Hedera (HBAR)

Hedera is an open source, proof‑of‑stake public ledger powered by Hashgraph consensus that processes 10,000+ transactions per second with 3–7 second finality and ultra‑low fees for scalable dApps.

What Is Hedera Hashgraph (HBAR)?

Hedera (HBAR) is a fully open source, proof‑of‑stake public distributed ledger that leverages its proprietary Hashgraph consensus algorithm to deliver exceptional performance and security. Specifically, Hedera can process over 10,000 transactions per second (TPS) in a single shard with finality achieved in as little as 3–7 seconds, while maintaining transaction fees as low as $0.001 USD. This high throughput is achieved via an energy‑efficient design, consuming only around 0.003 Wh per transaction.

An overview of Hedera Hashgraph | Source: Hedera

Designed for enterprise‑grade scalability, Hedera provides robust network services—including Solidity‑based smart contracts running on an optimized Besu Ethereum Virtual Machine (EVM), native tokenization, and a tamper‑proof consensus service—empowering developers to build decentralized applications (dApps) that meet the demands of modern digital ecosystems while upholding strict decentralization and governance standards.

Hedera sets itself apart as the world’s first public network powered by Hashgraph, a consensus mechanism invented by co-founder Dr. Leemon Baird. Unlike traditional blockchains that rely on proof‑of‑work or even classical proof‑of‑stake, Hashgraph uses “gossip about gossip” and virtual voting to achieve asynchronous Byzantine Fault Tolerance (aBFT).

What Is the Hedera Governing Council?

Hedera Governing Council members | Source: Hedera

Hedera is governed by a diverse council of 39 leading global organizations representing technology, finance, telecommunications, and other key industries. Notable council members include Google Cloud, IBM, Boeing, Deutsche Telekom, and LG Electronics.

Each member holds an equal vote, ensuring decentralized governance on critical decisions such as software upgrades, network pricing, and treasury management. This structure guarantees that no single entity can dominate the decision-making process, and detailed meeting minutes are published regularly to ensure transparency and accountability.

Currently, Hedera operates as a public permissioned network; however, the council is committed to a path toward full decentralization. In the future, any qualified entity will be able to run a node anonymously, further bolstering network resilience and security. This governance model, backed by industry giants, not only strengthens trust in the network but also underpins Hedera’s long‑term vision of achieving a truly decentralized public ledger.

Hedera’s Core Network Services

Hedera vs. Bitcoin vs. Ethereum | Source: Hedera

Hedera empowers developers through three main services, each accessible via user‑friendly APIs and official SDKs:

1. Smart Contract Service

Solidity‑Based Execution: Runs Solidity smart contracts on an optimized Besu EVM that leverages Hashgraph consensus for superior performance.
High‑Throughput & Scalability: Supports hundreds of transactions per second and can process up to 15 million gas per second, enabling robust decentralized applications.
Low Fees & Environmental Benefits: Offers transaction fees as low as $0.001 USD per transaction and operates with a carbon‑negative footprint, making it both cost‑effective and sustainable.
Seamless Migration: Allows developers to port Ethereum‑compatible contracts with minimal code adjustments, facilitating quick adoption and deployment in existing ecosystems.

2. Consensus Service (HCS)

Guaranteed Ordering & Timestamping: Ensures every submitted message is immutably ordered and time‑stamped with finality in 3–7 seconds, creating a tamper‑proof record.
Real‑Time Data Feeds: Ideal for applications such as supply chain tracking, financial settlements, and IoT sensor data aggregation, where accurate and immediate logging is critical.
Enhanced Privacy: Supports payload encryption so sensitive information remains secure even as the data is recorded on the public ledger.

3. Token Service

Efficient Token Management: Provides native tools for minting, managing, and transferring both fungible and non‑fungible tokens with near‑instant finality (3–7 seconds) and ultra‑low fees.
Customizable Features: Enables detailed configuration such as supply control, KYC integrations, and freeze capabilities, with seamless integration into smart contracts.
Scalability for Diverse Economies: Capable of supporting large‑scale token economies, from stablecoins and utility tokens to gaming rewards and digital collectibles.

Overview of the Hedera Ecosystem

Hedera’s ecosystem showcases its versatility as a high‑performance public ledger, powering a diverse range of real‑world applications across multiple sectors:

Payments & Financial Services: Hedera’s lightning‑fast finality and ultra‑low fees enable instantaneous cross‑border payments and stablecoin issuance. For instance, fintech startups leverage Hedera to settle micropayments and remittances efficiently, reducing costs and settlement times compared to traditional systems.
Decentralized Finance (DeFi): The ecosystem supports a suite of DeFi applications such as lending protocols, decentralized exchanges (DEXs), and oracle networks. Platforms can execute smart contracts at scale. This performance has attracted projects looking to build robust financial instruments without the high fees or congestion seen on legacy networks.
Content Authenticity & Audit Trails: Leveraging its immutable consensus service, Hedera is used to create tamper‑proof records for document verification, supply chain audits, and IoT sensor data logging. Enterprises use these immutable audit trails to ensure data integrity and traceability, which is critical in regulated industries such as healthcare and logistics.
NFT Marketplaces: Hedera’s Token Service enables efficient minting, trading, and management of both fungible and non‑fungible tokens. NFT marketplaces built on Hedera benefit from near‑instant finality and minimal fees, making it ideal for digital art, collectibles, and in‑game assets. Several leading NFT platforms report faster transaction speeds and improved user experiences compared to Ethereum‑based solutions.
Decentralized Identity: Hedera supports secure, privacy‑preserving digital identity solutions. These identity platforms leverage the network’s robust security and low‑cost transactions to manage user credentials and personal data, ensuring compliance with global privacy standards while reducing identity fraud.
Permissioned Blockchain Integration: Hedera’s interoperability capabilities allow seamless bridging between private (permissioned) blockchains and its public ledger. This integration empowers enterprises to combine the privacy and control of permissioned systems with the transparency and security of a public ledger, fostering innovative hybrid solutions for industries like finance and supply chain management.

HBAR Token Utility and Tokenomics

HBAR, the native cryptocurrency of the Hedera network, serves a dual purpose that underpins the ecosystem's performance, security, and governance:

Network Fuel: HBAR is used to pay for all network transactions, including smart contract executions, token transfers, and consensus service messages.
Network Protection & Staking: HBAR plays a critical role in securing the network through staking. Both node operators and token holders stake HBAR to participate in Hedera’s proof‑of‑stake consensus mechanism. This not only fortifies network security but also allows stakers to earn rewards—potentially up to 6.5% APY—from transaction fees, aligning economic incentives with long‑term network stability.
Governance and Incentives: Beyond transactional utility, HBAR is integral to decentralized governance. Token holders contribute to decision‑making processes related to software upgrades, network pricing, and treasury management. Moreover, HBAR supports ecosystem incentives such as developer grants and community initiatives, further driving decentralized innovation and participation.

Hedera (HBAR) Tokenomics

Hedera’s tokenomics are designed to ensure long‑term ecosystem stability, transparent governance, and sustained network growth. With a fixed total supply of 50 billion HBAR, the Hedera Council, guided by its Treasury Management and Token Economics Committee, has structured the distribution of HBARs into clearly defined categories, each with its own release schedule and vesting mechanisms.

Key Classification of HBAR Supply

Unreleased Supply: All HBARs begin as unreleased and remain in this state until transferred to a user‑controlled account. Once transferred, they are reclassified as Released Supply. Different methodologies may be used to define circulating supply, and released supply is one such metric.
Allocated Supply vs. Unallocated Supply:

Allocated Supply: These are HBARs that the Hedera Council has earmarked for specific purposes and are stored in designated accounts. Allocated supply is divided into several key categories:

Initial Development Costs and Licensing: Funds allocated for licensing and deploying hashgraph technology—including the original licensing payments to Swirlds, Inc.—are now largely historical following the open‑sourcing of intellectual property.
Purchase Agreements: HBARs distributed through regulated sales contracts such as SAFTs (Simple Agreements for Future Tokens) and TPAs (Token Purchase Agreements). These agreements provide initial liquidity and longer release schedules for early investors.
Network Governance and Operations: Tokens used to compensate founders, executives, employees, and contractors, including allocations from the early Coin Plan and council operations. This category also covers board reserves and ongoing operational costs.
Ecosystem and Open Source Development: HBARs dedicated to community incentives, developer grants, and ecosystem development programs aimed at fostering decentralization and long‑term growth.

Unallocated Supply: A small fraction of HBARs remain unallocated until the Council designates a purpose. This ensures that future needs or opportunities can be addressed without altering the overall supply.

HBAR Token Allocation Breakdown (December 2024 Snapshot)

HBAR token distribution | Source: Hedera

Initial Development Costs and Licensing: 7.74% (~3.87 billion HBAR)
Purchase Agreements: 25.40% (~12.70 billion HBAR)
Network Governance and Operations: 16.23% (~8.12 billion HBAR)
Ecosystem and Open Source Development: 50.50% (~25.25 billion HBAR)
Unallocated Supply: 0.13% (~67 million HBAR)

Note: These percentages and values reflect allocations as reported in December 2024 and are subject to updates as the network evolves.

Release Schedule and Vesting

To prevent market oversupply and to incentivize long‑term commitment, the release of allocated HBAR is staggered over multiple calendar quarters. Only a portion of the allocated supply is released each quarter, with detailed forecasts based on existing commitments. This controlled release helps maintain market stability and aligns with strategic ecosystem milestones.

Each allocation category features tailored vesting schedules:

Initial Development & Licensing: Tokens in this category were subject to short‑term, fixed vesting terms that were front‑loaded to support the rapid deployment of hashgraph technology. For example, a substantial portion was unlocked within the first 12–18 months post‑launch, with predetermined dates tied to key milestones such as technology deployment and the subsequent open‑sourcing of intellectual property.
Purchase Agreements and SAFTs/TPAs: Tokens distributed through Purchase Agreements—including SAFTs (Simple Agreements for Future Tokens) and Token Purchase Agreements (TPAs)—follow a longer vesting period, typically spanning 3 to 5 years. These tokens are gradually unlocked in quarterly or annual tranches, ensuring that early investors remain aligned with the network’s long‑term objectives while mitigating short‑term selling pressure.
Governance and Operations: Allocations intended for network governance and operational roles are structured to retain key contributors over the long haul. Vesting in this category usually extends over 4 to 5 years, with periodic unlocks (often quarterly or semi‑annually) tied to operational benchmarks such as governance council meetings, software upgrade cycles, or other critical performance milestones.
Ecosystem and Open Source Development: Tokens earmarked for ecosystem initiatives and open‑source development are designed to fuel ongoing community participation and innovation. These tokens typically vest over a period of 3 to 5 years, with releases scheduled to coincide with the rollout of community incentive programs, developer grants, or major project launches. This staggered release helps ensure a continuous flow of resources to support decentralized growth and developer engagement.

Hedera Roadmap and Recent Developments

Milestone Achievements (as of early 2025)

Global Adoption: Increasing integration with enterprise‑grade applications, with major initiatives including potential collaborations with giants like SWIFT to revolutionize global payments.
Ecosystem Growth: Significant expansion in the number of dApps and token projects deployed on Hedera.
Technological Enhancements: Introduction of innovative features such as the Tiered HBAR Rate Limiter, enabling relay operators to manage user transaction costs effectively while ensuring fair network resource allocation.

Strategic Initiatives

Decentralized AI Society Membership: Hedera has joined the Decentralized AI Society (DAIS) to promote ethical, decentralized AI development. This initiative underscores Hedera’s commitment to leveraging distributed ledger technology to shape the future of ethical AI.
Path to Permissionless Operation: Hedera continues to evolve from a public permissioned model toward full permissionlessness, inviting a broader spectrum of node operators and decentralizing control further.
Ongoing Infrastructure Upgrades: A detailed roadmap outlines projects from near‑term improvements—such as enhanced tooling, metadata management for tokens, and extended EVM compatibility—to long‑term vision projects aimed at achieving unparalleled throughput and security.

Future Developments

Hedera’s roadmap is designed to sustain its position as a leading public ledger:

Scalability Enhancements: Continued sharding and performance optimizations to further boost TPS beyond current limits.
Expanded Governance: Additional decentralization measures to open node operations and foster community‑driven innovation.
Interoperability: Building bridges to other networks to ensure seamless cross‑chain interactions and bolster mainstream adoption.
Enterprise Collaborations: Strategic partnerships (e.g., with SWIFT) expected to drive global use cases and mainstream financial integration, positioning HBAR for unprecedented transaction speeds and cost efficiencies.

Conclusion

Hedera (HBAR) represents the evolution of public distributed ledgers, merging the efficiency and security of Hashgraph consensus with a robust suite of network services designed for modern decentralized applications. With its low fees, high throughput, and energy‑efficient operations, Hedera is not only empowering the next generation of DeFi and enterprise applications but also setting a global standard for decentralized governance and technological innovation. As the network continues its journey toward full permissionlessness and scales its ecosystem through strategic partnerships and groundbreaking technological advancements, Hedera is poised to lead the charge in shaping a more decentralized, equitable digital future.