Statement on Proposed Changes to TRON Rewards

As you may have heard, TRON would like the Super Representatives to increase the block reward from 32 TRX per block with a 16 TRX per block shared allowance, to 16 TRX per block with a 160 TRX per block shared allowance.

This proposal goes together with a code change to automate voter gratuities, replacing the daily airdrops to voters that the Super Representatives take it upon themselves to do.

When the block reward comes mostly from block production and provides the bulk of the voter gratuity there is a tendency for voters to choose the 27th ranked SR because they will offer the highest reward per vote. Shifting the balance of the reward to mostly coming from vote tallies has the effect of equalizing the differences between SR voter gratuities, even among the non-elected top 127. As Justin says it will create a “neutral community.”

Since the automatic rewards seems to encourage SR’s to differentiate between block income and vote income, with the tendency to keep the block rewards and share 100% of the voter rewards, then the voter reward does become exactly equal among all 127 SR candidates. That’s a good thing.

However, no argument has been put forth as to why 16/160 is the optimal payout. Is it?

Instead of tossing out random amounts, perhaps we should start with an intention, define limitations, and then do some calculations to arrive at our figure. For example, I do believe the goal of neutral community is what we should strive for. And that means a combination of rewards which ensures, or at least makes more likely, that SRs will copy each other’s rewards plans. I think the plan most likely to be adopted is the 100% voter rewards back to voters, 100% of block rewards to the SR. If you make the SR reward too much they may be tempted to give some to the voters and throw off the balance between candidates. The limitations are the acceptable inflation to the Tronix supply.

Currently, TRON’s rate of inflation is 0.5% per year. A 16/160 reward scheme will produce a 1.85% annual rate of inflation. In my opinion this is not acceptable for the benefits gained. It might have been better if a 1.85% annual rate had been set during the first year when project cultivation was a priority. At this point is seems like more of a giveaway.

The good news is that with only 20% of TRX being staked and voted, the ROI for staking is greater than the inflation rate.

Lightning will set the bar for staking without capital risk, and it appears as if it will yield 1%. I think we should strive for 1.5% annual yield for staking and voting. E.g. someone staking 100k TRX at the end of the year should have 1,500 TRX for a 1.5% interest rate.

With 20 Billion votes, a shared 32 TRX per block reward that is allocated 100% to the voters will yield a 1.6% annual interest; sufficient to crush the competition.

921600 x 365 days a year = 336,384,000 TRX per year
336,384,000 / 20 Billion = 1.68%

But as more TRX becomes frozen and voted that yield will go down, therefore it is imperative that whatever rate we set for the voter reward component, we be able to increase it to maintain the same ROI yield.

My biggest objection to the proposed 160 TRX per block voter reward is that if we want to maintain a consistent payout then the reward will have to be increased 2x or 3x as more votes dilute the proposed payout.

I would not vote for a 16/160 rewards scheme.

I recommend a 16/32 rewards scheme to start. This would not change the current rate of inflation and it would leave room for a rewards increase.

-Jason Neely