Reduction of Qitmeer Network Block Reward Schedule
The Economic Implications of Block Rewards
In a crypto-economic system, both types of rewards, transaction fees and block rewards, ensure that all those enjoying the benefits of the network contribute resources to running it. This arrangement is very similar to infrastructure funding in a traditional financial system: for example, a highway network may be supported through toll fees, which are paid directly by drivers, and public funds, which are contributed by a broader group of tax payers who enjoy the indirect benefits of the highway system. In the context of the electronic payment system, transaction fees are paid by the consumers to the validators who support operations of the payment network that enables such transactions. The block rewards dominate the growth of the total token supply, causing the purchasing power of tokens to be eroded over time, forcing all those who hold tokens as a store of value or for speculative purposes to eventually bear some of the cost of such block rewards. This effect is analogous to the well-known concept of “inflation tax” in conventional economic systems, where validators become the beneficiaries of these “taxes” through the collection of newly minted tokens in the form of block rewards.
Spreading the burden of funding the network’s operations over a wide range of users to frequent transactors and even long-term holders of tokens is more than an issue of fairness. Making speculators pay for some of the block rewards reduces the required level of transaction fees, which generally enhances token adoption and growth of the network. It is reasonable to expect that, in a new system, the volume of retail transactions starts at a relatively low level, grows over time. In contrast, speculative transactions may be active at first and eventually decrease as the network stabilizes. However, the volume of transactions using tokens for commercial consumption is exogenous, and consumer demand for token balances is elastically related to the expected rate of return they earn on those token balances. Higher block reward rates reduce the expected return on passive holdings of tokens, while weakening consumer demand for token balances, ultimately undermining user adoption of cryptocurrency.
Therefore, in the design of crypto-economic systems, block reward rates are designed with a tendency to start at a relatively high level at the beginning of the network launch and gradually decay as the network matures. This block reward schedule, which ensures the long-term economic viability of the payment network, includes sufficient incentives for user adoption and for participation in performing network functions(block proposals and validation).
A higher initial block reward rate is consistent with the design of many existing cryptocurrencies. This would encourage miners to participate in the early stages of network development, when the volume of consumer transactions and thus the volume of transaction fees is low. At this early stage, it is necessary to reward miners for their efforts to participate in performing network functions; without these nodes, the system would not function.
Qitmeer Network Block Reward Schedule
Like most existing cryptocurrencies, Qitmeer Network’s block reward schedule has a trade-off between long-term economic viability and user adoption. Only unlike the “halving” used in cryptocurrencies like Bitcoin, Qitmeer takes a “smooth decay” approach. The higher initial reward rate spreads the financial burden of running the network over a broader base of token holders. As the adoption rate increases, the initial growth rate of token supply will gradually decrease.
The Qitmeer block reward decay plan starts from the active block of MeerEVM, i.e. main height 951100, and the decay period is every 138240 main heights, the initial block reward is 10 Meer/block, and the decay ratio is 100/101. Then the block reward after the nth decay is
where R_0=10Meer=1000000000Qit ,is the initial block reward.
From this, it can be deduced that the block reward in the main height H block should be
Where t is the decay times,
As a result, the first reduction in Qitmeer Network block rewards will occur on the main height 1089340 block.
How long until the reduction?
The first reduction of Qitmeer block rewards will happen on the main height 1089340 block, so how long is it before the current point in time? An estimation formula is given below.
Assuming that the current main height is h, the first reduction will take place after another (1089340-h) main heights, corresponding to a physical time of approximately
For example, if the current main height is 1026427, we can estimate that we have about 21.84 days until the first reduction.
