DEXON Network Cryptoeconomics
DEXON Foundation Last Modified 2019/3/4 v6.0
*This document describes the current plan and vision for the DEXON Network platform. While we intend to attempt to realize this vision, please recognize that it is dependent on a number of factors and subject to a wide range of risks. We do not guarantee, represent or warrant any of the statements in this document, because they are based on our current beliefs, expectations and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. Please know that we seek to achieve the vision laid out in our whitepaper and website, but that you cannot rely on any of it coming true. Blockchain, cryptocurrencies, other aspects of our technology and these markets are in their infancy and will be subject to many challenges, competition and a changing environment.
The total supply of DXN tokens is fixed at 4 billion. The genesis token supply is 1 billion DXN and the other 3 billion DXN will be minted as mining rewards after DEXON mainnet launches. The token allocation is shown below:
Figure 1. Token Allocation
75% for Miner’s Reward
For rewarding miners that actively participate in network consensus and smart contract executions on DEXON Network.
25% for Genesis Supply
The genesis supply will be distributed to 4 parties, including DEXON Foundation / Team and
private sale token purchasers under different vesting schedules.
Nodes that actively participate in validating transactions will get DXN tokens as mining rewards based on DEXON’s Proof of Participation Model.
- Validator Eligibility
A node is eligible to join as a validator if its DXN token deposit reaches the threshold of 1 million DXN. The deposit can come from the node itself or from any other accounts that support the node. It takes 24 hours for the deposit to become effective, and another 24 hours for deposit withdrawals to become effective.
- Symmetric Validator Power
The validating power and the probability to be selected as a block producer among all validators are both fair and symmetric, meaning that the expected mining rewards of each validator will be the same as well.
- Mining Rewards
A validator earns transaction processing fees, gas fees, and mining rewards when it actively produces blocks and acks to other blocks.
Adaptive Mining Mechanism
DEXON adopts a novel adaptive mining mechanism that can self-adjust the token minting velocity. The token minting velocity is proportional to the participation rate of mining. If the demand of DXN token is strong, it will attract more token holders to participate in mining for rewards, hence the minting velocity will increase, and vice versa. This will make sure the system can keep demand and supply balanced by itself.
The formula of minting velocity is stated below:
r is total supply growth rate (the annual growth rate of total supply), vis node mining velocity (the annual mining rate of each node), and is mining participation rate (the percentage of deposited tokens in validators relative to current total token circulation). Initially, v is 18.75% and will alter based on the total minted tokens under a half-life condition. The relation between node mining velocity and minted tokens is shown below:
v= 18.75% when mainnet launches.
v= 9.375% after 1.5 billion DXN tokens are minted.
v= 4.6875% after another 750 million DXN tokens are minted, and so on.
As an example, inniitialy each node can mine 1M * 18.75% = 187.5K DXN tokens per year. As total minted tokens hit 1. 5B DXN, the annual mining rate per node will decrease from 18.75% to 9.375%, and as total minted tokens hit 2. 25B DXN, the annual per node mining rate will decrease further from 9.375% to 4.6875%, and so on.
Figure 2. Node Mining Velocity Half-Life Threshold
Mining Rewards in Circulation
Now, let’s consider the influence of mining participation rate. For example, the genesis supply of DXN token is 1 billion, if 500 millions tokens are deposited in validating nodes, the mining participation rate will be 50%. So the total supply growth rate will be 18.75% * 50% = 9.375%. The total mining rewards in circulation based on different participation rates (30%, 50%, 70%) is shown in the figure below:
Figure 3. Total Mining Rewards in Circulation
Assuming the mining participation rate is fixed at 50%, r(total supply growth rate) per year is shown below:
Figure 4. Total Mining Rewards in Circulation