Table of contents
secondary title
Table of contents
text
· Introduction
Organization
· NPoS payments and inflation
inflation model
payment details
Distribution of payments among validator slots
The Polkadot network will adopt a native token called DOT. We (Web3 Foundation) summarize its main functions as follows:
1. Economic level: The Polkadot network will independently mint coins or "burn (burn), isolate the pass and prohibit anyone from accessing)" to reward nodes that run the consensus protocol, inject financial capital, and control currency purpose of inflation.
3. Governance and supervision: DOTs also represent certain voting rights, allowing DOTs holders to express their opinions on governance decisions through referendum
Introduction
4. Parallel chain allocation: Finally, DOTs allocate the ownership of different items on the parachain slots through auction and recharge modes
Introduction
Polkadot is a proof-of-stake based platform where a group of validator nodes with DOTs are responsible for detecting consensus and generating blocks. If the validator's behavior violates the agreement, the system will confiscate part of his DOTs, otherwise he will be rewarded, which is approximately proportional to his mortgaged DOTs and contribution. The set of nodes elected as validators is constantly changing (approximately once a day in each epoch) but is still limited in number. At the same time, any number of DOTs holders can also indirectly participate in the decision-making process.
As a nominator node, the so-called Proof of Stake. A nominator identifies candidate validators it trusts and stakes some DOTs to endorse its nomination. If at some point one or more of her nominated candidates is elected as a validator, she shares with those nominated validators any economic rewards or penalties proportional to her stake. Becoming a nominator is a way to invest with DOTs and help secure the system. In fact, the greater the total amount of DOTs staked by nominators and validators, the more secure the system will be, since an adversary needs more stake in DOTs (or nominator's trust) before any node can be elected as a validator. Therefore, our goal is for the staked investments of validators and nominators to become the main source of the total supply of DOT. Another large portion of the DOT supply will be provided by commercial blockchains that acquire parachain slots as a frozen margin. Our initial goal is to deposit about 50% of DOT in NPoS and 30% in the collateral of the parachain. For reference, the staking percentages in other PoS projects are as follows: - Tezos has a staking rate of 65.73%, - DASH has a staking rate of 58.69%, - Lisk has a staking rate of 58.20%, - EOS has a staking rate of only 35.49%, but This is because it is DPoS and the yield is low.
secondary title
Organization
This instruction contains the following chapters
1. NPoS payments and inflation: We describe how well-behaved validators and nominators are rewarded in nominated proof-of-stake. Since minting DOTs is the main cause of system inflation for this purpose, we describe the inflation model here as well
2. Transaction Fees: We analyze the optimal transaction fees on the relay chain to cover costs, deter harmful behavior and handle eventual peaks of activity and long inclusion times
3. Treasury: We discussed how and when to increase the price of DOTs or change the exchange rate to pay for the ongoing maintenance of the network
NPoS payments and inflation
We (Web3 Foundation) currently consider paying validators and nominators for their participation in the Block Production (BABE) and Final Agreement (GRANDPA) protocols. Under normal circumstances, we only consider payment in the form of tokens for the act of minting new tokens. In this article, we will not discuss the knowledge background of large penalties, whistleblower and fisherman (fisherman) rewards or transaction fee rewards, etc., we will discuss the above in another chapter.
Since this payment mechanism is the main driver of inflation in the system, we first examine the inflation modelsecondary title
inflation model
Let x be the pledge rate in NPoS at a specific point in time, that is, the ratio of the total amount of tokens pledged by nominators and validators divided by the total supply of tokens. X ∈ (0,1) let
It is the ideal pledge rate that we hope to achieve in the long run. This value should probably be between 0.3 and 0.6. We initially set it to \chi_{ideal}=0.546. If the pledge rate of the entire network is lower than this value, it will be difficult to maintain network security. Therefore, we ( Web3 Foundation) strongly encourages DOT holders to increase their token pledges. On the other hand, if the pledge rate of the entire network is much higher than this value (0.546), then the entire network will lose liquidity, which is what we do not want to see, so we should significantly reduce incentives to curb investment.
Let i = i(x) be the annualized rate of return of NPoS; that is, the total number of tokens obtained by all validators and nominators for producing blocks and using GRANDPA algorithm tools divided by the total number of tokens they invested each year. We think of it as a function of x. Intuitively, i(x) is related to the degree of incentive we give investors to pursue profits. Therefore, i(x) should be a monotonically decreasing function with respect to x, since less excitation is required as x increases.1. For ease of understanding, we looked at annual interest rates (rather than per-block or per-period rates). This means that i(x) is the total payout of someone who observes staking one DOT continuously over the course of a year. The interest rate for each block can be easily calculated from it. (Q: In this calculation, do we consider compound interest? In other words, can the staked party immediately reinvest their payment as a stake?)
2. Not every stakeholder group will be paid in proportion to their stake. For example, validators will be paid more than equally staked nominators, and validators who produce blocks will be paid more than validators who do not produce blocks. Therefore, i(x) is only used as an average guide rate.
in,Let I be the annual inflation rate, we get:
Meanwhile, the inflation rate is defined by the following formula:
in,
It is the inflation caused by the excessive issuance of tokens paid to nominators and validators,
is the inflation caused by treasury minting,
is deflation caused by misconduct,
Block producers are rewarded from transaction fees (and tips) not from minting, but from the originator of the transaction. Likewise, reporters and fisherman are rewarded not from extra minting for discovering wrongdoing, but from the slashed party. That's why these entries don't appear in the formula above.
and
Has by far the largest order of magnitude of any formula entry and is thus the main driver of headline inflation. Note that by directing all DOTs destined to be burned (due to slashing fees and transaction fees) into , we reduced other terms in the formula (see treasury section). if we will
As a function of the pledge rate x, we can get
and
The relationship between:
From our present study we can deduce that
Therefore, we need to guide the market to adjust the pledge rate to a more ideal level, it is meaningful that at this time the
The inflation rate should take the maximum value.
adjustable parameters,
as x tends to zero
The limit of (i.e. when neither the validator nor the nominator has staked any DOTs)
The value of should tend to zero, but not zero, because we want to make sure that validators are always paid at least the operating cost, even if nominators get nothing. therefore,
An estimated parameter representing the operating costs of all validators expressed as a fraction of the total token supply. For values of x, we will ensure thatalways higher than
, especially as the limit of x approaches 1.
For simplicity, we propose the inflation function at x = 0 and
grow linearly. On the other hand, we recommend its
and x = 1 decreases exponentially. When x increases by a small amount through a change in ε, we choose
The exponent of i(x) falls, because this also means that the exponential of i(x) falls, and we want the rate to drop sharply toabove to avoid illiquidity while still being able to control its rate of change,
. It is important for nominators and validators to determine how quickly the rate changes.，
，
Adjustable parameter, define a decay level so that when the x direction
，
From the previous discussion, we propose the following functions for interest rates and inflation rates, which depend on the parameters
and d. make
The test of the above formula is as follows, for all
Equivalent to
Take the maximum value athttps://www.desmos.com/calculator/2om7wkewhr
, you can getAt this point i(x) is monotonically decreasing
For example, when
We can get the following figure, I(x) is green,
blue
secondary title
payment details
Most normal validators are involved in several protocols, and we reward them for successful participation or penalize violations such as slashing their late responses (whichever is easier to spot). From this point of view, we choose an easy-to-check method and decide to only reward validators and nominators after passing validity checks and block production.
In the validity check, we will be rewarded for this: the validity statement issued by the parachain validator for each parachain.
During block generation, we are rewarded for this:
1. Block producers used to produce blocks (non-uncle blocks) in the relay chain,
2. Block producers refer to previously unreferenced uncle blocks
3. Each referenced uncle producer
Therefore, these are considered "accountable activities". We define a points system where validators earn a certain number of points for each payable action they perform, and at the end of each period, their points are paid in proportion to the points they earned. Proportional. (The exact DOT value per point is unknown, as it depends on the total points earned by all validators in a given epoch. This is because we want the total payout per epoch to depend on the inflation model established above, rather than Number of payable operations performed).
Adjustable parameters: Our suggested scoring system is as follows:
1. 20 points for each validity statement
2. Reward 20 points for each block generated (non-uncle block)
3. Award 2 credits for each referenced block producer for previously unreferenced uncle blocks4. 1 point for each referenced uncle block producer
Note that what is important here is not the absolute points, but the points ratio, which determines the rate of remuneration payable for settlement. These points are parameters to be adjusted by the Ministry of Finance.
For each epoch (era) e for each validator v, we set a credit counter
. make
Represents the total target payout for all validators and nominators in this epoch (era) e (see the previous section on the inflation model for how to build
) Then, at the end of this cycle e, the payouts corresponding to validator v and its nominators are
It's worth noting that we can also use a counter to mark the amount of unresponsiveness: if a validator has earned close to zero credits on payable operations for a certain period (or any other measured period of time), we will count it disuse. See the "Slashing" note for more details.
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Distribution of payments among validator slots
In any given epoch (era), a nominator's stake is usually distributed among several validators, e.g. nominator n 70% of the stake is allocated to validator 1, 20% is allocated to validator 2, and 10% is allocated to validator 3, and so on. This allocation is determined automatically by the NPoS validator election mechanism that runs at the beginning of each epoch (see NPoS notes for details).
If there are m validators, the distribution of the stake divides the global stake pool into m slots: one for each validator. The stake in each validator seat consists of 100% of that validator's stake, and a fraction (possibly zero) of each nominator's stake that approves that validator. We sometimes refer to a validator's stake as "self-staking" to distinguish it from a validator slot's stake, which is usually larger. In the previous subsection, we explained how payouts are allocated to each validator slot in a given epoch. In this subsection, we explain how this payment is distributed within slots (i.e. between validators and nominators). Ultimately, a nominator's payout for a given period corresponds to the sum of its payouts for each of its staked slots.
