Conflux Network’s Economic Model: Pre-Mined Tokens in the Initial Phase
Part 1: A detailed look at Conflux Network’s pre-mined tokens in the initial phase.
In a decentralized system, data is organized without the presence and need of a trusted third party. With contract-based governance rules and the token-based value system, consensus can be achieved among all participating nodes without trust accumulation, and only a low cost is needed to keep the immutability and non-repudiation of the public data.
To ensure the efficient operation of a decentralized system, an underlying high-performance technology is required. And a well-designed economic model is also indispensable to make sure all participants within the ecosystem can obtain their incentives through cooperation and division of labor. Blockchain technology will establish trust, encourage more efficient relationships amongst cooperators, and will accelerate the transfer of value.
In such an economic model, the following core factors are required:
1. Value system: Public blockchain systems need a basic value carrier (tokens) as a calculable unit with economical value, which concurrently acts as a transaction medium for value interaction in the blockchain network to clarify users’ asset ownership. Many blockchain protocols design a specific amount of pre-mined tokens in the genesis block. And the pre-mined tokens will be offered as a reward for miners for maintaining the security and smooth operation of the blockchain system. More ideally, tokens can be connected with storage resources and distributed to different participants as long-term incentives.
2. Governance rules: Governance rules involve the distribution, use of tokens and the economic impact under different conditions. When certain rules are met, tokens can be distributed to some users as interest, or to miners as block-reward. Meanwhile, the token can also be exchanged into fiat currencies in the off-line world or to other digital currencies at certain exchange rates, which are all affected by the issuance of the token.
3. Community collaboration: For blockchain systems, it is a must to be “open for everyone and beneficial to all participants.” All users in the ecosystem have the right to enter the system without barriers. In a distributed business model, everyone can become a shareholder, contribute to the construction of the system, and get benefits out of their efforts.
As a Turing complete PoW blockchain system, Conflux Network greatly improves the performance of the underlying network using the innovative Tree-Graph consensus algorithm, reducing transaction confirmation time and thus increases transaction throughput.
Our trial results showed that the Conflux Network based on the Tree-Graph consensus algorithm transfers over 3,000 transactions per second, displaying a much higher performance than Bitcoin and Ethereum. According to the current technical indicators, the Conflux Network runs at a fixed speed of generating two blocks per second. In total, the number of blocks generated per day is approximately 60 × 60 × 24 × 2 = 172,800.
In addition, to solve the problem of congestion, Conflux Network allows users to deposit tokens for storage space. The cost of the storage space effectively reduces unnecessary storage resources. Meanwhile, Conflux Network will offer extra interest for providing storage space. This is a sustainable income for miners.
The Concept of Conflux Economic Model
In order to further increase the value of Conflux Network and provide users with proper economic incentives and more value-added services, Conflux Network will provide all participants incentives to participate in the network through an economically driven model, and ensure that all users can access the ecosystem without barriers, while keeping the ecosystem safe, stable and predictable.
The pre-mined token of Conflux Network is called CFX. Each CFX contains 10¹⁸ drips (the smallest unit of CFX). As a non-profit organization, the Conflux Foundation’s main task is to offer incentives for the builders and maintainers involved in the ecosystem during the kick-off (cold-start) phase, and to ensure that all resources are distributed as balanced as possible.
At the beginning, the amount of pre-mined tokens in the genesis block of Conflux is 5 billion CFX, which will be unlocked gradually as Conflux Network launches.