3.1 Minting Function Rj is total number of tokens at year j, with R1 = 360M , and Rl representing the last year R were changed; cj is the yet un-minted supply of coins to reach that the values of , 360M ; u represents a staker, with u.samount representing 720M at year j such that cj the total amount of stake that u possesses, and u.stime the length of staking for u. 2 where, Rj = Rl + u X8 (u.samount, u.stime) (cj/L) 0 B B B j i=0 X + 1 1 1 + i i 1 C C C A 1 1 L = 0 B B B 1 i 1 1 + i i=0 X + C C C A At genesis, c1 = 360M . The values of and are governable, and if changed, the function is recomputed with the new value of c ) is a linear function . We have that that can be computed as follows (u.stime is measured in weeks, and u.samount is measured in $AVAX tokens): 1. ( ) ( P (u.samount, u.stime) = (0.002 u.stime + 0.896)

samount Rj If the entire supply of tokens at year j is staked for the maximum amount of staking time u (u.samount, u.stime) = 1. If, instead, every token is staked u (u.samount, u.stime) = 0.9. Therefore, staking for the maximum amount of time incurs an additional 11.11% of (one year, or 52 weeks), then 8 continously for the minimal stake duration of two weeks, then P 8 P tokens minted, incentivizing stakers to stake for longer periods. Due to the capped-supply, the function above guarantees that regardless of the number of governance changes, we will never exceed a total of 720M tokens. Therefore, lim j= 1 Rj = 720M (1) (2) (3) (4) 60 80 0 20.0YearsSinceGenesis 0.0 17.5 5.0 2.5 12.5 AVAX (100% staked) AVAX (50% staked) BTC 100%ofTotalCapReached 7.5 15.0 40 10.0 20 Avalanche Native Token ($AVAX) Dynamics 2020/06/25 5 100YearsSinceGenesis 60 60 80 80 0 0

AVAX (100% staked) AVAX (50% staked) BTC 100%ofTotalCapReached 40 40 20 20 Fig. 2. Token emissions between $AVAX and BTC, calculated over a 20 year and 100 year horizon, with = 1.15 and = 1.1. The curve for $AVAX (100% staked) represents the case where every token is being staked repeatedly for the maximum staking duration of one u (u.samount, u.stime) = 1. On the other hand, the curve of $AVAX (lower) year, i.e. represents the case where only 50% of the tokens are being staked repeatedly over the u (u.samount, u.stime) = 0.45. We note that, minimal staking duration of two weeks, i.e. 8 for simplicity, these graphs represent the case where and are xed at genesis and never P governed afterwards. The goal of changing and is to increase total supply of tokens in case the empirically observed total staked supply is too low. 8 P 100 105 110 115 120 125 6 Stephen Buttolph, Amani Moin, Kevin Sekniqi, and Emin Gun Sirer

4 Minting Mechanism Minting in $AVAX is designed to incentivize nodes to behave in a way that positively helps global outcomes. This is accomplished by special minting transactions. A node earns the right to mint by rst putting up a stake and then participating actively in the consensus process. Specically, node rewards are directly linked to their uptime and response latency. Every node maintains local information about the liveness and behavior of each other node with which it interacted. Whenever a node v is sampled by u, the latter maintains a local tuple of (response bit, timestamp). The rst entry is a single bit representing whether v responded within the timeout, and the second represents the timestamp of the response. In other words, minting in Avalanche is done via proof-of-uptime and proof-of-responsiveness. This mechanism has important consequences. In particular, since there is no leader accumulating rewards, there is no rich-get-richer compounding eects.