Details about POP mining and rewarding mechanism
Proof of work (POW) is a protocol in which a "prover" demonstrates to a "verifier" that he/she has performed a certain amount of computational work in a specified interval of time. In the same spirit, we’ve defined a Proof of Premium protocol (POP).
POP is introduced as part of the DeFiner protocol to encourage lenders and borrowers to continuously contribute to the platform and thus earn rewards. Whereas the traditional POW is based on verification of computational work, POP is based on verification of the capital commitment the prover (lenders and borrowers) contributed in a specified time interval.
A fixed amount of FIN will be mined in each Ethereum block and distributed proportionally to the lenders and borrowers based on the premium that was produced during that time. This adds an incentive for lenders and borrowers to support the platform and provides a way to initially distribute tokens into circulation and to the target users. The steady growth of a constant number of new tokens is analogous to gold miners expending resources to add gold to circulation. In our case, they are the crypto assets and committed time that are used to generate interest.
Miners (Lenders and Borrowers)
Lenders and borrowers are miners for the DeFiner platform.
Lenders provide assets for lending. They give up the opportunity cost of their financial assets and give borrowers access to crypto assets. In return, lenders will get paid by the premium from the loan(s) and earn passive income as well. Furthermore, they will receive FIN tokens from the POP mechanism as an incentive to discount certain transaction fees in the future.
Borrowers use the borrowed assets to fund their projects and get rewards in return, and they contribute the premium to the platform. In return, borrowers gain access to the crypto assets and fund their projects. Furthermore, they will also receive FIN tokens from the POP mechanism as an incentive to discount certain transaction fees in the future.
Proof of Premium FIN Distribution Mechanism
A total of 84 million FIN is reserved for the Proof of Premium (POP) mining. It will be managed through the smart contract and operates autonomously through a decay algorithm over about a 136-year period to lenders and borrowers of the DeFiner platform.
The initial release of FIN via Proof of Premium set at a rate of 5 FIN per block to the miners (borrowers and lenders). Every 8,400,000 blocks mined, which is approximately 4 years, the rate will be cut in half.
Block height 10819493 is the block that the DeFiner Savings contract got deployed and is the first block that the POP token got issued: https://etherscan.io/tx/0x02a81da7c4726499e5b1b8f4cf3d5664716b080342bfb4253eb3513b8ee8b8a5.
The supply growth model reduces the risk of excessive wealth concentration in Bitcoin and Ethereum and gives people living in the present and future a fairer chance to acquire FIN. At the same time, this model provides strong incentives to obtain and hold FIN because the fixed total maximum number of FIN and circulating supply growth rate as a percentage still tends to zero over time.
Projected FINs Short Term
This chart shows the number of FIN that will exist in the near future. The Year is a forecast and may be slightly off.
|Block||Reward Era||FIN/block||Year (estimate)||Start FIN||FIN Added||End FIN||FIN Inflation||End FIN % of Limit|
Projected FIN Long Term
The number of FIN created each time a new block on the Ethereum blockchain is created - the block reward - is halved based on a fixed interval of blocks. Also, the time it takes on average to discover a block can vary based on Ethereum mining power and the network difficulty. Because of these two factors, the exact time when the FIN block reward is halved can vary as well. Consequently, the time the last FIN will be created will also vary and is subject to speculation based on assumptions.
|Reward Era||FIN/block||Start FIN||FIN Added||End FIN||POP FIN Inflation||End FIN % of Limit|
Proof of Premium FIN Allocation Mechanism
Newly mined FIN is allocated to each class of assets based on the volume and factor of deposits and loans outstanding on the DeFiner protocol. Volume is the number of deposits and loans of each asset. The Factor is a balance parameter defined by the DeFiner governance body to balance the reward between each class of assets. The factor is larger than 0 and less than or equal to 10. Weight is equal to Volume * Factor and used to calculate the allocation percentage of newly mined FIN.
Here is a snapshot of the available assets on DeFiner Savings on Oct 13, 2020. There is a 1,495,295 USDC deposit with a Factor of 5 and a weight of 7,476,475 which is 26.185% of the total weight. Therefore, for each newly mined FIN, there is 26.185% allocated to USDC depositors, equally earning this newly mined FIN.