MONERO [XMR] REPORT - Scaling New Heights in Blockchain Performance: 2025 Portfolio / Part Two

Part Two / Page 3

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Ongoing Innovations: Monero’s roadmap (see Development Roadmap section) shows no signs of complacency. Upcoming improvements like “Seraphis” (a next-generation transaction protocol) and “Jamtis” (a new address scheme) aim to further increase the size of the anonymity set and improve transaction efficiency ( Roadmap | Monero - secure, private, untraceable ). Research proposals such as Full Chain Membership Proofs could one day allow a transaction input to be proven as one-of-any-output-ever (an anonymity set of all XMR outputs) ( Roadmap | Monero - secure, private, untraceable ) – a breathtaking increase in privacy that is under study. Monero’s developers are also working on OSPEAD (Optimal Statistical Estimation of Anonymity Distribution) to optimize decoy selection and foil statistical tracing attacks (OSPEAD - Optimal Ring Signature Research - Monero) (Rucknium has published OSPEAD Findings, showing through his ...). These efforts illustrate that Monero remains at the cutting edge of privacy tech.

From an investor’s perspective, Monero’s strong technology base provides a moat against competitors and a platform for longevity. It has proven its robustness over 9+ years; for example, when Chainalysis (a leading blockchain analytics firm) officially admitted in 2023 that Monero’s privacy is a significant obstacle, it affirmed the protocol’s technical strength (Chainalysis officially confirms that Monero is still causing problems). However, the very effectiveness of Monero’s privacy tech also poses challenges (discussed later) in terms of regulatory acceptance. In the next section, we examine Monero’s tokenomics – how its coin supply and economic incentives are structured – which is another foundational aspect of its investment profile.

Additional Sources – Monero Technology:

• van Saberhagen, Nicolas. “CryptoNote v2.0” (2013 Whitepaper) – The original paper outlining the cryptographic principles later used in Monero. [PDF]
  
  
• GetMonero.org – Moneropedia entries for Ring Signatures, RingCT, Stealth Addresses, and Dandelion++ (official documentation).
  
  
• Chainalysis Blog (2023): “Monero: All About the Top Privacy Coin” – In-depth analysis of Monero’s privacy features and usage data (Monero: All About the Top Privacy Coin - Chainalysis) (Monero: All About the Top Privacy Coin - Chainalysis).
  
  
• Arxiv (2017): “An Empirical Analysis of Traceability in the Monero Blockchain” – Moser et al., identifying early weaknesses in Monero’s mixin sampling (since mitigated).
  
  
• YouTube (2022): Monero Metaverse – Sarang Noether Bulletproofs Q&A – Discussion with Monero Research Lab member on Bulletproofs implementation.
  
  
• LocalMonero (2024): “Seraphis: What It Will Do for Monero” – Explainer on the upcoming Seraphis protocol and how it enhances Monero’s transaction model.
  
  
• Stanford Applied Crypto (2017): “Bulletproofs” research paper by Bünz et al. – The paper behind Monero’s Bulletproofs upgrade (for background on range proof innovation).
  
  
• Monero Audit Reports (2018): OSTIF Bulletproofs Audit Reports – Technical audit findings that preceded Monero’s Bulletproofs launch.
  
  
• Monero StackExchange: Various Q&A on Monero’s tech (e.g., “How do Ring Signatures work in Monero?”, “What are key images?”) that elucidate core concepts.
  
  
• HackerNoon (2021): “Are Privacy Coins Like Monero and Zcash Legal?” – Overview of privacy coin tech with legal perspective, including a section on Monero’s privacy methods.
  
  

Tokenomics and Supply Dynamics

Monero’s tokenomics are distinctive in the cryptocurrency landscape, prioritizing security and fairness over strict scarcity. Understanding Monero’s supply schedule, inflation rate, and economic incentives is crucial for investors evaluating its long-term value proposition and comparing it to other crypto assets.

Supply and Emission: Monero’s coin supply began at zero when launched in April 2014 and reached ~18.132 million XMR in May 2022, at which point its “tail emission” kicked in (What Is Monero & How Does It Work? Who Created XMR?). Unlike Bitcoin’s hard-capped supply of 21 million, Monero has no fixed maximum supply – instead, after ~18.4 million coins were mined, it introduced a perpetual block subsidy of 0.6 XMR per block (1 block ~ every 2 minutes) (What Is Monero & How Does It Work? Who Created XMR?). This tail emission translates to about 432 XMR per day created (0.6 * 720 blocks/day), or ~157,680 XMR annually. As a percentage of existing supply, Monero’s inflation was ~1.6% at tail emission start and declines each year (since the supply grows but the new issuance is fixed) (Monero Mining: Full Guide on How to Mine Monero - BitDegree). By early 2025, circulating supply is ~18.5 million XMR (Monero Price, XMR Price, Live Charts, and Marketcap - Coinbase), and the inflation rate has already dropped to roughly 0.8% per year – effectively a low, disinflationary regime.

• Tail Emission Rationale: The tail emission is designed to sustain miner incentives and network security indefinitely (What Is Monero & How Does It Work? Who Created XMR?). Block rewards will never drop to zero as in Bitcoin; instead, Monero will always reward miners with 0.6 XMR, ensuring that even when transaction fees are low, miners have revenue to continue securing the chain. This addresses the concern that in a distant future with only fees, a blockchain might become insecure if fee revenue is insufficient. Monero’s developers chose a tiny perpetual inflation as a trade-off to guarantee a minimum security budget. Notably, the inflation rate will asymptotically approach 0% as the supply grows – for instance, in 10 years the supply will be ~19.5M, making the annual inflation ~0.6–0.7%, and so on. Thus Monero has practically capped supply growth without a hard cap.
  
  
• No Premine, Fair Distribution: Monero had no premine or founder’s reward. All XMR in circulation have been emitted through mining rewards to participants worldwide. This stands in contrast to some competitors (e.g., Zcash’s founders and investors received a slice of mined coins for the first years, and Zcash continues with a developer fund tax). Monero’s distribution is therefore considered fair and decentralized, with no insider allocation – an important consideration for investors wary of concentrated holdings by founders. It also means development is funded by the community (see Governance section) rather than by a treasury carved from emissions. While Monero’s privacy makes it impossible to analyze the wealth distribution on-chain (no rich list can be derived since addresses are hidden), the lack of a premine and the CPU-friendly mining suggest a relatively egalitarian coin distribution compared to many ICO-era projects.
  
  
• Current Issuance vs. Competitors: As of 2025, Monero’s modest ~0.8% annual inflation is actually lower than Bitcoin’s (~1.7% post-2024 halving, dropping to ~0.8% after the 2028 halving). In essence, Monero’s supply is growing slower than Bitcoin’s was until very recently. Over the long term, Bitcoin’s inflation will keep halving (to ~0.4% in 2028, ~0.2% in 2032, etc.), eventually undercutting Monero’s; but that won’t occur until after multiple halving cycles. Zcash’s inflation, for comparison, was extremely high in early years (due to slow-start then 50 XMR block rewards) and remains higher than Monero’s until Zcash’s next halving. Other privacy coins like Dash have fixed emission schedules but many have tail emissions or do not fully stop either (Dash’s emission tapers but never fully zeroes out). Monero’s approach thus isn’t unheard of, but Monero is unique among top cryptocurrencies in having a deliberately never-ending emission at a fixed small amount (What Is Monero & How Does It Work? Who Created XMR?).
  
  

Monetary Policy and Investment Implications: Investors often gravitate to Bitcoin for its strict scarcity (the 21M cap and declining inflation). Monero presents an alternate monetary policy: slight perpetual inflation in service of network security. This means Monero does not have the absolute supply ceiling narrative that “digital gold” like Bitcoin has. However, at tail emission levels, the inflation is negligible for practical purposes and ensures new coins to reward those securing the blockchain. Some analysts argue that Monero’s model may be more sustainable long-term: “This preserves miner incentives and shields the network in the long term – a new way [different] from capped supplies such as Bitcoin,” as one 2025 analysis noted (Solana vs Monero (XMR): Speed, Privacy, and Utility in 2025). From a valuation perspective, the small inflation is akin to a “security budget tax” that all holders pay (through dilution) to keep the network safe. At ~0.8% yearly, this is comparable to the dividend yield of a stock or interest of holding a currency. As long as demand for Monero grows at a rate equal or greater than this, the price can appreciate despite inflation.

Fungibility and Use Case: Monero’s utility is as a medium of exchange – a private, censorship-resistant currency for those who need or value financial privacy. Unlike many cryptocurrencies, XMR is not designed for use in smart contracts, DeFi platforms, or as “gas” for an ecosystem. Its use case is more akin to cash: storing and transferring value with anonymity. This means the demand drivers for Monero come from transaction and savings usage (both licit and illicit), rather than speculative platform adoption or fee burning etc. One upside of this is fungibility: every XMR is the same as every other by design (no distinguishing marks due to its privacy). Monero enthusiasts often say it’s one of the few coins that is “sound money” in the sense of fungibility (Bitcoin, by contrast, has seen “tainted” coins refused by some exchanges (Monero - Wikipedia) (Monero - Wikipedia)). For investors, Monero’s fungibility means it could serve as a private store of value that is hard to confiscate or track. However, its primary demand is transactional, which ties its value to how widely it’s accepted and used in commerce or transfers.

• Adoption in Transactions: We will detail adoption metrics later, but note here that Monero sees on the order of ~24,000 transactions per day (2022–2023 average) (Monero: All About the Top Privacy Coin - Chainalysis) (Monero: All About the Top Privacy Coin - Chainalysis). This is a fraction of Bitcoin’s volume (~300,000 tx/day) but is significant for a non-platform altcoin, indicating real usage beyond mere HODLing. Monero’s daily transaction count roughly doubled from 2019 to 2021 and has since plateaued around that 20k–30k range (Monero: All About the Top Privacy Coin - Chainalysis) (Monero: All About the Top Privacy Coin - Chainalysis). This organic usage creates underlying demand for XMR tokens (for example, as people acquire XMR to make private payments or remittances). If usage grows, demand for the token should grow, supporting its price.
  
  
• Fees and Economic Throughput: Monero’s transaction fees are very low (often <$0.05). In 2022, total fees for the entire year were only a few thousand XMR, whereas miners received ~157k XMR from block rewards (tail emission) in that year. This underscores that block rewards (inflation) are currently the dominant incentive for miners, not fees (Monero: All About the Top Privacy Coin - Chainalysis) (Monero: All About the Top Privacy Coin - Chainalysis). Over time, if Monero’s usage exploded and block space became precious, fees could increase, but Monero’s dynamic blocks make runaway fee markets unlikely. For investors, this means inflation is a predictable “cost” that pays for security, rather than relying on uncertain fee growth.
  
  

Economic Model – Summary: Monero’s tokenomics favor stability and network health over extreme scarcity. Key points:

• The circulating supply is ~18.5 million and growing at ~<1% per year (decreasing) (Monero Price, XMR Price, Live Charts, and Marketcap - Coinbase).
  
  
• Inflation is constant in absolute XMR terms (0.6 XMR per 2 minutes forever) (What Is Monero & How Does It Work? Who Created XMR?), implying a gently decaying inflation rate that will reach ~0.5% in the 2030s and ~0.1% by mid-century, etc.
  
  
• There is no cap, so total XMR will slowly grow indefinitely (reaching ~20M in 2040s, ~21M in 2090s, etc., approaching an asymptote).
  
  
• Monero’s philosophy is that a small predictable inflation is preferable to risking a “fee-only” future that could jeopardize security. In a sense, it mirrors how gold has a ~1.5% stock growth per year historically – enough to incentivize mining but low enough to preserve value, a comparison Monero proponents sometimes make.
  
  
• No entity directly profits from inflation except the decentralized miner community (which anyone can join). There is no developer tax. This aligns incentives with coin holders insofar as miners secure the network for the reward, and holders pay a tiny dilution for that security.
  
  

For investors, a practical consideration is projected dilution vs. projected demand growth. If one expects Monero’s user base and adoption to grow faster than ~1% per year, demand can outpace supply and drive price appreciation. Indeed, Monero’s price has risen from under $1 in 2014 to around $280 in 2025 (Monero USD (XMR-USD) Price History & Historical Data), far outstripping the inflation. The inflation may, however, act as a slight drag on price if demand is stagnant – essentially requiring a bit of new buying each year to absorb new coins. Compared to many other altcoins that had large premine allocations or high ongoing inflation, Monero’s current inflation is quite conservative and likely not a major negative factor in investment return expectations.

Economic Use and Velocity: Monero’s velocity (how frequently each coin is transacted) is difficult to gauge due to privacy, but some clues exist. Chainalysis noted that as of 2023, Monero had seen ~32 million total transactions in its history (Monero: All About the Top Privacy Coin - Chainalysis). With ~18 million coins, this suggests a moderate velocity (not extremely high like a pure payments coin might have, but also not ultra-low). Some XMR is held long-term as an investment or reserve, while some circulates rapidly in markets (including darknet markets, gambling, remittances, etc.). The mix of use-cases means Monero behaves partly like a transactional currency and partly like a store of value. This duality can be beneficial: transactional demand provides a baseline usage, and any store-of-value demand (people holding XMR as a hedge or asset) adds a scarcity premium on top.

Bottom Line – Tokenomics: Monero’s tokenomics can be summarized as “inflation with purpose.” It does not offer the meme of absolute scarcity, but it offers a credibly low inflation and a guarantee of ongoing security. Its fair distribution and default fungibility strengthen the investment case for those who prioritize decentralization ethics and long-term network viability. However, investors strictly seeking deflationary or yield-generating tokens might view Monero’s model as less immediately attractive. There is no staking yield (it’s PoW), and no automated burn of fees. The “yield” to holders is essentially the utility dividend of having a private currency that works. Monero relies on network effect value rather than artificial scarcity. As such, a central part of Monero’s investment thesis is that demand for private, untraceable money will grow significantly in the future, outpacing the small supply expansion. We will examine that demand side in sections on Adoption and Market Dynamics.

Additional Sources – Tokenomics:

• Official Monero Supply Details: Monero FAQ – “What is the total supply of Monero?” (GetMonero.org) – outlines tail emission schedule and rationale.
  
  
• Kriptomat (2021): “What Is Monero and How Does It Work?” – Includes a section on Monero’s supply reaching 18.4M in 2022 and tail emission starting (What Is Monero & How Does It Work? Who Created XMR?).
  
  
• Coin Bureau (2023): “Ultimate Monero Guide 2024” – Explains Monero’s emission curve and compares it to Bitcoin’s halving model.
  
  
• Electric Capital Developer Report (2023): Contains data on Monero’s supply and inflation versus other coins (requires login).
  
  
• StackExchange (2019): Q&A: “Why does Monero have a tail emission?” – Community discussion of the economic reasoning behind it.
  
  
• BitcoinTalk Forums (2014): Original Monero launch thread – details on the absence of premine and initial coin distribution.
  
  
• CoinMetrics Data Charts: Charts of XMR inflation rate over time and projected future supply (analytical graphs plotting Monero’s emission curve).
  
  
• Academic (2020): “A Comparison of Cryptocurrency Inflation Models” – Research paper comparing Bitcoin vs Monero vs others (Monero’s perpetual inflation discussed as alternative approach).
  
  
• Securities.io (2025): “Investing in Monero – Everything You Need to Know” – Section on Monero’s tokenomics and supply characteristics.
  
  
• Monero.how (Community Resource): “Monero Supply and Inflation Calculator” – an interactive tool to project Monero’s supply growth and inflation rate year by year.
  
  
• Messari Profile (2025): Monero’s profile on Messari, Token section – includes current circulating supply, inflation, and comments on tail emission (Monero Price, XMR to USD, Research, News & Fundraising | Messari) (Monero Price, XMR to USD, Research, News & Fundraising | Messari).
  
  

Regulatory Environment and Compliance Challenges

One cannot analyze Monero without grappling with the regulatory environment. Monero’s core feature – strong privacy – puts it at odds with the increasing global push for transparency in crypto transactions to combat money laundering, tax evasion, and other illicit activity. As a result, Monero faces more regulatory hurdles than perhaps any other top cryptocurrency. This section examines current regulations, government actions, and compliance challenges surrounding Monero, which in turn significantly influence its investment risk.

Global Regulatory Stance: Many jurisdictions have taken an unfavorable view of privacy coins like Monero:

• Japan and South Korea: These countries were early movers in banning or restricting privacy coins. Japan’s Financial Services Agency banned exchanges from listing Monero, Zcash, Dash, and others in 2018 (Monero: All About the Top Privacy Coin - Chainalysis). South Korea followed with a ban on privacy coins on exchanges in 2021 (Monero: All About the Top Privacy Coin - Chainalysis). As a result, no licensed exchange in those countries offers XMR trading – effectively choking off retail access in two significant markets.
  
  
• European Union (EU): The EU is in the process of implementing a comprehensive crypto framework (MiCA – Markets in Crypto-Assets regulation) by end of 2024. Within MiCA and parallel AML legislation, there is explicit opposition to “anonymity-enhancing coins.” In fact, the EU’s new AMLA regulations “potentially ban all coins that enhance anonymity” (Monero Users' XMR to Be Converted to BTC as Privacy Coins Shunned in Europe | CCN.com). MiCA will outright bar crypto service providers from dealing with privacy coins unless identities of holders are known (Empire Newsletter: Privacy coins sacrificed so crypto could run - Blockworks) (Empire Newsletter: Privacy coins sacrificed so crypto could run - Blockworks) – a condition that Monero, by design, cannot satisfy. Anticipating these rules, major exchanges serving Europe have already culled privacy coins: Binance and OKX delisted Monero, Zcash, Dash, etc. for EU users in 2023 (Monero Users' XMR to Be Converted to BTC as Privacy Coins Shunned in Europe | CCN.com). Kraken (U.S.-based exchange) in 2024 ceased XMR trading for clients in countries like Ireland and Belgium, converting remaining balances to BTC (Monero Users' XMR to Be Converted to BTC as Privacy Coins Shunned in Europe | CCN.com) (Monero Users' XMR to Be Converted to BTC as Privacy Coins Shunned in Europe | CCN.com). Kraken explicitly cited compliance with upcoming regulations. By June 2024, Monero became essentially unavailable on all mainstream EU-facing exchanges.

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