Caiz Deflationary Tokenomics — Explained!

CAIZ MEDIUM
6 min readApr 26, 2023

‘Self-balancing Deflationary Mechanism’

TL;DR

The Caiz Ecosystem offers several features that make it a game-changer in the world of Digital Finance, and especially the Islamic finance. As the world becomes more interconnected, the need for halal investment options that are compliant with Islamic Law is growing. Caizcoin and its blockchain are well-positioned to address this need for a compliant cryptocurrency. The deflationary tokenomics and elastic token release schedule of the Caiz Ecosystem are designed to create a tight supply of Caizcoins in circulation. This means that the value of each Caizcoin may increase as the ecosystem grows, making it an attractive investment option for those seeking a stable and reliable cryptocurrency.

Caizcoin, the first European Islam-compliant cryptocurrency, is gaining popularity among Muslims and non-Muslims who want to access the financial markets in a way that is compliant with both universal and Islamic Finance principles. But what sets Caizcoin apart from other cryptocurrencies is its Deflationary Tokenomics.

What is Tokenomics:

Tokenomics refers to the study of how cryptocurrencies operate within a decentralized network. This field covers many aspects, including how tokens are created, distributed, traded, and managed. Tokenomics also involves the use of advanced technologies like smart contracts and blockchain to create different types of tokens, such as payment, security, utility, and governance tokens. In short, tokenomics is crucial in motivating people to take part in a decentralized network and encouraging them to act in ways that benefit the network as a whole.

Caiz Deflationary Tokenomics: A self-regulating mechanism

Caiz tokenomics is built to uphold a critical feature of the ecosystem: a Deflationary Mechanism. This mechanism ensures that early adopters of the Caiz ecosystem receive greater access to available average Caizcoins, as the mechanism gradually decreases the average coin availability over time. This design promotes fair distribution of Caizcoins among ecosystem participants and creates a stable buying- and selling-price for the coin.

With a total supply of 999,999,999 coins, the Caiz ecosystem has 40 million coins currently in circulation. This supply strategy ensures that there is always a sufficient number of coins available for transactions while preventing a surplus that can lead to a decline in their value. Over and above, to guarantee the availability of coins when needed, the ecosystem has reserved 20 million coins (of the 40 million currently in circulation) in a “Liquidity Wallet.” These coins are locked in the wallet, and they are not intended for distribution in the ecosystem. Instead, they are reserved to provide liquidity in the ecosystem and support a stable buying- and selling-price, even during high transaction volumes.

Moreover, the Deflationary Mechanism provides protection against the destabilizing effects of inflation. Inflation can erode the purchasing power of a currency and lead to economic instability. The Caiz ecosystem protects itself from these risks by maintaining a steady release of coins into the market.

For example, if the number of verified wallets in the ecosystem decreases, Caizcoins will be transferred back to the Minted Wallet. Moreover, the transfer of coins to the Distribution Wallet will be halted until the creation of new verified wallets absorbs the surplus of Caizcoins. This strategy ensures a balanced supply and demand for Caizcoins and guarantees that the ecosystem remains stable and self-regulating.

The Caiz ecosystem is a powerful example of how blockchain technology can be combined with advanced AI algorithms to create a decentralized ecosystem that supports real-world use-cases. With its deflationary tokenomics and robust security measures, the Caiz ecosystem is well-positioned to grow and prosper.

Caiz Ecosystem:

Elastic Token Release Schedule

The Caiz Ecosystem has a unique token release schedule that is designed to be deflationary. The number of Caizcoin in circulation is determined by the number of verified wallets in the ecosystem. When a new wallet is verified, a limited amount of Caizcoins is released to the distribution wallet for distribution to the ecosystem.

The token release amount is reduced by approximately 35.4% for each subsequent slot as more wallets are verified, making the ecosystem even tighter. The final slot, slot number 7, runs from 500 millionths to almost the billionth wallet and has a slightly adjusted reduction factor. In the final slot, new verified wallets will not lead to an increase in circulating Caizcoins as the maximum supply of 999.999.999 Caizcoins will have been met.

The Caiz ecosystem is designed to prevent an ecosystem-wide oversupply of coins, and for every new verified wallet that is created, only a limited number of Caizcoins are released into the ecosystem. This maintains the deflationary mechanism by decreasing the average number of Caizcoins available to users each time a new user is accepted into the ecosystem.

The Caiz ecosystem is also designed to offer practical applications and benefits driven by real-world use-cases, making it a use-case-driven ecosystem. New Coins are introduced into the ecosystem in direct correlation with user-growth. In case the number of verified wallets in the Caiz Ecosystem decreases, the Distribution Wallet will transfer Caizcoins back to the Minted Wallet.

Elastic Token Release Procedure

As stated above, the Caiz Ecosystem has a defined Token release procedure to ensure that the supply of Caizcoins in circulation is tight and evenly distributed. This procedure involves two wallets: the Minted Wallet and the Distribution Wallet.

Minted Wallet

This wallet contains all the Caizcoins that have been created and added to the blockchain but have not yet been released into the Caiz Ecosystem. This wallet is responsible for holding the initial supply of Caizcoins before they are made available to the public. The Minted Wallet serves as a reserve of Caizcoins, ensuring that there is always a sufficient number of tokens available for distribution.

Distribution Wallet

This wallet contains all the Caizcoins that have been released and are ready to be distributed to the Caiz Ecosystem. This wallet is responsible for the release of Caizcoins into the ecosystem according to the elastic Token release schedule, which is directly correlated to the number of verified wallets. As more wallets are verified in the Caiz Ecosystem, the Distribution Wallet releases a limited number of Caizcoins, which decreases with each slot, ensuring a deflationary mechanism.

By separating the responsibilities of these two wallets, the Caiz Ecosystem can maintain a tight supply of Caizcoin while ensuring their even distribution among the ecosystem’s verified wallets. This ensures that Caizcoins remain a valuable and stable cryptocurrency in the market.

The Caizcoin Token Release Algorithm is designed to run daily at 2 pm CET to transfer coins from the Minted Wallet to the Distribution Wallet. The algorithm calculates the amount of Caizcoins to be released by multiplying the respective Elastic Token Release Amounts with the number of verified wallets in the previous 24 hours.

The Optimal Liquidity Sales Algorithm is responsible for selling tokens from the Distribution Wallet in a way that minimizes selling pressure on the market. This algorithm ensures that new Caizcoins are only sold during up-market movements, preventing negative impacts on the value of Caizcoin.

The Ecosystem Liquidity Pool is a thin layer that links all trading venues for Caizcoin. It is algorithmically managed and connected to the Caiz Earn program, where users can pool their Caizcoins to provide liquidity to the ecosystem and earn a liquidity trading profit. This guarantees that there is always liquidity available for buyers and sellers.

Conclusion

The Elastic Token Release Schedule of the Caiz Ecosystem is a unique feature that sets Caizcoin apart from other cryptocurrencies. Its Deflationary Tokenomics ensures that the supply of Caizcoins in circulation remains tight, making it an attractive investment option for those who want to benefit from the principles of supply and demand.

All in all, the Caiz Ecosystem and Caizcoin offer compelling use cases for those seeking a compliant and reliable cryptocurrency. With its deflationary tokenomics, elastic token release schedule, and commitment to ethical principles, Caiz is well-positioned to become a leading player in the cryptocurrency space.

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CAIZ: Uniting tradition with fintech for ethical, secure & fiqh-compliant financial freedom.