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Developers’ Journal

The New Hdac Economic Ecosystem

Dec 17th, 2019

With the launch of our new mainnet, Friday, the need for a suitable economic ecosystem has become evident. Building a healthy economic ecosystem where HDAC token holders, validators of the mainnet and DApps can create a virtuous cycle in terms of creating various businesses and added value is crucial in launching the mainnet.

In this post, we will provide an overview of our new economic ecosystem. Our thoughts and the challenges we faced in building this new ecosystem will be shared in the next post so that you can check the entire process, not just the outcome.

The Meaning of PoS and the Importance of Staking

The transition to the PoS mechanism is a significant matter to the participants of the decentralized ecosystem. Under PoS, as the name suggests, it is important that more people stake more of their tokens on the network. As token holders increase their HDAC deposit, the pie gets bigger, meaning it becomes harder for malicious actors to secure enough tokens to dominate the entire Hdac ecosystem.

As such, our first and foremost goal for the new economic ecosystem is to encourage a high number of token holders to stake much of their share on the network, making it safe and sound.

The Staking Problem and Our Solution

To resolve this issue, we plan to create an environment where the staked HDAC tokens can be used in carrying out economic activities as well as in voting on validators and receiving rewards. One way of doing so is delegating tokens to DApps. Under this system, token holders will be able to delegate their stake to DApps and receive rewards from them. Ultimately, token holders will choose to delegate their share to better validators and promising DApps that generate more transactions in order to enjoy additional economic rewards and further grow the ecosystem.

By adopting this new system, we will enable our token holders to engage in economic activities within the network in addition to receiving rewards for staking and block verification.

Reasonable Transaction Fees and DApp-friendly Environment

There will be fees for generating transactions on the Friday mainnet, but we are working on ways to lower the fees significantly. One of them is providing proportional discounts. Token holders with a higher stake will be able to enjoy lower transaction fees, which would encourage them to stake more, and the low transaction fees would vitalize the ecosystem, thereby boosting the entire network value.

One of the main reasons to charge transaction fees on the Friday mainnet is to intensify network security. In an ecosystem without transaction fees, malicious actors may attempt denial-of-service (DoS) attacks, generating endless transactions and paralyzing the network. Case in point: EOS token holders pay no additional transaction fees once they deposit their tokens and receive resources proportional to their share. This resulted in a spam attack last year, overloading the EOS network with the message “we love BM.” Without charging a sufficient fee for network usage, therefore, we are bound to face the “Tragedy of the Commons,” which would be detrimental to the network and the ecosystem.

To prevent such spam transactions and to maintain network security, there will be transaction fees, but proportional to each holder’s stake so that users and DApps can easily participate in our economic ecosystem.

Proof of Profession — Better Alternative to PoS

As an alternative, we have come up with the concept of Proof of Profession (PoP) to distribute both authority and rewards in a more equitable manner. Under the new scheme, the level of contribution to the ecosystem and network stability will be taken into consideration in addition to the amount of delegated tokens.

Under PoP, it will be difficult to exert absolute influence on the network with capital alone. Moreover, validators will be motivated to contribute to the Hdac ecosystem and the network, which will make the ecosystem healthier and the network more sustainable.

Continued Consideration and Open Discussions

Stay tuned!
 

This post has been written based on the research and experiments of the Hdac economy TF.

Written by Hdac economy TF — Steve Kim, Bryan Rhee, Yongwan Ju, Yeon Hwang.

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1. Introduction.

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