How Does Your Chain Ensure Sustainability?
Financial and Governance Models for Stability and Growth Built on Proven Systems
There are four core financial models in the DataGrid Blockchain. These are the following:
Monetary Policy Model
Gas Price Model
Node Staking Model
The Monetary Policy Model manages the supply of the DataGrid Token, changing the rate of increase or decrease based on economic information.
The Treasury Model manages the budgets for the Prasaga Foundation, the Prasaga Philanthropic spending, the wealth redistribution function, and a short-term surplus.
The Gas Price Model manages the average gas price with respect to the total DGB economy, to maintain profitability for node operators and enable competitive pricing for differentiated service.
The Node Staking Model manages the node DGT staking requirement for (re)registering a node for the DGB. The objective for node staking is to discourage various forms of attacks by attaching monetary costs to such attacks, while balancing the staking amount with encouraging a large diverse pool of node operators.
Combined, these four models manage the main aspects of the internal financial aspects of the DGB.
Monetary Policy and Treasury Models
The Monetary Policy Model and Treasury Models are independent of each other and are controlled by independent governance bodies. However, they have both direct and indirect relationships. Therefore, these are discussed together.
Monetary Policy Model
The responsibility of the Monetary Policy Model is to manage the supply of DGT coins in the total DGB economy. This is equivalent in concept to decentralized money supply management. To accomplish this there must be a means to increase the supply of DGT as well as decrease the supply of DGT.
Increasing the DGT supply is accomplished through block incentives. As such, the Monetary Policy Model affects the increase of the DGT supply by managing the amount of DGT per-block incentive.
Decreasing the DGT supply by definition means burning DGT. Psychologically burning coin is difficult, even though theoretically it increases the value of the remaining coins in circulation. That is, a node operator on validating a block expects to earn transaction fees and possibly an incentive reward. Burning some of the transaction fee and eliminating the incentive reward, if needed to manage the DGT supply is unlikely to be a welcome state.
Therefore, the Monetary Policy Model uses a novel approach. An optional, variable DGT bonus is given to each node as it (re)registers on the DGB. This bonus, just like the stake, earnings and incentive rewards are not received until the node completes a lifecycle. The amount of the bonus may vary and may be zero, based on the Monetary Policy Model’s determination of the target DGT supply. Any bonus that is not delivered to the node is burned.
Burning the DGT instead of delivering it as a bonus is not sufficient on its own. The critical missing piece is the source of the DGT for the bonus. The bonus DGT is supplied from the Treasury account, which in turn is collected from the transaction fees taxes. As a result, burning some or all of the bonus directly reduces the DGT supply. Because the bonus only impacts the node registration stage, when DGT supply reduction, or reduction in the rate of increase is needed, the Monetary Policy Model reduces bonus returned to the node through the Monetary Policy smart contract, the nodes already registered on the DGB do not feel the impact directly.
Gas Price Model
The Gas Price Model uses the following equation:
Average Transaction Gas Price = (P*Y * GG%) / transaction count
The DGB average transaction throughput gas price is set periodically using the above formula. Essentially the intent is that the DGT spent on gas is on average GG% of the economy. GG% is managed by Gas Price Governance.
Node Staking Model
The Node Staking Model uses the following equation:
Node Registration Stake = (P*Y * SS%)/node count
The node registration stake price is set periodically using the above formula.
The intent of the node registration stake is to discourage a majority attack by setting the per-node stake such that a 50+% attack (P*Y * SS%/2) is a large enough financial commitment to deter such an attack. SS% is managed by Node Staking Governance.
The governance refers to any actions carried out on the network that change the rules of the decentralized system. The governance model from Prasaga takes inspiration from modern democratic and monetary policy systems. Recommendation Boards will be comprised of Subject Matter Experts from a range of communities including developers, cryptographers, economists, legal experts and other domain experts who specialize and contribute to the network development and sustainability.
To democratize the process, key policy and ultimately implementation decisions will be based on a majority or super majority plenary vote from the DataGrid Blockchain community. To balance the voting, the weight of each individual will not be determined by how many validator nodes or tokens are held, to lessen the self-interested impact on the governance decision-making process, we envision a one person one vote system which is further enabled by the XBOM account and smart capabilities.
There are four proposed vertical areas of governance: Technology, Monetary, Treasury and Community. Each Recommendation Board will comprise of a panel of experts at first appointed by the foundation and tasked with day-to-day responsibilities to engage with Prasaga ecosystem and outside experts. The boards will propose recommendations to the DataGrid Blockchain Community for final vote before major changes or new features for the ecosystem are implemented.
An outline of responsibilities for each Board is noted below, we fully expect there will be sub-committees that report up to the main boards:
Technology Board: work related to building and releasing updates of the DataGrid Blockchain, and other technical issues.
Monetary Board: work related to monetary policy around token supply and treasury, and other economic and commercial governance issues.
Treasury Board: work related to managing the budgets for the Prasaga Foundation, wealth redistribution and philanthropic spending.
Community Board: work relating to marketing and promoting the DataGrid Blockchain globally, and the appointment and management of ambassadors for outreach and education.
Prasaga Foundation, as the originator of the network, will help initiate and coordinate the Boards and sub-Committees in order to get them established and self-sufficient. It is intended that the Boards will as soon as practically possible be independent from Prasaga and comprised of a majority of non-Prasaga members. Any member of the community can apply to join an expert Board and/or Sub-Committee, there will need to be a vetting process to ensure best representation for the community in their ecosystem of experts and final plenary vote. Each board shall include seven members with a term of 5–7 yrs.
Originally published at https://prasaga-ceo.medium.com on October 3, 2019.