What is Moonbeam (GLMR)?

As a decentralized smart contract platform, Moonbeam requires the Glimmer token to function. This token is central to the design of Moonbeam and cannot be removed without sacrificing essential functionality. Some of the uses of the Glimmer token on Moonbeam include:

• Supporting the gas metering of smart contract execution
• Incentivizing collators and powering the mechanics around the creation of a decentralized node infrastructure on which the platform can run
• Facilitating the on-chain governance mechanism including proposing referenda, electing council members, voting, etc
• Paying for transaction fees on the network

Moonbeam targets a 5% annual inflation rate and, as such, has an uncapped token supply.

The purpose of inflation in Moonbeam is to pay for ongoing security needs of the network. The primary security budget items are to pay for a parachain slot on an ongoing basis, and to incentivize collators to provide collation (block production) services to support the Moonbeam network. Of the 5% inflation, 1% goes towards incentivizing collators and 1.5% goes to the parachain bond reserve to accumulate on chain funds to pay for a parachain slot in perpetuity. The remaining 2.5% is for users that stake their GLMR tokens and help power the collator selection process.

Fees on Moonbeam related to transactions and smart contract execution are handled in two ways. 80% of the spent fees are burned, which acts as a deflationary force and accrues value to existing GLMR holders based on increased utilization of the network. 20% of the spent fees go to the on chain treasury which can be allocated via onchain governance to projects and initiatives which further adoption and engagement with the network.