Helium eyes a potential path to deflationary tokenomics

The decentralized wireless company Helium is planning to funnel 100% of Helium mobile subscriber revenues to HNT token burns, co-founder and CEO Amir Haleem tweeted yesterday.

Its not clear if Helium plans to buy HNT on the open market or simply burn tokens from its treasury, but the initiative is going into effect “this week, barring any weird logistics,” he said.

In any case, that‘s an estimated $2.3 million in monthly gross revenues offchain that otherwise would have gone to Helium’s parent company, Nova Labs, now being redirected to HNT token holders.

HNT is Heliums native SPL token, which migrated to Solana from its own L1 appchain in April 2023.

When users pay USD to use Helium‘s network, it’s swapped under the hood to HNT, which is then burned for a consumable fixed-price token of $0.00001 known as “Data Credits.”

Today, Helium has about 1.1 million daily users across 108,850 hotspots.

The majority of Heliums revenues is driven primarily by WiFi carrier offload, rather than its own mobile virtual network operator (MVNO).

When users of big telcos like AT&T or T-Mobile are near a Helium WiFi spot, they can shift that data onto Heliums network automatically and pay Helium on a per-demand basis.

This way, major carriers avoid additional CapEx while still managing to improve coverage for customers in hard-to-serve or obscure locations.

Earlier this month, Helium also went through its biennial emission halving, halving annual HNT emissions from 15 million to 7.5 million.

Source: Blockworks Research

Both mechanics in tandem — an emission halving and circulating supply burn — could create a net deflationary effect for the HNT token.

Blockworks‘ Nick Carpinito told me: “Amir’s announcement creates immediate deflationary pressure on HNT by burning tokens equivalent to Helium Mobiles subscriber revenue, which could accelerate the timeline for HNT to become net-deflationary sooner than expected.”

“While we don‘t yet know the specific mechanics (whether Nova Labs will burn from its treasury or make open market purchases, or whether this applies to gross vs. net revenue), this represents a significant step toward integrating Nova Labs’ offchain revenue streams directly into HNTs tokenomics as we anticipated in our July analysis.”