1. Validator nodes

2. Archive nodes

3. Standby nodes

Each of these are necessary to the health of the system and have to be incentivized to run the nodes. The incentive structure for each of them :

Constant Node Distribution :

Divide the incentives in such a way that number of nodes remain in a 50:30:20 ratio for Validator : Archive : Standby

Things to consider : Validator and Standby nodes would have similar cost of running but Archive nodes would require much heavier hardware & computing thus it would be more expensive. We are assuming an archive node costs 3x validator node.

Total Rewards >= # of Nodes x Cost per node

Validator : Rv = Cv x Nv = C x 0.5x (50%) = 0.5Cx

Archive : Ra = Ca x Na = 3C x 0.3x (Cost of running 3x validator) = 0.9Cx

Standby : Rs = Cs x Ns = C x 0.2x = 0.2Cx

Rv : Ra :Rs = 0.5 : 0.9 : 0.2 = 32:56:12

So,

Validator nodes : 50% nodes in system - 32% Rewards - ~6M SHM*

Archive nodes : 30% nodes in system - 56% Rewards - ~10M SHM

Standby nodes : 20% nodes in system - 12% Rewards - ~2M SHM

Benefits :

1. Provide fixed incentives to the node runners

2. Miners would change to different types of system based on the advantages being provided

Disadvantages :

1. Very high distribution to Archive nodes

2. Node rewards aren’t fixed, dependent on the number of nodes in the system, lower the better

Workaround: Few 100 archive nodes would be enough to maintain security of the system, they do not need to scale with the total number of nodes, have a hardcap on the token distributed to archive nodes (<5m $)

Calculation Reference:

Shardeum Total Supply : 508 M

Available Supply : 250 M

Staked Supply (80%) : 200 M

*Inflation Rewards (9%) : 18M token per year

Dollar Rewards (500 Mn FDV) : 18 Mn

Shardeum has a high percentage allocated as staking rewards - 51% of all tokens, this heavy allocation towards staking rewards indicates a commitment to reward loyal community members. The 49% of token holders will recieved 51% as staking rewards, making the long term cumulative inflation rate as ~104% (51/49) distributed over 25+ years.

The objectives to optimize for token release schedule :

1. Reward High % Staking Behaviour

2. Staking Rates comparable to other chains

3. Avoid Heavy Dilution of Unstaked coins

Token Release Schedule :

Keeping the objectives in mind, we will evaluate the different token release schedules that can be followed :

• Flat Inflation Model :

  Emissions = 7.5 : Distributed over 10 years

Advantages :

1. Simple to understand and to set expectation to end users

2. Flat inflation provides incentives to stake for a long time compare to Deflationary staking

Disadvantages :

1. Doesn’t provide any incentive to improve % of coins staked

2. Sudden Cliff in staking rewards, would pose security threat post 10 years

3. Token distribution is limited to shorter time frame which might not be enough to make the self sufficient based on transaction fees only.

Deflationary Emissions :

The network's token release Schedule is uniquely described by two parameters: Initial Inflation Rate, Dis-inflation

The initial inflation rate would be 9% and would dis-inflate 10% every year till it reaches 2% at the end of 15 years.

The staking rewards are dependent on the amount of coins staked, rewards are higher at lower stake percentage

% SHM Rewards = % of Emissions / % Total SHM Staked of Current Supply

Advantages :

1. More sustainable rewards for long term

2. Along with token price appreciation and transaction fee increase, the rewards are more appropriate

3. High staking rewards even post 10 years (~6%) in an average case

Disadvantages :

1. Low % staking behavior is rewarded more, this type of rewards don’t create an incentive for the community to prioritize & promote staking

2. Rewards are unpredictable, based on % staked

Variable + Deflationary Emissions :

The emissions are dependent on the % of coins staked, we would take the inverse relation here where higher the coins staked, more the emissions. Long term this would saturate to 2%

The corresponding staking rewards :

Advantages :

1. Creates a ve(3,3) style tokenomics, where a higher % stake results in a higher emissions. This creates a culture which promotes staking

2. Staking rewards are higher than most chains

3. Initial staking rewards would be high at low % staked, attracting users to stake

Disadvantages :

1. Complex to understand, staking rewards are not fixed

2. Staking rewards run out sooner

Fixed Staking Rewards :

The inflation schedule would adjust to make the staking rates uniform

Advantages :

1. Very simple to understand for the user

2. The staking rate is independent of the amount of % of Staked, which in earlier model were giving advantages to having a low % of stakers

3. Staking rates is higher than most chains over a v long period

Halving :

If we have the inflation rate such as Bitcoin Halving :

Note : Initial Reward is ~12% decreases progressively

Advantages :

1. Very Simple to understand

2. Initial rewards are quite higher than market standards

3. Creates progressive scarcity of coin

Disadvantages :

1. Halving could disincentivize people from staking

2. Less staking behavior could create a sell pressure on the coin

3. This could cause volatility in number of nodes participating during halving events

The past week we have increased our activity, however we observe a decline in activity across all channels since the public launch, channel wise details :

Twitter : New followers on twitter are in slight decline. We also observe a dip in the impressions from 182.6K to 137K.

Discord : With Discord, we are working on implementing user feedback, we have received request to include language channel and we have opened a suggestion channel to get feedback

Note : Numbers represent new subscribers for the week

Telegram : We have done a few announcements on it in the past week and have ~300 new subscribers with low to no effort

YouTube : We haven’t published any new content on the channel, thus we aren’t seeing much activity here.

Next week : Plan for march is to produce content, and 2-3 AMAs, we will keep this open to community to create videos which can be published

Email :

Last week we started a few email campaigns - it is a welcome email. We are currently testing out the time for sending and frequency. The open rates of email campaign - # Of Email Opens/ # Of Email Sent is >40% which is exceptional. We observe the emails that have been automated, see stronger performance in terms of Open and Click to Open Rate, this could be as we are unable to see the number of unique opens for them and the number might be inflated.

Website : Traffic seems saturated at 2K

Next week : Plan to increase the outreach, as well as add blogs along with SEO - Keywords related to Shardeum.

Traffic Drivers : Social drives 50% of all traffic, while direct + natural 44% of traffic

Newsletter : Similar to decline as everything else

Next week - A dedicated page has been created, which will be shared across via all our channels to increase reach

That’s it for channel Updates. moving to Tasks.

Trello dashboard for tasks :

https://trello.com/b/O71O5KSh/buidling-shardeum

Super Shardian : We have announced the Super Shardian program - to provide recognition to top performers, we are monitoring the feedback we are getting and the plan is to start by this Friday

Discord : Ranks have been enabled, we are upgrading Discord to have more engagement events and activities.

Community Mod : Yash and Aaron were added as community mod Roles, they will work in answering and engaging community. We are connecting daily for it. Language channel mod are also being added. Role Titles are upto change

Community Driven Content : YouTube channel to generate content, videos and AMAs w Omar & Nischal next week. A twitter space in next 1-2 week

Content by community - created, voted and published by the community

Channel : Increase activity esp Reddit, and get more contributor engagement

For tasks planned before 31st march - Alphanet launch, the progress has been :

1. Keyword list - Done: These keywords to be focused in the content, 3 articles min a week target. SEO Documentation is also done

2. Welcome Newsletter - Done

3. List of Backlinks - Created - Targeting prominent blockchain content and driving traffic to ours, plan to share it with community

4. Weekly Newsletter - Started - Prepared by Subbu, version 1 sent on weekly updates

5. Automate Block Management - WIP : 80% done, rest to be done post feedback

Suggestions :

Track the number of spectator and attendees on call, to track progress on community involvement. Let’s get more from community to be in the calls.

Recording of the call:

Join the Shardeum Community

➡️https://bit.ly/ShardeumDiscord

➡️https://bit.ly/ShardeumTelegram

➡️https://bit.ly/ShardeumTwitter

➡️https://bit.ly/ShardeumReddit

➡️https://bit.ly/ShardeumLinkedin