FIN Token Proof of Premium (POP) Mining

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. 

Date reached

Block Reward Era FIN/block Year (estimate) Start FIN FIN Added End FIN FIN Inflation End FIN % of Limit
9/8/2020 10819493 1 5 2020                     -         10,500,000       10,500,000 infinite 12.50%
9/7/2021 12919493 1 5 2021       10,500,000       10,500,000       21,000,000 100.00% 25.00%
9/7/2022 15019493 1 5 2022       21,000,000       10,500,000       31,500,000 50.00% 37.50%
9/6/2023 17119493 1 5 2023       31,500,000       10,500,000       42,000,000 33.33% 50.00%
9/5/2024 19219493 2 2.5 2024       42,000,000         5,250,000       47,250,000 12.50% 56.25%
9/4/2025 21319493 2 2.5 2025       47,250,000         5,250,000       52,500,000 11.11% 62.50%
9/4/2026 23419493 2 2.5 2026       52,500,000         5,250,000       57,750,000 10.00% 68.75%
9/4/2027 25519493 2 2.5 2027       57,750,000         5,250,000       63,000,000 9.09% 75.00%
9/2/2028 27619493 3 1.25 2028       63,000,000         2,625,000       65,625,000 4.17% 78.13%
9/2/2029 29719493 3 1.25 2029       65,625,000         2,625,000       68,250,000 4.00% 81.25%
9/1/2030 31819493 3 1.25 2030       68,250,000         2,625,000       70,875,000 3.85% 84.38%
9/1/2031 33919493 3 1.25 2031       70,875,000         2,625,000       73,500,000 3.70% 87.50%
8/31/2032 36019493 4 0.625 2032       73,500,000         1,312,500       74,812,500 1.79% 89.06%
8/30/2033 38119493 4 0.625 2033       74,812,500         1,312,500       76,125,000 1.75% 90.63%
8/30/2034 40219493 4 0.625 2034       76,125,000         1,312,500       77,437,500 1.72% 92.19%
8/29/2035 42319493 4 0.625 2035       77,437,500         1,312,500       78,750,000 1.69% 93.75%

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
1 5.000000000000                      -    42,000,000.000         42,000,000 infinite 50.0000000%
2 2.500000000000  42,000,000.000  21,000,000.000         63,000,000 50.00000000% 75.0000000%
3 1.250000000000  63,000,000.000  10,500,000.000         73,500,000 16.66666667% 87.5000000%
4 0.625000000000  73,500,000.000    5,250,000.000         78,750,000 7.14285714% 93.7500000%
5 0.312500000000  78,750,000.000    2,625,000.000         81,375,000 3.33333333% 96.8750000%
6 0.156250000000  81,375,000.000    1,312,500.000         82,687,500 1.61290323% 98.4375000%
7 0.078125000000  82,687,500.000       656,250.000         83,343,750 0.79365079% 99.2187500%
8 0.039062500000  83,343,750.000       328,125.000         83,671,875 0.39370079% 99.6093750%
9 0.019531250000  83,671,875.000       164,062.500         83,835,938 0.19607843% 99.8046875%
10 0.009765625000  83,835,937.500         82,031.250         83,917,969 0.09784736% 99.9023438%
11 0.004882812500  83,917,968.750         41,015.625         83,958,984 0.04887586% 99.9511719%
12 0.002441406250  83,958,984.375         20,507.813         83,979,492 0.02442599% 99.9755859%
13 0.001220703125  83,979,492.188         10,253.906         83,989,746 0.01221001% 99.9877930%
14 0.000610351563  83,989,746.094           5,126.953         83,994,873 0.00610426% 99.9938965%
15 0.000305175781  83,994,873.047           2,563.477         83,997,437 0.00305194% 99.9969482%
16 0.000152587891  83,997,436.523           1,281.738         83,998,718 0.00152593% 99.9984741%
17 0.000076293945  83,998,718.262              640.869         83,999,359 0.00076295% 99.9992371%
18 0.000038146973  83,999,359.131              320.435         83,999,680 0.00038147% 99.9996185%
19 0.000019073486  83,999,679.565              160.217         83,999,840 0.00019074% 99.9998093%
20 0.000009536743  83,999,839.783               80.109         83,999,920 0.00009537% 99.9999046%
21 0.000004768372  83,999,919.891               40.054         83,999,960 0.00004768% 99.9999523%
22 0.000002384186  83,999,959.946               20.027         83,999,980 0.00002384% 99.9999762%
23 0.000001192093  83,999,979.973               10.014         83,999,990 0.00001192% 99.9999881%
24 0.000000596046  83,999,989.986                 5.007         83,999,995 0.00000596% 99.9999940%
25 0.000000298023  83,999,994.993                 2.503         83,999,997 0.00000298% 99.9999970%
26 0.000000149012  83,999,997.497                 1.252         83,999,999 0.00000149% 99.9999985%
27 0.000000074506  83,999,998.748                 0.626         83,999,999 0.00000075% 99.9999993%
28 0.000000037253  83,999,999.374                 0.313         84,000,000 0.00000037% 99.9999996%
29 0.000000018626  83,999,999.687                 0.156         84,000,000 0.00000019% 99.9999998%
30 0.000000009313  83,999,999.844                 0.078         84,000,000 0.00000009% 99.9999999%
31 0.000000004657  83,999,999.922                 0.039         84,000,000 0.00000005% 100.0000000%
32 0.000000002328  83,999,999.961                 0.020         84,000,000 0.00000002% 100.0000000%
33 0.000000001164  83,999,999.980                 0.010         84,000,000 0.00000001% 100.0000000%
34 0.000000000582  83,999,999.990                 0.005         84,000,000 0.00000001% 100.0000000%

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. 

Category Asset Volume Factor Weight Allocation Percentage
Deposit USDC  $         1,495,295 5           7,476,475 26.185%
Deposit BAT  $                3,579 1                  3,579 0.013%
Deposit ZRX  $                9,457 1                  9,457 0.033%
Deposit ETH  $            530,476 2           1,060,952 3.716%
Deposit DAI  $            656,388 5           3,281,940 11.494%
Deposit USDT  $         3,022,187 5         15,110,935 52.923%
Deposit LINK  $              38,773 1                38,773 0.136%
Deposit WBTC  $            147,374 2              294,748 1.032%
Loans USDC  $            264,294 1              264,294 0.926%
Loans BAT  $                        7 1                          7 0.000%
Loans ZRX  $                        7 1                          7 0.000%
Loans ETH  $            367,494 1              367,494 1.287%
Loans DAI  $            399,076 1              399,076 1.398%
Loans USDT  $            243,181 1              243,181 0.852%
Loans LINK  $                    379 1                      379 0.001%
Loans WBTC  $                1,220 1                  1,220 0.004%