How do smart contracts bring value to STRAT?

When a smart contract is executed it requires computing resources in order to be run. It will require storage on a hard drive, some memory and some CPU usage time. An estimate of the resource requirements for each smart contract will be automatically tallied up by giving a weighting to each segment of code contained in the contract. This weighting will translate into a fee, called gas, which will cover the resource costs of running a smart contract. The gas amount will be paid by the smart contract user to the node operator and that payment will be made in STRAT. So, in order to execute a smart contract, the user will need to pay the node operators in STRAT and every smart contract will cost a certain amount of STRAT to run. You can read in more detail about STRAT gas, gas prices and gas limits here.

Every time a user wants to use a Stratis smart contract they’ll need to have STRAT and pay the gas cost to the node operators. This provides significant utility to the coin. It is a prime example of how utility drives demand: people will want to use the services and platforms built using Stratis’s smart contracts and to do so they will need to buy STRAT. For certain applications, it is reasonable to expect that the user experience will be streamlined so that the buying of STRAT is done automatically. This would remove it as a barrier to adoption. However, the process will still be there. As will the outcome, that demand for STRAT will increase.

Demand induces scarcity. This is the economic underpinning of the smart contracts. If some platform or application which uses smart contracts is attractive enough to users, then they will execute smart contracts. Every time they do, STRAT is spent as gas. If they want to use the platform or application, they need to have STRAT. This need translates to demand for the coin, which, when realized, introduces scarcity to the coin. Moreover, the STRAT paid as gas goes to stakers. This further incentivizes people to stake their STRAT which in turn reduces the circulating supply and constitutes supply-induced scarcity.