Home · Blog · Economics & Policy · · Updated Dec 19, 2025 · 6 min read
How XOR's Elastic Supply Powers the SORA Economic System
XOR isn't designed like Bitcoin. Its elastic supply funds productive development and adjusts to economic needs. Here's how the system works.
XOR is not Bitcoin. It’s not designed to be scarce, deflationary, or a store of value through artificial supply limits.
XOR is the utility token of the SORA economic system — a decentralized framework for funding productive development and enabling borderless transactions. Its supply is elastic by design, expanding to fund new goods and services and contracting through usage-based burn mechanisms.
This article explains how XOR’s supply mechanics work and why elastic supply is central to SORA’s economic model.
Key Concepts
- • Elastic supply — XOR expands to fund productive development, contracts through burns
- • Utility token — Designed for economic activity, not speculation
- • Token Bonding Curve — Provides price predictability when reserves are built
- • Transparent funding — TBCD allocations published monthly
- • Usage-based burns — Network tx fees burn XOR; TONSWAP routes TS burns to XOR buyback
Why XOR Has Elastic Supply
Most cryptocurrencies copy Bitcoin’s fixed-supply model: artificial scarcity, hope demand increases. This works for speculation but fails as economic infrastructure.
SORA takes a different approach, based on Richard Werner’s economic research: money created for productive use generates real growth.
| Money Created For | Economic Effect |
|---|---|
| Consumption | Price inflation (more money chasing same goods) |
| Speculation | Asset bubbles |
| Production | Real GDP growth — new goods and services created |
XOR’s elastic supply targets the third category: funding productive development that creates real utility.
The SORA thesis: When new XOR funds development that creates utility (DEXs, bridges, wallets, CBDC infrastructure), the resulting economic activity justifies the expansion. Value comes from what’s built and used.
How XOR Supply Changes
Expansion: Funding Development
TBCD (Token Bonding Curve Dollar) is SORA’s mechanism for funding builders:
- Governance approves funding via on-chain referendum
- TBCD is allocated to builders for their work
- TBCD can be converted to XOR via the Token Bonding Curve
- The work produces utility (apps, infrastructure, integrations)
Allocations are published in the ecosystem accounting and funding records on GitHub.
How TBCD works: TBCD can only be created by on-chain governance — XOR token holders decide the supply. When builders convert TBCD to XOR via the TBC, the TBCD becomes a reserve asset backing XOR. The design goal is to offset newly minted XOR with reserve assets, reducing unbacked dilution risk.
Contraction: Burn Mechanisms
XOR is removed from circulation through:
| Mechanism | How It Works | Status |
|---|---|---|
| Transaction Fee Burns | 20% of every SORA network transaction fee burns XOR | Active |
| TONSWAP Fee Burns | Portion of TONSWAP’s fee-driven TS burn/re-mint cycle allocated to XOR buyback-and-burn | When TONSWAP launches |
| TBC Sell Operations | XOR sold to the TBC is burned | Active |
How TONSWAP’s XOR burn works: TONSWAP uses trading fees to buy and burn its native TS token. Of the burned TS, 90% is re-minted daily (10% stays burned permanently). The re-minted portion is distributed: 70% to liquidity providers, 10% to the TONSWAP DAO treasury, and 10% to buy and burn XOR. This creates a sustainable link between TON ecosystem activity and XOR deflation.
As network usage grows, burns become more significant.
The Token Bonding Curve
The Token Bonding Curve (TBC) is a smart contract designed to provide price predictability and liquidity — not speculation-driven appreciation.
How It Works
- Buy from TBC: Pay reserve assets (e.g., ETH, DAI, VAL, PSWAP, XST, TBCD) → receive newly minted XOR
- Sell to TBC: Send XOR → receive reserve assets, XOR is burned
- ~20% spread between buy and sell price in the ideal model (actual sell price may be lower until reserves rebuild)
- Margin funds buyback-and-burn programs (e.g., KUSD) and reserve building
Current status: The TBC is operational but has an “unfunded liability” — the reserves aren’t yet full from when SORA v2 launched. The sell price is lower than the ideal 20%-below-buy until reserves build up. See the SORA Wiki for details.
The TBC doesn’t guarantee price stability — it provides forward-guided price predictability. As reserves grow, the system becomes more effective.
Network Fee Distribution
Every transaction on the SORA network pays a fee in XOR. That fee is distributed:
| Allocation | Purpose |
|---|---|
| 50% | Buyback and burn VAL (validator rewards) |
| 20% | Burn XOR |
| 19.5% | Buyback and burn KUSD |
| 10% | Referral rewards |
| 0.5% | Buyback and burn TBCD |
This distribution creates deflationary pressure on multiple ecosystem tokens while rewarding network participants.
The 2025 Repackaging
XOR underwent denomination changes in 2025 to improve usability:
- May 2025: 100 XOR → 1 XOR
- October 2025: 1,000,000 old units → 1 new unit (further display convenience)
Both repackaging events were applied automatically on-chain — no user action was required, and all wallet balances adjusted instantly.
| Aspect | Changed? |
|---|---|
| Display numbers | Yes — fewer digits |
| Proportional ownership | No change |
| Economic value | No change |
Like exchanging 100 pennies for 1 dollar — same value, easier to work with.
XOR’s Role in the SORA System
XOR serves specific functions:
- Transaction fees — Native currency for network operations (with fee distribution above)
- Governance — Participation in funding and protocol decisions via referenda
- Staking — Stake XOR to nominate validators (validators are rewarded in VAL)
- Liquidity — Base asset on Polkaswap, TBC reserve interactions
- Economic coordination — Connecting DeFi, CBDCs, and cross-border payments
Design philosophy: XOR’s value comes from utility and adoption — not artificial scarcity. As the network is used, burns increase and the TBC reserves grow, creating sustainable tokenomics tied to real activity.
Verify Supply Data
All XOR data is transparent:
- Polkaswap Stats: polkaswap.io/#/stats
- MOF Supply API: mof.sora.org/qty/xor
- SORA Wiki: wiki.sora.org/xor.html
- Monthly Memos: GitHub
Conclusion
XOR is infrastructure for a decentralized economic system. Its elastic supply enables transparent funding of productive development, with burn mechanisms tied to actual usage.
The system is designed to work at scale — when applications are used, transactions flow, and institutions integrate. That’s when XOR’s utility model demonstrates its value.
Further Reading:
- Token Bonding Curve (SORA Wiki)
- XOR Token Documentation
- Richard Werner & the SORA Economic Model
- SORA Nexus Complete Guide
FAQs
Why doesn’t XOR have a fixed supply?
XOR is designed as utility infrastructure, not a store of value. Elastic supply allows funding productive development — value comes from what’s built and used, not scarcity.
What did the repackaging change?
Display units only — like exchanging pennies for dollars. Your proportional stake in the network is unchanged.
How is development funded?
Through TBCD, approved by on-chain governance referendum and published monthly in the memos on GitHub. TBCD becomes a reserve asset in the TBC when converted to XOR.
What burns XOR?
20% of network transaction fees burn XOR (active now). TONSWAP will route a portion of its fee-driven TS burn/re-mint cycle to XOR buyback-and-burn when live. XOR sold to the TBC is also burned.
What are validators paid in?
Validators are rewarded in VAL, not XOR. Users stake XOR to nominate validators, but the rewards are distributed as VAL (which itself has deflationary tokenomics — burned on every transaction, with a portion re-minted for validator rewards).
Is the Token Bonding Curve active?
Yes, but it has an “unfunded liability” from launch. The sell price is lower than the ideal 20%-below-buy until reserves build up. The TBC provides forward-guided price predictability, not guaranteed stability.
Is XOR a good investment?
XOR isn’t designed as a speculative investment — it’s utility infrastructure. Its value is tied to ecosystem adoption and usage, not supply scarcity. Evaluate whether you believe in the utility being built.
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