As you know, just 10% of all SRM were unlocked for the first year (with 825m tokens reserved for building out the Serum ecosystem staking rewards). This included 6m tokens that were sold in the IEO and 169m tokens that were made available for liquidity (of which 44m is currently in circulation and 125m is reserved for further liquidity provision and is not circulating).
In response to feedback from the community, we sought to manage the circulating supply in line with demand, and we worked with liquidity providers to lock up 125m of the tokens allocated for liquidity provision with the standard 1–7 year lockup. This effectively reduced the circulating supply to the 50 million tokens today and accounts for all tokens available either on exchanges and non-custodial wallets.
In addition, 825m unlocked tokens were set aside for ecosystem incentives for SRM holders and Serum users, including staking rewards and grants. These tokens are still controlled by the foundation for distribution in future years.
Year 2 and onwards
When we drafted plans for Serum, we were mindful of the pace of the industry and set out to ensure our product had the best chance to withstand its cycles. This meant designing incentives and tokenomics that would extend far enough into the future, but also close enough to muster support from our ecosystem partners. 7 years is an eternity in crypto, but the truth is, this is still only the beginning. We expect the road to 1 billion users (and beyond) to be a longer journey than many realise.
As you know, over the next 6 years, 90% of the remaining tokens will unlock linearly in equal proportions (starting August 11, 2021 at 12:00 AM UTC) under the same schedule. We expect a very small percentage of these tokens to actually enter the circulating supply.
You may recall the following:
- Only 4% of tokens were sold to private sale investors
- Team tokens are controlled by governance
- Circulating supply is closely managed by the foundation
This means that despite the unlock schedule, circulating supply may not necessarily change in a meaningful way. We expect in future upgrades that many decisions by the foundation, including those related to circulating supply, will be made via governance and look forward to building out those systems in due course.