Introducing 2Ether dynamic rewards
We’ve covered lots of ground in our previous few posts. How Ethereum miners earn their rewards, how these rewards changed through the years, what the thirdening and the difficulty bomb mean, and how the recent reward reduction affected small miners — all this is basic information that any Ethereum enthusiast must know. Now we are finally ready to tackle the key issue: how 2Ether will solve the issue of falling rewards and the inefficiencies of the whole reward system.
In 2Ether, block rewards don’t remain fixed for months or years at a time. Instead, they are dynamic — they change in accordance with several factors. Once the system is fully implemented, every block will have its own individually calculated reward. This will take time, of course.
The overall architecture of dynamic block rewards consists of three parts:
1) Rewards are slowly reduced with time at certain block heights to curb inflation. This is known as the base reward.
2) On top of this, the base reward is currently adjusted by the market price of ET2.
3) Finally, each miner’s reward can differ depending on their hash power.
Let’s start with the base reward. In our upcoming posts, we’ll take a look at the other two elements of the dynamic reward architecture.
At first, we’ll launch 2Ether with a fixed base reward of 25 ET2 per block. Since our target average block time is 60 seconds, every minute 25 new ET2 coins will be produced. For a 24-hour period, this makes 60*24*25= 36 000 ET2.
The next key moment will come about 9 months after the launch. At this point, the 2Ether blockchain is projected to reach its block number (height) 388 800. The dynamic formula for base reward will finally kick in. This formula is partly inspired by the solution used by Monero. It looks like this:
Base Reward = ((Maximum Supply — Current Supply in Circulation)/(Maximum Supply)*(25+(Current Supply/15))
If it looks scary, don’t worry — we’ll unpack the formula in our next post.
The maximum supply is the maximum number of ET2 coins that can be issued. This value is set at 18*e14, or 18 with fourteen zeros after it. If it seems like an unimaginably huge number, think of this: Ethereum doesn’t set any limit to its supply at all! Potentially we can have an infinite number of ETH on the market. And as you know, when banks print new money, inflation speeds up. It’s the same with crypto: an infinitely increasing supply will eventually cause the price of the asset to fall. So we thought it wise to set a limit to our maximum supply.
The most important thing about the formula is that the base reward is completely predictable. For each block height, you can calculated how many ET2 there will be in the system and, therefore, how large the base reward will be. And while it will slowly decrease with time, it will always remain large enough to attract not just big mining farms but also independent miners.
This way, we’ll solve the first part of the Ethereum reward problem: how to ensure that inflation stays within limits and rewards aren’t cut too suddenly. In 2Ether, there can be no such thing as a thirdening or any other shock measure. The process will be very smooth and gradual.
Check out the official 2Ether website for detailed information. And don’t forget to follow us on Twitter!
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