aelf Economic Model Episode I — Nodes & Voters
The “Stake to Vote” Design Incentivizes Nodes to Contribute to aelf Mainnet Ecology
The launch of aelf mainnet token swap marks a preliminary spark of aelf ecology. Once swapped, the ELF mainnet tokens will be vitalized for their practical uses. aelf created a strong economic model to best reciprocate its users. Subsequently, users are highly stimulated to participate in developing a more diversified ecology. In this article, we will state a thorough explanation of the beneficiaries mentioned in the aelf Economic Governance Whitepaper v1.1.
Use cases of mainnet ELF tokens
Mainnet ELF tokens are the only voucher within aelf ecology. After migrating to aelf mainnet, mainnet ELF tokens could be used as:
- Currency to pay for transaction fees, sidechain index fees, deposits, block rewards, and many more;
- Voucher to participate in the node election. Once staking, users could vote, in which way they can get dividend rewards;
- Tickets to participate in the mainnet development and governance.
How to maximize the full-channels earnings with my mainnet ELF tokens?
Within the aelf network, there are four paths so that the users could join to dive in. Namely, they are Block producers (BPs), Valid backup nodes, investors, and developers. For these four roles, aelf has designed a rich incentive model to stimulate participation, aiming to promote the value growth of the entire aelf ecology. This article will mainly discuss the profit-sharing mechanism of and voters, BPs, Valid backup nodes.
- Dividend Pool structure of aelf mainnet
The aelf team designed a bonus mechanism to encourage nodes to participate in the aelf ecosystem: During the AEDPoS consensus operation of the aelf main chain, there is a weekly transition behavior. At the end of each session, the aelf mainnet consensus contract will generate a dividend of N * 0.125 ELF based on the actual number N of blocks produced in the current session. The dividends will be injected into the following main chain bonus pool proportionally as a node incentive.
In the incentive model of the aelf main chain dividend pool, the following three roles are involved:
- Voters: Refers to users who participate in node voting and jointly elect production nodes that can represent the will of the public. Voters need to stake ELF to vote. The Election contract will calculate the number and duration of staking ELF to calculate the voting weight. There is no upper limit on the number of voters;
- BP: The maximum number of block producers is 17+2n, where the “n” stands for the number of years that aelf mainnet has been opening officially for election. BP will participate in the production of the block according to the consensus rules and get the block reward. Any node can apply to become a BP.
- Valid backup node: Refers to those who have failed to be not elected as a production node, can participate in block verification to ensure that the node election is in a healthy competition situation. Stake 100,000 ELF to become a candidate to accept user votes. The maximum number of candidate nodes is 5 times the current number of production nodes.
- Dividend income for each of the three identities:
- Citizen Welfare for Voters: The dividend pool will get 75% of the dividends of each session; the estimated APY can reach 112.7%.
ELF holders can stake their tokens to vote. In this way, they can get profits by voting for nodes, and user voting income occupies a large share of the dividend pool (75%).
Starting September 9th, mainnet ELF token holders can log into the Governance page to vote for the current initial node.
1 ELF token represents 1 ticket. Voters can choose the lock-up periods among 3 months, 6 months, 12 months, 24 months, and the longest is 36 months. The profit distribution will be calculated according to the number of votes and the lock-up time. The longer you lock, the higher return rate it will be.
2. Mining Reward for BPs: The dividend pool will get 20% of the dividend for each session; the estimated APY can reach 91.4%.
Stake no less than 100,000 ELF tokens to participate in a BP election.
According to the aelf Whitepaper, during the initial phase, 17 BPs will be elected from the candidates. After the chain operates robustly, 2 new production nodes will be added each year.
The Mining Reward for BPs is divided into three parts：
- Users' Flexible Reward from New BP: If there is a newly elected BP in this term, the “flexible reward” (worth 5% of the dividend pool) will merge into the “voter reward”; otherwise, this part of the income is merged into the “production node basic reward”. In other words, this dividend pool is established to encourage users to vote for candidate nodes that have never been elected as production nodes.
- New BP Welcome Reward: If there is a newly elected node in this session, the new node will equally share the “new node reward” (worth 5% of the dividend pool; otherwise, this part of the reward will be merged into the “production node basic reward”.
- BP Basic Reward: 10% of the dividend pool of the main chain. The number of blocks produced in the previous session is used as the distribution profit weight for the production nodes.
Note: The Users’ Flexible Reward and the New BP Reward are accommodated from the original BP revenues to avoid centralization.
3. Backup Subsidy for Candidates: The dividend pool will get 5% of the dividend for each session; the estimated APY can reach 4.5%.
Those who have failed to be elected as a BP can participate in block verification, ensuring that the node election on aelf is secured. As long as receiving a vote in node election, the user can become a valid backup node. In this way, s/he will have the opportunity to become BP in the future change of terms. The maximum number of valid backup nodes is 5 times the number of current BPs.
aelf sincerely invites all the crypto enthusiasts to start surfing on aelf — the fastest and the most user-friendly blockchain network in the world. Join our node election to gain competitive returns. In line with our roadmap, once we are set for the mainnet swap, we will release the details of the node election later this year. Please pay attention to our news and keep an eye on our social media platforms.
If you have any questions, please join the aelf community for further discussion. You can also view the latest version of the “aelf Economic and Governance Whitepaper v1.1” for details.
In the next episode, we will explain from the perspective of developers and introduce the aelf sidechain dividend mechanism.