<img src="https://i.ibb.co/WHRDtQt/tokenomics2.png" alt="" />
Today, we&rsquo;re thrilled to introduce PEN Tokenomics 2.0&mdash;a forward-thinking plan to enhance the sustainability, decentralization, and utility of the PEN token.
Since Pendulum&rsquo;s launch in February 2022, the <a href="https://medium.com/pendulum-chain/pendulum-pen-tokenomics-afa5e5873d9a">tokenomics of PEN</a> have remained unchanged. While this strategy suited the early phase of growth, the dynamic realities of the ecosystem, combined with the evolution of Polkadot and the broader blockchain landscape, call for a significant adjustment, With PEN Tokenomics 2.0, we&rsquo;re aligning Pendulum&rsquo;s tokenomics with the progress we&rsquo;ve made and the community we&rsquo;ve built, all while staying true to Pendulum&rsquo;s vision of a decentralized and thriving Layer 1 blockchain.
Two Key Changes 
1 Stop Issuance and Minting of New PEN Tokens 
One of our major goals is to simplify the tokenomics of PEN tokens and increase transparency by halting any future token issuance. Here&rsquo;s how we plan to achieve this:
<ul>
<li>Delegator Rewards: Currently, new tokens are issued to reward delegators. This issuance is already set to stop automatically after two years. So far, only a small number of tokens have been issued under this system, making the transition seamless.</li>
<li>Collator Rewards: To ensure a decentralized and functioning economy, collators will continue to receive rewards. However, instead of minting new tokens, these rewards will come from the existing treasury. This ensures no new tokens are added to the circulating supply.</li>
<li>Reducing the Total Supply: We aim to lower the current maximum cap of 200 million PEN tokens to 150 million tokens. To achieve this, we propose burning a portion of the currently minted supply (163 million tokens), including tokens from allocations such as the Crowdloan reserve, which has become obsolete due to Polkadot&rsquo;s transition to the Core Time market model.</li>
</ul>
With these changes, we&rsquo;re safeguarding the value of PEN while building a sustainable and decentralized economy for Pendulum.w
2 Increase Decentralization of the PEN Token 
The second goal of PEN Tokenomics 2.0 is to put more decision-making power into the hands of the Pendulum community.
<ul>
<li>Streamlining Allocations: Several token allocations are no longer necessary, including:
<ul>
<li>Crowdloan reserve for parachain slot renewals.</li>
<li>Strategic sale allocation that was not utilized.</li>
<li>Certain allocations for market making, marketing, and private sales. These unused allocations will be returned to the treasury.</li>
</ul>
</li>
<li>Empowering Community Governance: By consolidating unused token allocations into the treasury, the community will decide how these tokens are used. Whether for liquidity incentives for Spacewalk, initiatives for the DEX, or other valuable projects, the Pendulum governance process will ensure transparent and community-driven decisions.</li>
</ul>
This shift simplifies the structure, enhances transparency, and places more control in the hands of our community.
Why Now? 
Over the past two years, we&rsquo;ve grown and learned a lot. While Pendulum expected more builder traction and Polkadot-wide adoption initially, Pendulum is now at an exciting juncture: successfully launching the first dApps on the Pendulum Layer 1 chain. To support Pendulum&rsquo;s growth, we&rsquo;re suggesting tokenomics adjustments to make PEN more attractive and better aligned with the community&rsquo;s long-term goals.
Roll-out Plan 
We aim to implement these changes by early next year, creating a more decentralized and sustainable future for Pendulum.
<ul>
<li>Vested Multi-sig-controlled allocations of 35.3m PEN have been returned to the community-controlled treasury on 23 Dec 2024:
<ul>
<li><a href="https://pendulum.subscan.io/extrinsic/4303958-2">1.48m PEN </a></li>
<li><a href="https://pendulum.subscan.io/extrinsic/4303950-2">2.49m PEN </a></li>
<li><a href="https://pendulum.subscan.io/extrinsic/4303942-2">4.66m PEN </a></li>
<li><a href="https://pendulum.subscan.io/extrinsic/4303931-2">12.49m PEN </a></li>
<li><a href="https://pendulum.subscan.io/extrinsic/4303803-2">8.87m PEN </a></li>
<li><a href="https://pendulum.subscan.io/extrinsic/4303776-2">5.31m PEN </a></li>
</ul>
</li>
<li>The community-controlled treasury funds increased to 55.6m PEN. All remaining Multi-sig controlled funds will be returned to the community owned Pendulum treasury after vesting</li>
<li>Delegator rewards will be stopped as planned and already enacted in the runtime with Block #5259600. The current estimate for publishing this block is May 2025, which will be the timeline we are aiming at completing Pendulum tokenomics 2.0.</li>
<li>A referendum is prepared, where delegator rewards will be sent from Treasury instead of being minted</li>
<li>Another referendum is prepared that burns tokens from the treasury aiming at having a total issuance = max issuance = 150m PEN tokens (down from 200m PEN).</li>
</ul>
Get involved 
We invite all community members to join the conversation and share their feedback! Your input is critical to shaping the future of PEN Tokenomics. Review this plan and the upcoming gov proposals, participate in the discussion, and suggest ideas.
Thank You for Building the Future With Us 
The Pendulum community is the foundation of everything we do. PEN Tokenomics 2.0 is a testament to our commitment to transparency, decentralization, and long-term growth. Together, let&rsquo;s build a stronger, more vibrant ecosystem for Pendulum and beyond. Stay tuned for more updates, and as always, thank you for your continued support! 🌟

<img src="https://i.ibb.co/WHRDtQt/tokenomics2.png" alt="" />
Today, we&rsquo;re thrilled to introduce PEN Tokenomics 2.0&mdash;a forward-thinking plan to enhance the sustainability, decentralization, and utility of the PEN token.
Since Pendulum&rsquo;s launch in February 2022, the <a href="https://medium.com/pendulum-chain/pendulum-pen-tokenomics-afa5e5873d9a">tokenomics of PEN</a> have remained unchanged. While this strategy suited the early phase of growth, the dynamic realities of the ecosystem, combined with the evolution of Polkadot and the broader blockchain landscape, call for a significant adjustment, With PEN Tokenomics 2.0, we&rsquo;re aligning Pendulum&rsquo;s tokenomics with the progress we&rsquo;ve made and the community we&rsquo;ve built, all while staying true to Pendulum&rsquo;s vision of a decentralized and thriving Layer 1 blockchain. 
Two Key Changes 
1 Stop Issuance and Minting of New PEN Tokens 
One of our major goals is to simplify the tokenomics of PEN tokens and increase transparency by halting any future token issuance. Here&rsquo;s how we plan to achieve this:
<ul>
<li>Delegator Rewards: Currently, new tokens are issued to reward delegators. This issuance is already set to stop automatically after two years. So far, only a small number of tokens have been issued under this system, making the transition seamless.</li>
<li>Collator Rewards: To ensure a decentralized and functioning economy, collators will continue to receive rewards. However, instead of minting new tokens, these rewards will come from the existing treasury. This ensures no new tokens are added to the circulating supply.</li>
<li>Reducing the Total Supply: We aim to lower the current maximum cap of 200 million PEN tokens to 150 million tokens. To achieve this, we propose burning a portion of the currently minted supply (163 million tokens), including tokens from allocations such as the Crowdloan reserve, which has become obsolete due to Polkadot&rsquo;s transition to the Core Time market model.</li>
</ul>
With these changes, we&rsquo;re safeguarding the value of PEN while building a sustainable and decentralized economy for Pendulum.w
2 Increase Decentralization of the PEN Token 
The second goal of PEN Tokenomics 2.0 is to put more decision-making power into the hands of the Pendulum community.
<ul>
<li>Streamlining Allocations: Several token allocations are no longer necessary, including:
<ul>
<li>Crowdloan reserve for parachain slot renewals.</li>
<li>Strategic sale allocation that was not utilized.</li>
<li>Certain allocations for market making, marketing, and private sales. These unused allocations will be returned to the treasury.</li>
</ul>
</li>
<li>Empowering Community Governance: By consolidating unused token allocations into the treasury, the community will decide how these tokens are used. Whether for liquidity incentives for Spacewalk, initiatives for the DEX, or other valuable projects, the Pendulum governance process will ensure transparent and community-driven decisions.</li>
</ul>
This shift simplifies the structure, enhances transparency, and places more control in the hands of our community.
Why Now? 
Over the past two years, we&rsquo;ve grown and learned a lot. While Pendulum expected more builder traction and Polkadot-wide adoption initially, Pendulum is now at an exciting juncture: successfully launching the first dApps on the Pendulum Layer 1 chain. To support Pendulum&rsquo;s growth, we&rsquo;re suggesting tokenomics adjustments to make PEN more attractive and better aligned with the community&rsquo;s long-term goals.
Roll-out Plan 
We aim to implement these changes by early next year, creating a more decentralized and sustainable future for Pendulum.
<ul>
<li>Vested Multi-sig-controlled allocations of 35.3m PEN have been returned to the community-controlled treasury on 23 Dec 2024:
<ul>
<li><a href="https://pendulum.subscan.io/extrinsic/4303958-2">1.48m PEN </a></li>
<li><a href="https://pendulum.subscan.io/extrinsic/4303950-2">2.49m PEN </a></li>
<li><a href="https://pendulum.subscan.io/extrinsic/4303942-2">4.66m PEN </a></li>
<li><a href="https://pendulum.subscan.io/extrinsic/4303931-2">12.49m PEN </a></li>
<li><a href="https://pendulum.subscan.io/extrinsic/4303803-2">8.87m PEN </a></li>
<li><a href="https://pendulum.subscan.io/extrinsic/4303776-2">5.31m PEN </a></li>
</ul>
</li>
<li>The community-controlled treasury funds increased to 55.6m PEN All remaining Multi-sig controlled funds will be returned to the community owned Pendulum treasury after vesting</li>
<li>Delegator rewards will be stopped as planned and already enacted in the runtime with Block #5259600. The current estimate for publishing this block is May 2025, which will be the timeline we are aiming at completing Pendulum tokenomics 2.0.</li>
<li>A referendum is prepared, where delegator rewards will be sent from Treasury instead of being minted</li>
<li>Another referendum is prepared that burns tokens from the treasury aiming at having a total issuance = max issuance = 150m PEN tokens (down from 200m PEN).</li>
</ul>
Get involved 
We invite all community members to join the conversation and share their feedback! Your input is critical to shaping the future of PEN Tokenomics. Review this plan and the upcoming gov proposals, participate in the discussion, and suggest ideas.
Thank You for Building the Future With Us 
The Pendulum community is the foundation of everything we do. PEN Tokenomics 2.0 is a testament to our commitment to transparency, decentralization, and long-term growth. Together, let&rsquo;s build a stronger, more vibrant ecosystem for Pendulum and beyond. Stay tuned for more updates, and as always, thank you for your continued support! 🌟

Introducing PEN Tokenomics 2.0: A New Chapter for Pendulum

- **Problem Statement:** Updating the tokenomics of the PEN token to enhance sustainability, decentralization, and utility for the Pendulum community.
- **Significance:** Adjusting the tokenomics to align with the evolving ecosystem and community goals, increasing transparency, and decentralizing decision-making.
- **Proposed Solution:** Stop issuance of new PEN tokens, reduce total supply, empower community governance, and streamline token allocations.
- **Expected Outcomes:** Safeguarding the value of PEN, creating a sustainable and decentralized economy, and putting more control in the hands of the community.

#4 Introducing PEN Tokenomics 2.0: A New Chapter for Pendulum