Consensus in Shardeum is achieved through a hybrid mechanism that merges Proof of Stake (PoS) with a process called Proof of Quorum (PoQ). Rather than bundling transactions into blocks, Shardeum finalises each transaction individually, which reduces latency and enables faster settlement. Validators must stake SHM, the native token, to participate in the consensus process, and their behaviour is subject to slashing in cases of malicious activity. The system also incorporates automatic validator rotation and redundancy to prevent collusion and ensure resilience across the network.
A key architectural distinction lies in Shardeum’s linear scaling approach, where adding nodes proportionally increases the network’s processing capacity. This contrasts with vertically scaled systems that depend on enhancing the performance of individual nodes. To maintain long-term sustainability, Shardeum employs a dynamic supply model for SHM, adjusting issuance based on network demand, validator participation, and transaction volume. This elasticity allows the protocol to find an equilibrium between token inflation, deflation, and validator incentives while adapting to changes in usage patterns over time.
Shardeum supports a wide ecosystem of Decentralised Applications (DApps), infrastructure services, and community governance features. It is integrated with existing wallet standards and RPC endpoints, enabling seamless interaction with the broader Web3 ecosystem. With its technical emphasis on atomic composability, low transaction costs, and EVM support, Shardeum aims to offer a platform suitable for both high-frequency applications and long-term decentralised coordination. Its roadmap includes further developments in autoscaling, interoperability, and open governance, building toward a more modular and adaptable blockchain framework.
What is the SHM Token?
The SHM token is the native utility asset of the Shardeum blockchain, functioning as the foundational unit of value and coordination within the network. It plays a critical role in enabling decentralised consensus, facilitating economic incentives, and supporting the execution of smart contracts. SHM is designed with 18 decimal precision, similar to Ethereum’s ETH, ensuring compatibility with EVM-based tools and applications. As Shardeum operates using a combination of Proof of Stake (PoS) and dynamic sharding, SHM serves as the token that validators must stake to participate in network consensus, with rewards issued for honest participation and penalties applied in cases of misbehaviour.
Beyond staking, SHM also functions as the gas token for the network, meaning it is used to pay transaction fees and computational costs associated with deploying and interacting with smart contracts. All transaction fees on the network are burned, rather than paid to validators, which introduces a deflationary component to SHM’s supply dynamics. This design ensures that as usage increases, token scarcity may rise, potentially balancing the inflationary effects of validator rewards. Additionally, SHM is employed in governance, where token holders may participate in decision-making processes that influence the network’s evolution.
The initial SHM supply was capped at 249 million tokens at mainnet launch, with allocations made to different stakeholders including the team, community, foundation, and private investors. However, the long-term issuance of SHM is governed by a dynamic supply model that responds to real-time network conditions such as transaction volume, validator costs, and overall activity. This model allows for flexible expansion or contraction of the token supply to ensure that the network remains sustainable, secure, and capable of scaling horizontally without over-rewarding or under-incentivising node operators.
In practical terms, the SHM token underpins every major operation on the Shardeum platform, from staking and validation to DApp execution and fee settlement. As the ecosystem grows, SHM is expected to gain further utility within Decentralised Finance (DeFi), governance, and cross-chain interoperability use cases. Its design intentionally supports both economic incentives and long-term deflationary pressure, aligning the interests of users, developers, and validators while helping Shardeum maintain efficiency, decentralisation, and scalability across network conditions.
SHM Tokenomics
The tokenomics of SHM are structured to balance network security, scalability, and long-term sustainability through a dynamically adjustable supply model. At genesis, Shardeum introduced a total initial supply of 249 million SHM, with allocations distributed across team members, private sale participants, the foundation, and ecosystem initiatives. Notably, 100% of transaction fees on the network are burned rather than distributed as rewards, introducing a built-in deflationary mechanism. Validator rewards, which are the primary means of issuing new SHM, are not fixed but instead dynamically generated in response to actual network demand, such as transaction throughput and the number of active validators. This ensures that token issuance can scale with adoption while maintaining economic equilibrium.
To further enhance sustainability, Shardeum’s tokenomics are designed around the S:A ratio, the balance between standby and active validator nodes, which directly affects network scalability and decentralisation. When the network requires more throughput, increased validator rewards encourage more nodes to join, raising the S:A ratio. Conversely, when activity slows, rewards can be adjusted downward to reduce unnecessary token issuance. This model allows the SHM supply to be inflationary, deflationary, or neutral depending on current conditions, ensuring validator incentives are maintained without over-saturating the token supply. Slashed SHM from misbehaving validators is also burned, reinforcing both scarcity and accountability.
How to buy SHM with crypto
1. Log in to your Bitfinex account or sign up to create one.
2. Go to the Deposit page.
3. In the Cryptocurrencies section, choose the crypto you plan to buy SHM with and generate a deposit address on the Exchange wallet.
4. Send the crypto to the generated deposit address.
5. Once the funds arrive in your wallet, you can trade them for SHM. Learn how to trade on Bitfinex here.
How to buy SHM with fiat
1. Log in to your Bitfinex account or sign up to create one.
2. You need to get full verification to be able to deposit fiat to your Bitfinex account. Learn about different verification levels here.
3. On the Deposit page, under the Bank Wire menu, choose the fiat currency of your deposit. There’s a minimum amount for fiat deposits on Bitfinex; learn more here.
4. Check your Bitfinex registered email for the wire details.
5. Send the funds.
6. Once the funds arrive in your wallet, you can use them to buy SHM.
Also, we have Bitfinex on mobile, so you can easily buy SHM currency while on-the-go.
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SHM Community Channels
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