How Qitmeer builds a decentralized economic system
A good blockchain economic system needs to design an incentive game mechanism that maximizes collective interests. 💭How to maximize the benefits of all parties involved in the entire ecosystem game, and maintain the long-term efficient operation of the network. It is the core task placed in the design of Qitmeer’s economic model.
In the era of Web 2.0, for-profit technology companies like Google and Microsoft quickly built highly complex and centralized software and services in line with the trend of the old era, gradually gaining influence beyond open protocols. 👺Users shifted from open services to these centralized services, which brought improvements in business efficiency, but also brought a series of centralization problems.
After mastering a large amount of user information, these Internet Tech Giants used the value of information to build barriers and change the rules of the Internet. As these giants gradually formed monopolies, they began to extract the remaining value of users’ information and even “steal” control of the economic system.
Despite the emergence of decentralized organizations such as Wikipedia in the Web 2.0 era, they lack a sustainable Incentive Mechanism and are difficult to achieve scale. Wikipedia community members only rely on “ faith ” and “ consensus ” to maintain this structure, which is fragile because it does not form a complex game mechanism.
Even if a reasonable incentive game mechanism is introduced, the traditional equity structure theoretically can not support the Incentive Mechanism of “ decentralized ” projects. If assign an equity stake to Wikipedia editors to incentivize “ bookkeeping ” ，❓run into two huge problems：
- 🧑🔧Obstacles to the flow of value：The transfer of equity stakes in the primary market requires legal and government trust, the process is cumbersome and has trust costs, and it is difficult to achieve a wider range of incentive effects; stocks in the secondary market rely on third-party exchanges to provide liquidity, unable to achieve 24-hour trading.
- 🧑🔧Not resistant to review：Equity is usually the legal record of the company issuing rights and interests, can not achieve anti-review; The right to distribute shares is still in the hands of a centralized group of registered companies, which is not transparent enough.
Although in the era of Web 2.0, the concept of “ decentralization ” to achieve the transformation of economic organization has not been widely implemented, but with the popularity of blockchain technology, this model has a better form of realization. The blockchain economy system solves the difficulties of the equity approach：blockchain-based native crypto assets can rely on good economic models to accurately identify and incentivize contributions, and are frictionless and censoring resistant.🌗
In addition, crypto assets also have a lower threshold of governance rights. Users holding a small number of tokens can also participate in community governance voting without threshold, to achieve community autonomy. This allows the popularity of blockchain technology to promote the practical application of the concept of “ decentralized ” economic systems.
We found that only economic distribution through blockchain can achieve incentives in the form of “ decentralization ” and coordinate the distribution of benefits among the participating parties. Below are some reflections on the goals and methodology of Qitmeer’s economic model design.
✨ Composition of participants
First, we need to understand who is involved in the Qitmeer ecosystem.
✨ Qitmeer network ledger and nodes：
Qitmeer’s data nodes are responsible for verifying the stored and updated ledger, providing transaction and accounting services for various token asset holders deployed on the chain, ensuring the security, decentralization, and immutability of transactions.
✨ Miners：
The maintainers of the Qitmeer blockchain, a group of miners distributed around the world, provide computing and storage hardware resources for the Qitmeer network, and help traders settle transactions on the blockchain; miners collect users’ transactions and pack them into blocks, conduct transactions settlement, add the latest settlement results to the Qitmeer ledger, store the latest ledger, earn Meer Coin rewards released by the Qitmeer network and transaction fees provided by traders.
✨ Users：
Hold and use Meer Coin to exchange value with other users. The user’s demand for Meer Coin payment constitutes the fundamental value of the Qitmeer network. Why do these users use Meer Coin for payment settlement? ⚡️First, the “ credit ” of the Qitmeer network is based on a decentralized PoW consensus mechanism rather than government credit. Second, the Qitmeer network can reduce the high transaction fees generated by cross-border settlement in the fiat currency system. Through the cross-chain transfer function from the underlying Meer network to the QNG network, the value barrier of the Layer1 + Layer2 network is opened up. 💥Users can use Meer Coin to realize value transfer on different levels of the Qitmeer network, and interact with various dApps on the Qitmeer blockchain , and conduct fee settlement.
✨ Speculators：
Earn profits by buying and selling various token assets on the Qitmeer blockchain. And provide liquidity for transactions for Qitmeer.
✨ Ecological application side：
Various applications deployed on the Qitmeer blockchain provide users with a variety of decentralized application services. The basis of their application implementation is to interact with users’ wallet addresses and pass tokens through smart contracts deployed on the chain.
✨ Qitmeer Team：
As a community-driven public blockchain project, Qitmeer is also faced with complex market competition and continuous optimization of business needs, and needs an efficient and decentralized organization to assist Qitmeer in rapid technology iteration, responsible for the early maintenance and development of the network, subsequent upgrading and optimization, and community ecological construction. ☄️Therefore, at the early stage of the Qitmeer mainnet launch, the Qitmeer operation team reserved part of Meer coins from the token distribution of the mainnet for subsequent ecological and community development.
✨ Investors：
Investors purchase Meer Coin through exchanges, recognize the value of Qitmeer network, and support project development and construction. 🌕 Currently, all MEXC, LBank, Jubi transactions that support trading Meer Coin are supported.
🏆Economic mechanism design goal — consistent incentive
“ Consistent incentive ” 🏆means that through mechanism design, the pursuit of individual interests is consistent with the overall interests, so as to promote everyone to contribute to the overall interests while pursuing personal interests, and achieve overall stability and prosperity.
In terms of economic mechanism design, Qitmeer needs to fully consider the influence of cryptography and game theory on the token economic model. It makes it possible for blockchain economic ecology to realize the game structure of “ consistent incentives ”, which means that while each participating individual pursues personal interests, the entire Qitmeer blockchain economic system can also achieve maximum benefits. This expands the ability to achieve “ decentralized ” structure size and cap.
The goal of the consistent incentive mechanism design is to enable the decentralized blockchain economic system to maintain stable operation only by relying on “ code order” and “ self-interested behavior of participants ”.
The ideal state of this mechanism is to allow participants “ Self-interest ” and “ interests of maintaining Qitmeer’s blockchain economic system ” overlap as much as possible, so that participants can help Qitmeer maintain its own operation only by pursuing their own interests, and achieve the Nash equilibrium of “ Qitmeer’s economic ecology ”.
🌐 Qitmeer Network Monetary Economics
Currency distribution
The operation mode of Qitmeer Network is similar to that of Bitcoin. Qitmeer Network is a decentralized network composed of public ledgers and nodes, miners, community users / investors, operation teams, and ecological application parties under a certain consensus mechanism. The total amount of core assets Meer Coin is 201.24 million pieces, which are produced by the proof-of-work mechanism.
Qitmeer implements fast transactions based on the MeerDAG consensus protocol and confirms them on the blockchain network. Through PoW consensus, it determines who will package the transactions and put them into the ledger. This requires miners to repeat the game for bookkeeping rights many times. 🌐 In order to motivate miners to continue to provide computing power to maintain the ledger, the Qitmeer ledger needs to keep recording the latest transactions.
If only the first “ winning ” miner continues to keep bookkeeping, other miners will have no incentive to provide computing power again. The miners who continue to be responsible for bookkeeping will be able to control the ledger to do evil.
Therefore, 🎰Qitmeer accounts once every 30 seconds on average, opening a new round of calculation competition, and a new round of miners who calculate the results first and get a consensus get the Meer Coin reward for this accounting. The conditions for miners to continue to maintain this system are very simple: expected income > input cost. This ensures a fair distribution of resources and benefits and avoids excessive concentration of power and wealth.
Value capture
How to motivate people to actively hold Qitmeer’s native currency to stabilize the entire network requires designing an economic system for Meer Coin value capture.
Although most Layer 1 blockchain native tokens either have value capture mechanisms that are inconsistent with the platform’s goals, or do not have value capture mechanisms at all, Qitmeer’s token economics design has created a long-term demand for Meer tokens. 💎 Adapt to the development trend of mainstream blockchain networks through the robust network scalability of the Layer1 + Layer2 network structure.
Qitmeer achieves compatibility between the UTXO model and the transaction data structure of the Ethereum account model by optimizing the MeerDAG protocol, so that Meer Coin can be transferred from the underlying BlockDAG network to the QNG network compatible with the EVM ecosystem to realize the flow of value.
Meer Coin serves as the fuel of the ecosystem, has an important governance and application core asset position. With the continuous development of the Qitmeer network ecosystem and the increase of network application rate, the usage scenarios of Meer Coin will increase significantly. Will attract investors or speculators to join the network and share the development dividend.
The increase in the adoption rate of the network will attract miners to continue to provide computing power support for the security of the network. At the same time, the increase in the number of users will strengthen the Network Effect of blockchain, reduce the cost of network operation, improve the participation experience of users, and create greater community influence.
At the same time, in order to ensure the long-term sustainable and stable development of the Qitmeer blockchain network. Qitmeer Network is a trade-off between long-term economic viability and user adoption.💎 Implemented a block reward scheme different from the “ halving method ” pursued by cryptocurrencies such as Bitcoin, and adopted a “ smooth decay method ”.
This is a distribution scheme in which the initial growth rate of the money supply will gradually decrease. Deflation is carried out in response to money output. This solution not only prevents monetary overexpansion and protects the rights and interests of Meer Coin holders, but also spreads the financial burden of running the network. Ensure that long-term contributors can share in the development dividends of the blockchain network.
