Telos Begins the Zero-Inflation Era

The Telos network has officially entered what is being called the Zero-Inflation Era.

Following months of discussion and planning, the majority of the changes outlined in the Zero Inflation Era proposal have now been implemented—dramatically simplifying the network’s tokenomics and reducing protocol issuance.

Annual issuance has fallen from roughly 23.6M TLOS (~5.26% of supply) to approximately 3.78M TLOS (~0.84%).

Because the Telos Foundation offsets this remaining issuance using existing reserves, net inflation is effectively zero.

What Has Been Implemented

Several standing issuance allocations have now been removed:

• Staking rewards: 600,000 TLOS/month → 0
• Ignite grants: 250,000 TLOS/month → 0
• Telos Core Development: 400,000 TLOS/month → 0
• Foundation allocation: 400,000 TLOS/month → 0

Together these changes removed 1.65M TLOS in monthly emissions, or 19.8M TLOS per year.

Block Producer rewards now remain the only active issuance stream.

A Simpler Economic Model

These changes remove several standing issuance allocations that were originally designed for an earlier stage of the ecosystem.

Over time, the cost of building and coordinating blockchain infrastructure has fallen dramatically, driven in part by advances in AI-assisted development and more efficient contribution models.

At the same time, the Telos Foundation has built meaningful reserves while reducing operational costs. This allows ecosystem support to continue without relying on permanent protocol-level emissions.

The result is a leaner and more predictable economic model, aligned with modern development realities.

Related X post: https://x.com/HelloTelos/status/2021816655525883950

Building Telos with AI

Part of the motivation behind these changes is a broader shift in how infrastructure is built.

AI-assisted development has dramatically lowered the cost of building and maintaining blockchain software. Tasks that once required large teams and extended timelines can now often be completed by smaller teams—or even individuals—working far more efficiently.

Contribution is also becoming increasingly permissionless. Developers can identify opportunities, ship improvements, and iterate quickly without relying on large, permanent funding programs embedded in protocol inflation.

In this new environment, simpler economic systems tend to outperform complex ones.

Telos’ updated model reflects that reality.

One Final Step Remains

The final component of the Zero-Inflation transition is an adjustment to Block Producer rewards, which is currently being refined with community feedback ahead of an amendment proposal and vote.

If implemented, this adjustment would reduce annual issuance further to approximately ~0.40% of supply, representing roughly another 50% reduction in remaining emissions.

Looking Ahead

As Telos simplifies its economic model, the network is also preparing to expand its capabilities.

The upcoming Telos privacy layer public release will introduce private transactions and enable new categories of decentralized applications, potentially driving increased network usage and fee generation.

Together, these developments mark the beginning of a leaner, lower-inflation era for Telos—focused on sustainability, utility, and long-term network growth.