You know all about Siacoins, the utility token used for automatically fulfilling Sia's smart contracts. But what about Siafunds - the other token on the Sia network?
Siafunds are a revenue generating token, designed to provide a stream of revenue to their holders in the form of Siacoins.
When contracts are completed on the network, 3.9% of each funding source are reserved for Siafund holders. Funding sources for contracts are:
- Renter fees for storage
- Renter bandwidth costs
- Host collateral
At the end of a contract, the amount reserved is then dispersed to all Siafund holders equally.
Siafunds are stored in your wallet, right next to your Siacoins.
They are also sent to and received at normal Siacoin addresses, and can be restored with your Siacoin balance as long as you have your Sia seed.
We created Siafunds in order to sustainably fund the development of the Sia network. Siafunds enable us to maintain and grow the decentralized network and capture value for Siafund holders as the network grows and cloud storage activity increases on the Sia network.
Likewise, as Siafunds are sold to investors, all holders have a long-term incentive to contribute to Sia's growth and development.
Tokenized securities vs utility tokens
We believe Siafunds are “tokenized securities” rather than “utility” tokens. Utility tokens primarily derive their value from use on a blockchain platform, like Siacoins. Siafunds, by contrast, derive their value from the present and future value of the Sia storage network.
How many Siafunds are there?
The maximum number of Siafunds that will ever be issued is 10,000, all of which were generated upon the launch of the Sia software in 2015. Because the number of Siafunds issued is fixed, as the number, size, and value of the contracts on the Sia network increase, the amount of revenue per Siafund increases proportionally.
Nebulous, Inc. originally owned all 10,000, but over the years have conducted multiple Siafund sales to fund development. As of April 2019, Nebulous holds about 8,600 and the rest have been issues to third parties.