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The New Economic Ecosystem — Voting System for DAppsDec 20th, 2019
In the previous post, we shared our thoughts on the new Friday mainnet and the economic ecosystem that befits it.
We have worked to resolve some of the issues that existing Proof of Stake (PoS) platforms have and to bring about positive changes. In this post, we will elaborate on the changes necessary for achieving this objective.
The New Voting System Supporting DApps
We believe token holders, validators and DApps are the key actors of a decentralized ecosystem.
Under existing PoS and Delegated Proof of Stake (DPoS) schemes, token holders and validators are given clear roles and rewards. Token holders operate nodes to partake in validation themselves or delegate their stake to good validators to participate in the ecosystem and receive rewards together. Meanwhile, validators of a DPoS blockchain not only make technical contribution as decentralized platform experts but also provide marketing support for the project to advance the decentralized ecosystem. They earn their rewards by serving as delegates of the stakeholders.
However, these economic ecosystems lack a major component: DApps. There needs to be a better arrangement for DApp developers who take fees from users as rewards for boosting a platform’s usability and ecosystem value. Our plan is to have stakeholders vote on DApps; DApps will be able to secure a better operating environment as they gain more votes.
Lower Transaction Fees With More Votes
DApps that receive votes will be given discounts on generating transactions on the network. Our goal is to lower the entry barrier to the Hdac platform for DApps so that quality DApps can generate more transactions, vitalizing the platform as a result. Much like TV audition programs, you can support and foster the DApps you use and like under this system.
However, our system will be designed such that votes and discounts are not linearly proportional to one another. In order to prevent votes and benefits being concentrated on a certain DApp, we are building a model where the discount rate increases as one secures more votes, but at a smaller increment. Naturally, there will be a maximum discount rate under this model.
Token holders who vote on DApps will also receive 10% of the discounted transaction fees as rewards. The rewards will motivate the stakeholders to discover and support DApps with high growth potential.
Rewards and Transaction Fee Discounts for Validators
Transaction fees will be offered as rewards to validators who gather transactions to create blocks, participate in validation and maintain the network. The fees cannot be lowered indefinitely as they need to cover the minimum operating costs and personnel expenses necessary for validation as well as serve as motivation for validators to contribute in a wide variety of areas and expand the ecosystem. It is also impossible to enforce a maximum or minimum fee as transactions tagged with higher fees may be processed first while those with lower fees may be rejected.
A “discount” means providing the same value at a lower price. To provide the same value, validators must receive the same level of rewards from discounted transactions as they would from regular transactions. In our new economic ecosystem, validators will be compensated for the discounted fees via inflation on the platform. A “discount” is more of a “payback” in that sense.
The problem of this system is that inflation may rise with the surge of transactions. Because there is an upper limit to the transaction fee discounts, however, we can expect that the platform’s value will appreciate faster than the speed of inflation. We are also running various simulations with this issue in mind in order to find the right numbers.
Our New Proposal and a Healthier Decentralized Ecosystem
Providing support for a greater number of DApps to generate more transactions on the network is what all decentralized platforms strive for. Generating more transactions on the network would boost the platform value and further advance the technology, resulting in more DApps on the blockchain.
We expect that the new DApp voting system we are proposing, together with the new economic ecosystem, will pave the way for DApps to enter our platform with ease. We also hope that the new system will serve as an important cornerstone in building a healthy, vibrant decentralized ecosystem.