Overview
Over five years ago, SKALE designed its revenue model and tokenomics around an ambitious idea: every application should be able to own and operate its own blockchain.
At the time, this made sense. The industry was experimenting with app-specific architectures, and SKALE set out to give developers the power and predictability of dedicated, high-performance chains.
Along the way, SKALE chains turned out to be far more powerful and versatile than originally anticipated. Running a single application on a SKALE chain frequently underutilizes the chain’s potential and has been creating economic inefficiencies.
This realization led to the introduction of Hub Chains. Hub Chains are shared, purpose-built chains like SKALE Nebula for gaming and SKALE Europa for DeFi. These hubs deliver better economics, better UX, and far greater throughput.
Yet despite major technical evolutions, SKALE’s revenue model hasn’t evolved at the same pace.
With 2026 approaching and SKALE Expand rolling out we are at a natural inflection point.
It’s time to modernize SKALE’s economics and align them with today’s market expectations.
This means rethinking demand mechanisms, pricing structures, and most importantly, introducing SKL burning.
Below is a clear breakdown of where SKALE stands today and where it needs to go.
Demand
Current Demand Model
Today, SKALE revenue is driven by chain fees. Applications pay for either a dedicated SKALE chain or pay their fair share of a hub chain.
Strengths:
- Predictable cost structure for developers
- Scalability without unpredictable gas dynamics
Weaknesses:
- Chains are overpowered for a single application
- The total number of chains is lower than originally expected
- Revenue does not scale enough with user activity or network adoption
Future Demand: A Multi-Layered Revenue Architecture
With an expansion to Base and potentially other EVM/SVM chains, SKALE introduces a more modern and diversified fee framework:
Chain Fees (on SKALE Ethereum only)
Applications can still pay for their own chain or a share of a hub chain on SKALE Ethereum. This preserves SKALE’s foundational value proposition of 0 gas fees.
App Fees
Developers/Apps will pay USDC or SKL to buy credits, which they need to execute transactions. This mirrors the dominant cloud-provider model (AWS, GCP, etc.) - predictable, scalable, consumption-driven.
This is a major shift because app fees scale with usage, not just chain count.
Gas Fees
End users will pay SKL directly as gas on a dedicated SKL Gas Chain.
This adds a direct, high-velocity demand mechanism for SKL - similar to ETH on Ethereum or SOL on Solana.
Supply
Current SKL Supply Dynamics
- 7B maximum supply
- ~6.2B circulating
- ~3% yearly inflation (dropping to ~1.5% in Q4 2026)
Future Supply: Introducing Burning & Buybacks
As SKALE enters its next phase of network growth, the supply side of the token economy must evolve alongside demand. The objective is straightforward; maintain the existing inflation trajectory while gradually reducing the circulating supply.
This can only be achieved through systematic burning mechanisms and targeted buybacks - made possible through SKALE’s new multi-layered fee architecture.
With the rollout of App Fee Chains and future Gas Fee Chains, SKALE now has multiple, sustainable pathways to introduce deflationary pressure without disrupting network incentives.
App Fee Chains Burning & Buyback Model
App Fee Chains introduce a more flexible, dual-path burn mechanism driven by developer consumption:
-
When developers buy credits with SKL:
A portion of the SKL used for credits is immediately burned. -
When developers buy credits with USDC (or any other token than SKL):
The network uses a share of this USDC revenue to buy SKL, and the purchased SKL is then burned.
This creates a powerful feedback loop:
- More usage → more credit purchases → more SKL buybacks and burns
- Burns SKL directly with network demand
- Deflation increases as adoption increases
This structure aligns SKALE’s supply dynamics with real economic activity rather than fixed schedules.
Gas Fee Chains Burning Model
Gas Fee Chains are the simplest and most direct mechanism for burning SKL:
- A portion of all gas fees paid in SKL is automatically burned, permanently removing tokens from circulation.
- The remaining portion continues to fund node operators through bounties and block rewards, ensuring network security and alignment.
This creates a continuous, usage-driven burn cycle tied directly to user activity.
Adjusting Demand & Supply over Time
The final percentage of SKALE Base revenue allocated to burning will be determined after a successful trial period of SKALE Expand. To begin with, we propose to implement a 50% burn rate, then adjust as adoption grows and the economic model proves itself.
The initial proposed target is:
Burning 10% of SKALE’s maximum supply (700 million SKL) through the first phase of buybacks and burns.
Once this 10% milestone is reached, SKALE will reassess the network’s demand and supply balance and consider entering a new burn phase if appropriate.
This phased, data-driven approach ensures:
- Network incentives remain intact
- Inflation remains stable
- Token scarcity increases responsibly
- Growth and sustainability remain aligned
Thanks again to all of our partners and our community for being part of this journey!
Sincerely,
Fabio, SKALE Foundation