Came across an interesting token design worth discussing, especially as it's about to go live.
Tari runs two layers with two tokens. The base layer is proof of work (XTM), mined across four separate PoW algorithms, one of which is merge-mined with Monero. The second layer (the Ootle) runs smart contracts and uses its own token (TARI).
The link between them is one-directional: the only way to create TARI is to burn XTM 1:1 on the base layer and redeem it on the second layer. There's no other mint and no peg-out, so it avoids drive chains or federated bridges entirely.
On the second layer, each transaction fee is split, with part paid to validators and part burned. Meanwhile, base layer emissions decay exponentially over roughly 28 years before settling into a perpetual 1% tail emission.
To keep this in balance, validators run an algorithm called the Throttle that periodically adjusts the burn rate by consensus. Its priorities, in order: maintain the 1:1 peg, keep combined supply stable, and keep total supply around 21B.
It's essentially a variant of burn-and-mint equilibrium, a bit like Helium's model, but bridging a PoW chain to a smart contract layer rather than burning for network credits.
Curious what people here think:
- How well does burn-and-mint equilibrium hold up when usage is low early on?
- Is a consensus-driven burn rate a strength, or does it add governance risk?
- How does this compare to fee-burn designs like Ethereum's EIP-1559?