Radix Economic Model

Introduction

The Radix economic model is designed to align network security incentives with long-term ecosystem growth. Unlike many layer-1 protocols that rely primarily on transaction fees or fixed block rewards, Radix uses a combination of programmatic XRD emissions, fee burning, and delegated proof of stake to create a self-sustaining economic loop. The model was outlined in the Radix Economics Proposal v2 and refined through community governance.

Token Supply & Allocation

XRD has a hard cap of 24 billion tokens. Half were minted at network genesis in July 2021; the other half is emitted over approximately 40 years as staking rewards.

Genesis Allocation (12 Billion XRD)

The initial distribution was structured to fund development, reward early participants, and reserve capital for ecosystem initiatives:

Category	Amount	Share
Radix Community (early contributors, 2013–2017)	3,000M	12.5%
RDX Works Ltd (founder retention)	2,400M	10.0%
Stablecoin Reserve (locked)	2,400M	10.0%
Radix Tokens (Jersey) Limited	2,158M	9.0%
October 2020 Token Sale	642M	2.7%
Developer Incentives	600M	2.5%
Network Subsidy (validator grants)	600M	2.5%
Liquidity Incentives	200M	0.8%

All genesis tokens except the Stablecoin Reserve were fully unlocked at launch. The allocation details are published by the Radix Foundation.

Emission Mechanics

The remaining 12 billion XRD is minted by the protocol as network emissions, distributed to validators and their delegators at approximately 300 million XRD per year. Emissions serve two purposes: compensating validators for securing the network, and gradually broadening token distribution over time.

Emission rates are not fixed in perpetuity — the XRD protocol parameters include adjustment mechanisms tied to epoch duration and network utilisation metrics. This allows the emission curve to adapt if network conditions change significantly, though changes require protocol-level updates and community signalling.

Delegated Proof of Stake

XRD holders delegate stake to validator nodes to participate in consensus. The top 100 validators by total delegated stake form the active set and are eligible to receive emissions. Validators set a commission percentage (deducted from their delegators' rewards), creating a competitive market for staking services. Delegators receive Liquid Stake Units (LSUs) — fungible tokens representing their staked position — which can be freely transferred or used in DeFi while the underlying XRD continues earning rewards.

Fee Burning & Deflationary Pressure

Every transaction on Radix incurs a fee denominated in XRD. The protocol permanently burns 50% of the base network fee, removing those tokens from circulation forever. The remaining 50% is distributed to validators as additional compensation on top of emissions.

This burn mechanism introduces deflationary pressure that partially offsets ongoing emissions. As network usage grows and total transaction volume increases, the burn rate rises proportionally. In a mature network with high transaction throughput, the annual burn could approach or exceed annual emissions — at which point XRD becomes net-deflationary, similar in principle to Ethereum's EIP-1559 mechanism but applied natively from launch rather than retrofitted.

Stablecoin Reserve Governance

Of the 12 billion genesis tokens, 2.4 billion XRD (10% of max supply) were locked in a Stablecoin Reserve — earmarked to bootstrap decentralised stablecoin projects native to Radix. The Radix Foundation has a 10-year window (from July 2021) to disburse these tokens.

In 2025, the Radix Foundation opened a community consultation on repurposing the reserve toward broader ecosystem growth. The consultation received overwhelming support (91% of weighted votes) for reallocating 1 billion XRD to a multi-season incentives campaign aimed at boosting on-chain liquidity and economic activity.

Incentive Alignment

The economic model is designed so that all participants' incentives converge on network health:

• Validators earn emissions and fee shares, incentivising uptime and honest behaviour. Validators with poor performance lose delegators and fall out of the top 100.
• Delegators earn staking yield via LSUs while contributing to network security. The liquid nature of LSUs means capital is not locked away, reducing the opportunity cost of staking.
• Developers can set component royalties on their blueprints, earning XRD each time their code is called. This creates a sustainable revenue model for open-source DeFi development.
• Users pay transaction fees that are low enough for practical use but high enough to prevent spam. Fee burning ensures that network usage benefits all XRD holders through supply reduction.

External Links

• Radix Economics Proposal v2
• Radix Tokens and Tokenomics — Knowledge Base
• XRD Token Allocation — Knowledge Base
• Radix on Tokenomics Hub