Conflux Economic Model — Staking & Collateral For Storage On Conflux Network
Introducing Conflux miner’s income — storage deposit interest.
Miner rewards on Conflux Network include block rewards, transaction fees, and storage and maintenance rewards. In a previous article, we discussed how the block reward is distributed in the Conflux Network. Today we are introducing another part of a Conflux miner’s income — storage deposit interest.
On Conflux Network, users can stake their tokens and receive an annualized return rate of about 4% that is generated from the additional issuance of tokens. The compound interest is implemented in the granularity of blocks where Conflux Network generates 2 blocks per second and approximately 63,072,000 blocks per year. The interest generated by each block is 4% / 63,072,000. Considering compound interest, the one-year interest rate is about 4.08%.
In addition to staking, Conflux tokens are used as collateral for storage and as a pricing method for the usage of storage.
On Conflux Network, for data that requires long-term storage, such as smart contract data, a Collateral for Storage (CFS) will be charged when the data is written at the price of 1 CFX / KB. The collateral is locked until the corresponding storage is freed or overwritten by someone else, and the corresponding interest generated by the locked collateral is given directly to miners for the maintenance of storage. This mechanism is more fair and reasonable than the one-off storage fee in Ethereum. For example, if there is a total of 100 GB of data to be maintained and stored, the total CFS is about 100 million CFX, and the interest generated by each block is about 0.06 CFX.
Only specific kinds of transactions require Collateral for Storage (CFS). If the “data” field of a transaction is filled with a long byte array, this large transaction may lead to the block missing the opportunity to package other transactions since there is an upper limit for the block size. But after about one day, the transaction itself will be deleted by the full node, and will only be fully recorded on an archive node afterward. In this transaction, CFS is not required for the data because the storage space it uses on the full node is temporary and that the transaction fee has already covered the cost of the storage in the one-day period.
When a smart contract maintains an array and stores large amounts of data in the array, the data needs to be permanently saved on all nodes (unless deleted) to ensure that the smart contract can be executed normally whenever the smart contract is called. In this case, the storage space that the data takes in a full node is long-term or even permanent, and therefore CFS is required. The interest from the storage deposit will be used to cover the cost of data storage.
All interest generated from the storage deposit in each epoch will be proportionally divided among the blocks of the same epoch according to the basic block reward of each block. In other words, if a block gets a penalty due to anti-cone blocks, interest rewards from storage deposits will also be affected.
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