Migration Committee - Catapult Tokenomics Proposal

[Migration_Committee]

Public Communication: Catapult Tokenomics Proposal

This is a joint message for our community on behalf of the Catapult Migration Committee, comprised of the NEM Foundation, NEM Studios, NEM Ventures and Tech Bureau Holdings

Translations :

• Japanese: here and, 7.01 , 7.1, 7.3
• Spanish: here.
• Mandarin: Forthcoming
• Italian: here.
• Russian:here.

Introduction

In this post we lay out and explain the recommended approach for Catapult Tokenomics. This is a recommendation and has been compiled by the Tokenomics Working group, reviewed by the Migration Committee, Core Team & Super Node Holders group.

A huge thanks go to everyone that has been involved in this process, some of the working group members are named on the proposal, others are not for personal privacy. All are known to the Migration Committee and are long standing, experienced members of the community. Your time, thoughts and efforts are truly appreciated and the result is a well balanced Tokenomics approch we believe.

A similar, but smaller, proposal will be released to cover any changes to the NIS1 Tokenomics as part of Catapult launch, these will be released in due course but it is considered more important to agree the Catapult Tokenomics first to ensure the launch date can be met.

Tokenomics Overview

The nature of Tokenomics necessitates some dense information, this post has been compiled to provide some context and guidance for how to absorb the proposal. We welcome any and all feedback, comments, questions, etc from the community.

The proposal broadly splits into the following main components:

1. Block Rewards - reduce core funds to start the chain with less than 9bn tokens, then use the new Catapult feature (Inflation Mechanism) to re-inflate it back to 9bn via block rewards to harvesters. This will be done by matching the rate that BTC is mined at - without the 4 year cliffs. This gives good rewards in the early years AND a nice easy marketing story about release matching in BTC

2. Node Harvest Reward - Providing a to the node owner from blocks harvested on their node by contributions from the delegated harvesters, again using a new Catapult feature.

3. SuperNode program will be phased out over 6 years and made more accessible to the wider community via tiering. It will no longer a large payout but that is offset by the block rewards, it is more of a contribution/thank you towards the cost of running the nodes, supporting the network reliably, locking tokens etc

4. Two Bonus Opportunities to encourage both early node deployment on catapult and providing node stability on NIS1

You will see that Points 3 and 4 are flagged as optional in the proposal and depending on community response may be kept, altered or removed without major impact on the overall Tokenomics Model. Our recommendation is they are included as documented.

Tokenomics Full Proposal

A Two Page Summary has been produced to help summarise the longer proposal and modelling; it is the best place to start.

The full proposal and spreadsheet models are also provided below:

Proposal Documents:
7.01 NEM Ecosystem Tokenomics - Catapult Proposal 2pg Summary
7.1 NEM Ecosystem Tokenomics - Catapult Proposal
7.2 NEM Ecosystem Tokenomics - Catapult - Inflation and SuperNode Rewards
7.3 NEM Ecosystem Tokenomics - Catapult Future Roadmap Items

Intended Next Steps

The following are the intended next steps for this work:

Catapult Tokenomics

• Leave this topic open for comments, input, questions etc
• Assuming it is well received, combine the Migration Path and Tokenomics Proposals into a single proposal which goes to PoI vote in mid December

NIS1 Tokenomics

• Create a similar, probably smaller document to this one which outlines suggested changes to NIS1
• Take it through a public vote, probably after Christmas/New Year at this stage.

As always, community input on this proposal is very important and some of these changes are fundamental to the way in which Catapult will work at launch and decades into the future. We encourage everyone to read and engage with the proposal as much as possible!

[cryptonit]

i hope u all understand that the tokenomics proposal means owning xem (which will be cloned and become new catapult coins too) means that on catapult ur coins act like hashrate and there is a equal strong blockreward as on BTC (percent based of new coins in a year compared to already existing coins) this is the really great news

the wet dream of any bitcoin miner : mining hardware that never gets outdated and need no electric power

if u look the reward calculation u see even if SN rewards are just a tiny income stream compared to what that blockreward generated u and then consider that u even get a share of the rewards delegated coins generate which someone else runs on top of ur node

so its better then old system for SN owner

but also by far (more then factor x10000) more rewarding for normal harvesters with more then 10000 coins

in my opinion this proposal deserve a big clap by community its very ambitious and establish new catapult based chain not only as a great blockchain infrastructure platform but also interesting for people who enjoy a POS coin incomestream as a additional factor to decide for this coin to be includet into their crypto portfolio

[nzminer]

I’m happy with this proposal, and the tierd system for supernode was something I wanted to see too.

[Shingen_Takeda]

Thank you for sharing this.
I have one question.
How do Migration Committee define “per person” for Early Adoption Bonus (Optional), NEM Ecosystem Node Bonus (Optional)?
Passport? Email address? Driver’s license?

There was the person who created a lot of email addresses during the initial distribution of XEM and got 90 million XEM, and there were candidates who were suspected of buying votes(KYC cleared) illegally in the last foundation election, weren’t there?

I am not against limiting.
But I don’t like "Cheating man gains the most profit."
If there is a limit where there is room for cheating, I think it is better not to have a limit from the beginning.

[memario]

From the summary:

• Each node operator can freely change their own tx fee requirements.
• Tx fees will change with supply and demand …

How will a node announce it’s blockfees to clients?

Most people just want to send a tx and not spend time on selecting particular nodes. Any ol’ node will presumably be picked for them, like I believe it is now in existing wallets.

Will the Foundation continue to run nodes (presumably all alices and bobs) and how will it choose it’s tx fees ?

Is there any document that goes into technical details of this mechanism? It’s a very interesting one I just find myself having a lot of questions.

/edit:

There also exists the opportunity to reward Node Holders that offer above average transaction fees (within limits), this is good for the network in general because if the fees are too low, it is disincentives new nodes coming online.

That is a very questionable way to look at things. Having a whole lot of nodes is important (though a healthy spread across the globe and different entities is neccessary) but it’s not everything. If the rules are geared too much towards harvesters and node runners, it may become unneccessarily expensive to actually use the network, which in the end is what actually matters.

Generally I really like what I’m reading. I think the introduction of inflation is one of the best ideas that’s ever come out of the foundation (to be fair, it’s been floating around for years).
What is lacking entirely though, is how adoption is going to be driven, apart from private networks.

[BloodyRookie]

Will the Foundation continue to run nodes (presumably all alices and bobs) and how will it choose it’s tx fees ?

Alices and Bobs are not run by the foundation, those are core dev’s nodes.

[tresto]

I have doubts about this scenario.
7.2 NEM Ecosystem Tokenomics - Catapult - Inflation and SuperNode Rewards

In Very High Demand Scenario, it is supposed to process 2669tx per minute(44.49tps) at maximum. That is more than 20 times of NIS1. Is this a possible number? Is there any rationale that public Catapult have that much processing power? Without a rationale, this scenario will not help.

[jabo38]

Hi Tresto, It is really hard to know of course, but the more capacity, the more possibilities. For instance, I have had a serious talk with one project that has been building on NIS1 and Catapult for sometime in the background and their project is needing more than 2 tx/s just for their DAP alone during peak times and for that reason they decided not to build on NIS1 but are waiting for Catapult. In the end, we don’t know, but I do think in 10 years we could hit those numbers.

I have also noticed in general a trend at NEM that tx volume per day roughly doubles every 1.5 years. That starts off pretty slow but picks up pretty quickly at the end of the 10 years.

[LauraBKK]

If projects like RubyPlay Network move over to Catapult, we can certainly hit quite a few transactions, as they hit the spam filter and overloaded us in October! So I’d say the possibilities are certainly there.

[tresto]

Thank you!
No one knows how many transactions will increase in the future in 10 years. We hope that it increases as much as the simulation results.

But if there are so many transactions in the future in 10 years, will Catapult be able to process without delay? That was my curiosity.

but now I understood that transaction processing of Catapult is not impossible physically without significant delays even if it increases as much as the simulation results. That’s great.

[jason.lee]

If projects like RubyPlay Network move over to Catapult, we can certainly hit quite a few transactions, as they hit the spam filter and overloaded us in October! So I’d say the possibilities are certainly there.

They have been getting into NIS1 and will look into testnet too, we need to get more projects that can really add value to the networks.