peaq network (PEAQ) tokenomics

Peaq's native token, PEAQ, is central to the network's operation, security, and governance, supporting its role as a Layer 1 blockchain for Decentralized Physical Infrastructure Networks (DePINs). The tokenomics model is designed for long-term sustainability and growth, featuring a disinflationary supply schedule and a comprehensive allocation plan. The maximum total supply of PEAQ is set at 4.2 billion tokens.

Issuance Mechanism

Peaq operates under a disinflationary economic model designed to incentivize early adoption while ensuring long-term stability.

• Initial Inflation Rate: The network launched with an initial annual inflation rate set at 3.5%.
• Disinflationary Schedule: This inflation rate is programmed to decrease by 10% each year until it stabilizes at a final rate of 1% annually, which is projected to occur 12 years after the mainnet launch.
• Inflation Allocation: Of the newly minted tokens generated through inflation, 40% are distributed as staking rewards for validators and delegators, while the remaining 60% is directed to non-circulating treasury allocations intended for long-term ecosystem development.
• Governance Control: This economic model is subject to change, as on-chain governance allows token holders to vote on proposals related to PEAQ's economic framework.

Allocation Mechanism

The initial distribution of the 4.2 billion PEAQ tokens is structured across various stakeholders and ecosystem funds, with a strong emphasis on community and core development.

The proposed initial allocation breakdown is as follows:

Note: These distributions were noted as subject to change.

Usage and Incentive Mechanism

The PEAQ token serves multiple critical functions within the ecosystem, primarily focused on network security, transaction facilitation, and governance.

Core Utility

1. Transaction Fees: PEAQ is the native currency used to pay transaction fees on the network.
2. Staking and Network Security: The network uses a Delegated Proof of Stake (DPoS) consensus mechanism. Token holders can stake PEAQ to support validator nodes or delegate their tokens to preferred validators, ensuring reliable block production and network security. As of March 31, 2025, 1.75 billion PEAQ tokens, or 41.2% of the total issuance, were staked.
3. Governance: PEAQ token holders are slated to have voting rights on key decisions regarding network updates, economic policies, and ecosystem grants, although this functionality was not immediately implemented at launch.

Incentive Distribution

Transaction fees collected by the protocol are distributed among network participants to incentivize active engagement and contribution. As of Q1 2025, the distribution of transaction fees is structured as follows:

• Validators & Delegators: 40%
• General Treasury: 25%
• DePIN Treasury: 20%
• Security Treasury: 10%
• Machine Subsidization Treasury: 5%

Future Utility and Machine Economy

Peaq plans to expand token utility to support the machine economy:

• Machine Reputation Proof: Machine owners will be able to stake PEAQ on their devices to vouch for their quality and reliability. If a machine fails to serve its intended purpose, the staked tokens would be subject to slashing.
• Machine DeFi and Tokenization: Future innovations include Machine DeFi and Machine Tokenization (Real World Assets), enabling the tokenization of physical machines for use in the DeFi ecosystem.

Locking Mechanism and Unlocking Time

The token allocation includes various lock-up and vesting schedules designed to ensure long-term commitment from early investors and core contributors.

The total liquid supply of PEAQ tokens is projected to increase steadily from the mainnet launch in November 2024 through May 2028.

• Q2 2025 Unlocks: Approximately 294.1 million PEAQ tokens were projected to enter circulation in Q2 2025.
• Q3 2025 Unlocks: Approximately 327.3 million PEAQ tokens are projected to unlock in Q3 2025. The largest contributors to the circulating supply in Q3 2025 are projected to be Investors (187.9 million PEAQ, or 20.2% of circulating supply) and Community (70.2 million PEAQ, or 7.6% of circulating supply).
• Long-Term Trend: The Community allocation is expected to hold the largest share of unlocks over time, accounting for 53.4% of the circulating supply by Q1 2025, indicating a significant focus on ecosystem participation and rewards.