Frequently asked questions
from our community

HoloFuel is Holo's native, asset-backed, mutual-credit currency.

HoloFuel is a Holochain-based currency that is a contractual service obligation, redeemable for hosting. HoloFuel is a mutual-credit accounting system capable of performing billions of daily microtransactions. Its primary use is for Holochain application (hApp) providers to pay Holo hosts for their services.

HoloFuel benefits:

• A completely peer-to-peer cryptocurrency.
• Optimized for high speed and minimal fees.
• Currency you earn for hosting on Holo, and redeem to pay your bills.
• Completely accountable and transparent crypto-accounting, operating by known and shared rules running on every host machine.

How is HoloFuel different?

• Mutual Credit: Unlike other cryptocurrencies which are primarily used for speculation, HoloFuel is not tokens created from nothing. It is a double-entry crypto-accounting framework in which units are created, transferred, or destroyed at transaction time.
• Asset-Backed: HoloFuel is backed by the computing power of hosts like you across the globe. That means it can be redeemed for a product with real utility.
• Value-Stable: The value of HoloFuel is connected to the computing capacity of the network of hosts. This capacity evolves and changes slowly and isn't subject to huge spikes and crashes the way other speculative tokens are.
• Scalable: HoloFuel is designed for micro-transactions, which means it needs to support millions of global value exchanges per second at fractional values. This is possible thanks to Holochain's massively parallel design.

How can I use HoloFuel?

• Spend it through a variety of apps and online marketplaces.
• Redeem fuel earned by hosting for other currencies to pay your bills.
• Borrow it, based on your proven hosting track record, to pay for things.

HoloFuel marks the beginning of a new era of cryptocurrencies backed by the capacity provided by people. All of the currency supply is correlated to building and providing the computing power of the Holo network. We always create that value together.

Most cryptocurrencies are modeled as digital objects tracked on a global ledger. With HoloFuel, each user has their own ledger showing their account balance and transaction history. Each transaction requires an agreement between two people, which is then recorded on their respective ledgers and validated by peers in the network.

Mutual credit means that every credit (positive) has an equally matching debit (negative), giving a net supply of zero and a dynamic circulating supply that’s responsive to the actual market behavior of its users.

Credit limits are directly connected to a demonstrated capacity to repay a negative balance by providing hosting resources. HoloFuel is directly redeemable for hosting services. HoloFuel is therefore backed by computing power, a valuable modern asset.

Being asset-backed and having a dynamic supply means that HoloFuel can be value-stable without being static or requiring a peg. HoloFuel can optimize the market value of its units in relation to the cost of hosting, creating a steady and stable trajectory.

The agent-centric design allows for the transactions per second (TPS) to increase the more people use it, mirroring how the English language’s “words per second” increases as more people speak it. Therefore, HoloFuel is scalable for mass adoption.

There is no mining or staking involved in earning HoloFuel—only the useful work of web hosting. Anyone can become a host and be compensated by application providers who want their hApp served to the web.

Having a dynamic supply allows HoloFuel to adapt to the needs of the hosting economy, protecting it against extreme price volatility.

Dynamic supply is inherent in the design of a mutual credit currency, where every credit (positive) has an equally matching debit (negative). The constant interplay between positive and negative accounts determines the circulating supply at any given moment.

This dynamism is critical for HoloFuel to be useful as a medium of exchange. It allows the supply to organically respond to demand in the hosting economy, expanding or contracting as demand increases or falls (see “How does HoloFuel’s dynamic supply work?” for more details).

A currency with wild price movements is good for speculative swing trading, but not for a day-to-day, productive use. HoloFuel is made to be stable enough for normal people to trust with doing business.

As a mutual credit currency, HoloFuel’s supply is determined by the interactions between agents with positive and negative balances. The key factors influencing the supply are:

1. Hosts’ spending behaviors into and out of negative balances (confined by their credit limit)
2. How often people buy fuel from reserve accounts vs. regular exchanges
3. Hosts’ redemption behaviors

HoloFuel is a mutual credit currency:

Transactions between two accounts with positive balances (or two with negative balances) have no impact on circulating supply. To see why, consider this example:

Fatima and Ellie both have a balance of 100 HoloFuel, representing a supply of 200 HoloFuel total. Fatima agrees to pay Ellie 50, so that Fatima ends up with 50 and Ellie ends up with 150, resulting in the same 200 HoloFuel in circulation—exactly what existed before they transacted.

In contrast, consider this variation:

Fatima, an application provider, has a balance of 200 HoloFuel. Ellie, a host, has a negative balance of -200. These balances represent a total active supply of 200 HoloFuel total. Fatima agrees to pay Ellie 50 HoloFuel for hosting services. Fatima ends up with 150 and Ellie ends up with -150, paying off part of Ellie’s debt and removing 50 HoloFuel from circulation.

Therefore, it is only accounts with credit limits, host and reserve accounts, that determine the supply of HoloFuel. When their balances go negative, circulating supply goes up. When their negative balances move toward positive again, in other words, as their debts are paid off, supply goes down - as long as the negative account is transacting with a positive one.

Here are the specific factors that determine how HoloFuel’s supply changes over time (key points are in bold):

1. Supply decreases every time a host with a positive account balance redeems the fuel they earned through hosting. Since Reserve Accounts always have a negative HoloFuel balance, backed by fiat reserves, supply is removed from circulation when a host redeems for an outside currency through the reserve, paying off part of the reserve account’s HoloFuel debt.
2. Hosts have the right to spend below zero, the credit limit being determined algorithmically based on their demonstrated ability to earn back that debt through hosting (i.e., their fuel debt is backed by hosting power). Circulating supply changes depending on how much hosts choose to spend (supply goes up) or pay off (supply goes down) their credit.
3. HoloFuel can be purchased from Reserve Accounts or acquired by trading on regular exchanges. The price of HoloFuel on Reserve Accounts will be determined by an algorithm that takes into account the price at which Hosts are willing to redeem. When people buy fuel from the reserve (e.g., if the price is lower on the reserve than the exchange), the circulating supply will increase. Buying from an exchange will have no impact on supply.

To summarize: The supply of HoloFuel can expand and contract in response to demand, adjusting to the actual market behavior of its users.