Sustainable Node Economics Require External Incentive Structure

I haven’t done the math to back this up but I have a strong intuition about node economics.

In particular, the network will need to be incentivized by a reward external to fees spent on private computations.

I suggest the tokens retained by the team be released evenly among nodes over a 20 year period according to a model of exponential decay.

If you do not do this, nodes will charge extremely high fees, or only perform computations where the fee is large.

You want a balance between making computation fees economical (because they are low enough) and node rewards economical (because they are high enough). The only solution to this is block rewards from a portion of the 75 M tokens retained by the team.

Please share your thoughts.


I agree that we need a bootstrapping phase where the nodes are rewarded from something similar to a block reward. Here are my thoughts.

  1. It should be designed to last 15-20 years.
  2. It should only do payouts from the “block reward” proportionate to computations done by nodes. (so you earn more the more computations that you do but not all nodes are paid equally)
  3. It should be understood that over time the “block reward” will lower and eventually nodes will only get revenue from the computational demand generated from dapps.