After the successful launch of confidential transfers on Findora Mainnet Beta 0.1.0 in March 2021, Findora Testnet (Anvil) Beta v0.2.0 has now been released for testing with proof-of-stake (PoS) consensus, rewards and penalties.
Overview – Monetary Policy
Findora is powered by FRA, the network’s native token which has the following key properties:
- Maximum Supply: 21 billion FRA (non-inflationary)
- Circulating Supply: 2.365 billion FRA (as of June 30, 2021)
- Full FRA Unlock Schedule
- Token Allocation
Findora’s tokenomics were designed to incentivize a secure PoS consensus process and this is accomplished by two key algorithmic rules:
Dynamic Block Rewards: Block reward rates will adjust higher when the percentage of circulating supply staked falls.
Voting Power Cap: A single validator is capped at 20% maximum voting power.
Securing consensus is the foundation of any PoS blockchain and incentivizing a higher circulating supply staked is expected to increase Findora’s network security. As the percentage of FRA staked increases, the cost to attack Findora consensus increases. Thus, incentivizing high staking participation is paramount to network security.
Also, to help ensure Findora remains Byzantine-fault-tolerant (i.e. preventing ⅓ or more consensus voters from cheating), any single validator will be capped at a maximum of 20% voting power when determining consensus — regardless of the amount of FRA staked.
To incentivize FRA token holders to contribute to the PoS consensus process, FRA token holders can earn rewards by running a validator to stake FRA tokens (or delegate tokens to a validator for staking). The Findora network pays out two types of rewards to validators (and their delegators) — FRA block rewards and (under certain circumstances) a block proposer bonus.
FRA rewards are minted from every new block as a coinbase transaction. An initial allocation of 420m tokens has been set in the genesis block for block rewards, with up to 2.73b tokens allocated for block rewards, which can be modified via governance voting.
Of note, minting 420m FRA will not cause FRA maximum supply to exceed 21 billion.
FRA Block Rewards: block rewards are paid to the top 100 validators that stake (or are delegated) the most FRA. The annualized rate at which block rewards are paid out depends on percent of Circulating Supply Staked following the rate curve below:
The Rate Curve is defined below:
- Y = 1 / x * [Rate Modifier Constant]
- Y = Annualized Block Rewards Rate
- x = % Circulating Supply Staked (i.e. FRA staked / unlocked FRA)
- Rate Modifier Constant = 0.0536
- adjusts (up/down) the rewards rate at every point of curve and thus, the # of FRA rewards minted for block rewards
Note: The Rate Modifier Constant may be adjusted by Findora governance voting in future releases if the community determines the curve is too high (or too low).
For example, if the Circulating Supply Staked percentage is at a low 10% (implying low PoS consensus security), then the Findora network will pay out rewards at a relatively high 53.6% annualized rate to incentivize more FRA holders to stake. Once the Circulating Supply Staked percentage rises to a more secure 67%, then the Findora network will automatically pay a relatively low 8% annualized reward rate.
Block Proposer Bonus – this bonus is only paid out if the validator selected to propose the next block meets certain pre-commit voting criteria specified in the table below. The bonus is paid only to the single validator that is proposing the next block (rather than all of the top 100 validators like the FRA block reward).
Transaction costs are currently static at 0.01 FRA per transaction during the Mainnet Beta 0.1.0 and Testnet Beta 0.2.0 phase of development. Transaction costs are automatically burned by the protocol.
If determined by community governance, the Findora network may also convert to dynamic transaction fees and may stop burning fees and begin paying FRA transaction fees to validators in future releases of the network.
To ensure PoS consensus security and network performance, the Findora network penalizes validators with an FRA penalty fee when a validator double-signs or the validator is unexpectedly offline.
Double Signing Penalty: a 5% FRA penalty fee is charged to both the validator and its delegators whenever a validator double signs a block. The penalty fee will be burned.
Offline Penalty: if a top 100 validator (responsible for voting on consensus) is detected to be offline, then a 0.3 FRA penalty fee is charged for each block that the validator is offline. The penalty fee will be burned.
- Y = 1 / x * [Rate Modifier Constant]
21 billion FRA (non-inflationary)
Voting Power Capped
A single validator’s voting power is capped at 20%
FRA block rewards dynamically adjust based on percentage of Circulating Supply Staked
At 67% Circulating Supply Staked, the annualized block rewards rate will be 8%
5% FRA penalty for double-signing
0.3 FRA offline penalty (per block missed)