Toward Ultra Sound Money: The Future of Telos

It is time for Telos to to take bold and aggressive steps to become ultra sound money, clearly setting itself apart from the thousands of inflationary, unsustainable networks that dominate the market today.

The State of Crypto Today

We must acknowledge some hard truths about the industry:

✅ Real, organic demand for crypto transactions remains modest - less than 1% of the world’s population has been onboarded.

✅ Most network activity is botted, paid for with inflation, and ultimately pointless.

✅ Staking rewards and incentives consume a large share of inflation, making up what is ultimately a circular and unsustainable exercise.

We’ve seen these dynamics firsthand across many networks. That’s why our priorities are clear:

Drastically reduce, or eliminate emissions.

Increase real-world utility and demand for the Telos network to fully offset any remaining emissions.

Why This Matters

🌪️ High-inflation networks create perverse incentives to generate fake demand.

Inflation forces networks to manufacture transactions and activity simply to justify token emissions. This creates an endless, self-defeating cycle.When Avalanche offered inflated incentives via “Rush” programs, TVL temporarily surged, but over 75% of it left within months as incentives dried up. More recent programs such as that of berachain showed the exact same trend. Inflated ecosystems can’t build lasting demand.

🦈 VC-backed chains can play this game better than Telos.

They have deeper pockets and greater ability to manipulate TVL and network usage. Even if we wanted to compete in that arena (we don’t), it would be a losing battle.Networks like Aptos and Sui raised over $350M each before launch. One may argue they use this to game metrics — subsidizing liquidity, bootstrapping usage, and manufacturing adoption narratives.

📈 Telos DeFi and applications need sound TLOS.

DeFi on Telos struggles under a volatile, inflationary token. An appreciating, credible TLOS provides a much stronger foundation for sustainable DeFi growth.

🔗 Trust cannot thrive in high-inflation systems.

When incentives are misaligned and demand is artificial, trust inevitably breaks down The tokenomics become messy and confusing.. It also becomes extremely difficult to justify the various expenditures needed to support the token price at sustainable levels.

What We Will Achieve

🌪️ A network and community focused on generating real demand and solving real-world problems

With lower inflation and a differentiated approach, we can set more realistic transaction goals and build a truly sustainable network.

🦈 A community-driven chain, like Bitcoin

VCs are welcome to participate, just as they do with Bitcoin, but our path will be led by developers and the community, not dictated by Web 2.0 vanity metrics.

📈 Ultra Sound TLOS

A token with a fundamentally sound path, featuring fewer emissions than burns. A token that can be trusted and helps set the network apart from its peers.

0% Inflation Today

One month ago, the Telos Foundation took the first step by offsetting what would have been 4.4% annual inflation for six months. Thanks to our existing burn mechanisms, TLOS is now moderately deflationary. But this is just a signal of intent, not the finish line. Technically, new tokens are still entering circulation, and we acknowledge that. We remain committed to solving this over the long term.

What We’re Working On

Our research and planning are well underway:

✅ Exploring the implementation of a hard cap on TLOS supply

✅ Identifying ways to grow authentic network activity and attract new users

✅ Designing mechanisms to fund and secure the network without inflation

✅ Investigating new transaction types with stronger real-world demand potential

✅ Enhancing utility to drive adoption and meaningful use cases. Eg. ZK Identity

Key Insights So Far

💡 People are willing to pay for transactions

After raising fees, transaction volume actually increased, showing that demand is not purely price-driven and supporting the feasibility of a deflationary model.

🕵️ Privacy has a strong long term future and necessary for real world adoption

Most real-world transactions are private by nature. Privacy and shielded transactions could be the key driver of long-term growth for Telos.  Web2 keeps your data privatish. Web3 should do better, not worse.

🎯 We don’t need to play the same games

By differentiating ourselves through integrity and sound economics, we can eliminate much of the unnecessary inflation tied to staking rewards, and unsustainable incentives. We are not going to go toe to toe with networks on fake numbers, we are going to simplify our own economics to achieve deflation on smaller, more realistic organic numbers.

Long-Term Deflation Is Achievable

Telos can achieve long-term deflation through a combination of:

Offsetting all inflation with transaction fees

Reducing or fully eliminating inflationary mechanisms

Here’s a simple breakdown of what sort of deflationary pressure can be created based on achievable daily tx numbers and the current average TelosEVM transaction fee: 0.32 TLOS

Projection:

For Context, Polygon does 3-5M transactions per day. We are seeking to achieve much more conservative numbers as we will be doing this without the unsustainable incentives that other networks  are using  - we want to generate real usage that sets us apart from our competitors with unsustainable tokenomics. Current IssuancesWe are going to tackle in a seperate release but there are a number of different options that would reduce the current outgoing issuance (post existing offset)  from 4.4% to between 0% and 2.5% which would see TLOS become net deflationary based on usage targets.

What’s Next?

We have several potential paths forward and are actively exploring the optimal way to achieve our vision of a sound, sustainable Telos economy.

In the meantime, we wanted to share these updates so the community knows where we’re headed and can begin contributing ideas and feedback. In our next update we will go into more details about everything discussed and dive into  use cases that would bring in the number of tx’s Telos will require to be sustainable.

Telos is moving forward as a network worthy of trust - built on sustainable and truly sound money. Stay tuned, this is just the start of the journey.Telos - Fast, Deflationary, Unstoppable.

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