for payment of gas fees. These users must hold/spend MIZU to deploy smart contracts, bridge tokens, etc.