Decentralized Supercomputer AO Token Economics How to Earn Tokens with 100 Fair Distribution

June 14th, the AO Foundation officially launched the token economics of the decentralized supercomputer AO.


8 key facts and dates about the AO token
AO follows the 100% fair issuance token model of Bitcoin.
The AO token will be used to protect message transmission in its network.
The minting mechanism will start retroactively from February 27, 2024, at 1:00 PM EST (block 1372724). During this period, 100% of the minted AO tokens have been granted to Arweave token holders based on their respective balances every 5 minutes. If you hold AR on an exchange or custodian, inquire about how to receive the tokens.
In the future, one-third (33.3%) of AO tokens will be minted based on ownership to AR token holders every 5 minutes. Two-thirds (66.6%) of the AO tokens will be minted in the future to transfer assets into AO to stimulate economic growth.
The first phase of the bridging contract is now live. In this initial bridging phase, users’ tokens will be securely held on their native network while receiving AO tokens. After the second phase of the bridge goes live, users will be able to deposit assets into the new bridging contract and use them on AO – while also earning rewards. Users can deposit staked Ethereum (stETH) tokens into the audited pre-bridge contract here.
Transition rewards will start on June 18, 2024, at 11:00 AM EST.
Users can withdraw tokens from the pre-bridge at any time, but can only start earning AO after the rewards begin on June 18. Rewards will be distributed every 24 hours.
AO tokens will remain locked until approximately 15% of the supply has been minted. This is expected to occur around February 8, 2025.
Overview: Total supply of 21 million, 100% fair issuance
AO is a token issued 100% fairly based on the model of Bitcoin.
Like Bitcoin, AO has a total supply of 21 million tokens, with a halving cycle every 4 years. AO is distributed every 5 minutes, with a monthly distribution of 1.425% of the remaining supply. As of June 13, there are 1.0387 million AO tokens in circulation. This makes them extremely scarce. In comparison, Ethereum has 120 million, Solana has 461 million, and Ripple has 55 billion.
The minting mechanism of AO means that while the number of newly minted tokens is halved every 4 years, there is no sudden “halving event.” Instead, the number of new tokens decreases slightly each month, creating a steady issuance schedule.
While most token distribution models favor insiders over the community, AO’s model insists on the principles of fairness and equal access, which are at the core of the crypto revolution. There are no presales or pre-allocations. Instead, the AO token reward mechanism incentivizes two key aspects of a successful ecosystem: economic growth and the security of the underlying layer.
Here’s how it works:
~36% (100% for the first 4 months + 33.3% thereafter) of AO tokens are minted over time by Arweave token holders, whose tokens incentivize the security of the AO base layer – Arweave.
Approximately 64% of AO tokens are minted over time to provide external income and bring assets into AO to stimulate its economic growth. This creates a powerful incentive for increasing ecosystem liquidity, forming an economic flywheel.
Meanwhile, without conducting any token sales, the network provides funding for its ecosystem development in two ways:
Permissionless ecosystem financing
After the bridge goes live, developers who attract users to deposit qualifying assets in their applications will receive corresponding AO token rewards. This provides developers with a permissionless, long-term source of income without applying for grants, external investment, or even tokenizing their projects. If they wish, these developers can also choose to share a portion of the AO rewards with users, allowing users to continue earning AO tokens while using applications in the ecosystem.
Permaweb Ecosystem Development Association
In addition, certain ecosystem development organizations and builders will also share the native revenue generated from assets stored in the bridge. These organizations and builders are dedicated to the core protocol of AO, marketing operations, and crucial infrastructure development. These funds will gradually decrease over time in line with the network’s coin minting decay rate – allowing the network to guide but retain it as a neutral shared protocol.
AO Balance Calculation for AR Holders
The minting of AO tokens for Arweave token holders has been retroactively applied since February 27, 2024, at 12:00 UTC when the AO testnet started. Minting AO tokens since the start of the testnet ensures there is sufficient circulation before the tokens go live, with the goal of reaching approximately 15% of the total supply (3.15 million) around February 8, 2025.
If you have held $AR since the start of the testnet a few months ago, as of June 13, 2024, you have accumulated approximately 0.016 AO tokens per AR. Remember, the current supply of AO is 1/65 of AR.
Major exchanges are currently exploring whether and how to distribute $AO to users. Contact the exchange or custodian to understand how they manage this process.
If you have been self-custodying $AR tokens, you can check your balance by visiting ao.arweave.dev. Click on the Arweave tab and connect your self-custody wallet (such as ArConnect).
Earning AO by Holding AR in the Future
New AO tokens are minted every 5 minutes. Before the launch of the pre-bridge on June 18, 100% of all AO tokens are minted by AR token holders. After the pre-bridge launch, 33% of AO tokens will be proportionally distributed to AR holders, representing an average of approximately 36% of the total supply of AO tokens minted by AR token holders. This process occurs automatically.
The following list shows how much AO you can expect to accumulate over the next 12 months based on a given AR balance:
1 AR: 0.016 AO
10 AR: 0.16 AO
50 AR: 0.8 AO
100 AR: 1.6 AO
500 AR: 8.0 AO
1000 AR: 16.0 AO
The amount of newly minted $AO will decrease over time until all AO tokens have been minted. AO tokens are expected to become transferable around February 8, 2025.
Pre-Bridge stETH to Convert Earnings into AO
Note: AO Transition Rewards are not available to U.S. citizens
You can start depositing stETH (ETH staked using Lido) into the pre-bridge at this initial stage to accumulate token rewards in AO. As AO becomes more open to the ecosystem, other proof-of-stake assets will also qualify.
At this initial stage, pre-bridge assets cannot be used in applications on the AO network. After the second phase of the bridge goes live, you will be able to use stETH in AO applications and still receive AO token rewards.
When you pre-bridge your stETH to AO, your original stETH deposit will be held in an audited contract on the Ethereum network, with native revenue distributed among dedicated ecosystem development organizations and builders to promote growth. These organizations include the Open Access Supercomputing Foundation, Forward Research, Autonomous Finance, Warp Contracts, Longview Labs, and ao/acc at launch. More organizations will be added as the ecosystem develops.
Users can withdraw their initial stETH deposits at any time.
New AO tokens will be minted every 5 minutes starting at 11:00 AM EST on June 18, 2024, exactly 16 weeks after the AO testnet launched. After rewards begin, 66% of the newly minted $AO will be proportionally distributed to wallets pre-bridged to AO. This process occurs automatically.
The exact number of AO tokens received by income providers depends on the proportion of assets they deposited in the contract compared to the total assets deposited. As AO becomes more open to the ecosystem and can offer various proof-of-stake assets, the number of AO tokens received will depend not only on the proportion of assets provided but also on the income generated by each asset.
The following list shows how much AO you can expect to accumulate over the next 12 months based on holding a certain percentage of the total income asset pool (assuming the only asset provided is stETH):
0.01%: 210 AO
0.1%: 2,105 AO
0.5%: 10,524 AO
1%: 21,049 AO
5%: 105,243 AO
AO tokens are expected to become transferable around February 8, 2025.
How to Deposit stETH to Earn AO
Note: AO Transition Rewards are not available to U.S. citizens
Users can start depositing stETH into the pre-bridge today. Rewards will begin accumulating at 11:00 AM EST on June 18, 2024. Rewards are distributed once a day, so users may need to wait up to 24 hours to receive the first reward.
Convert your stETH earnings into AO tokens following these simple instructions:


Go to the minting page on the AO website.
Click on the Ethereum tab and connect your Ethereum wallet (Metamask or Rabby).
Enter your Arweave wallet address where you want to receive AO tokens.
Deposit stETH into the audited contract by entering the amount you wish to provide. These tokens will be held in a trustless contract on Ethereum and can be withdrawn at any time. If you don’t have stETH in your wallet, you will need to exchange other tokens to get some stETH before making a deposit.
Sign the transaction in your ETH wallet to deposit stETH into the contract.
You will receive AO tokens directly into your specified Arweave wallet.
Smart Contract Security
The pre-bridge contract has undergone extensive audits and is trustless: no one can access your tokens except you. The only privilege is that the Open Access Supercomputing Foundation (the organization coordinating the launch of the AO token with the Arweave ecosystem organizations) can withdraw tokens from the contract in the event of a security incident and return them to the original owner. This feature provides an additional layer of security without placing pre-bridge assets under the control of any centralized entity.
These contracts are minor modifications of the MorpheusAI deposit contract. These contracts are used to provide battle-tested infrastructure to reduce any security risks.
Conclusion
The AO token minting process introduces a completely different model based on the principles of fairness and equal access, rewarding users and developers. The diverse teams behind this initiative draw inspiration from the groundbreaking innovation of Bitcoin and the fundamental principles established by Satoshi Nakamoto.
The crypto industry has experienced tremendous growth over the past fifteen years. However, this expansion is not always aligned with broader societal interests. To truly advance the mission of creating a decentralized, permissionless network that safeguards user rights, it is crucial to rethink how to integrate values and incentive mechanisms to achieve these goals.