ICON Economics Overview
Hello from ICX Station,
We have noticed more questions being asked about ICON’s economic policy and have realized that the only form of documentation is the yellow paper. With that said, we will keep this document as short, simple, direct, and up-to-date as possible. It will cover ICON’s current economic policy and will be updated as things change over time.
ICON’s current economics can be broken into two categories: block producers (P-Reps) and voters (ICX holders). The network directly rewards voters and nodes separately, so there is no need for nodes to take a commission fee and disperse the rest to their voters, this is already built into the network. Read more about this structure here.
Block Producers (P-Reps)
The top 100 P-Reps, with ranking based on votes received (1 ICX = 1 vote), earn rewards, and the top 22 are block producers with governance rights. The amount of rewards earned is based on a variable called i_rep.
I_rep is a number that determines the monthly reward for P-Reps. P-Reps submit what they think i_rep should be, then the network takes an average. The effect i_rep has on rewards is illustrated below assuming an i_rep of 14,000:
Rewards for receiving votes: Half of i_rep is used to reward P-Reps based on how many votes the P-Rep has received. Take 14,000 / 2 = 7,000. P-Reps will earn 7,000 ICX per month per 1% of the vote they receive. If a P-Rep has 3% of all votes, they will earn 21,000 ICX per month (7,000 x 3).
Rewards for being in the top 22: Half of i_rep is used to reward P-Reps in the top 22. Take 14,000 / 2 = 7,000. Each P-Rep in the top 22 earns an extra 7,000 ICX per month just for being in the top 22.
Applying what was explained above, a P-Rep in the top 22 with 3% of the vote will earn 28,000 ICX per month (3 x 7,000 + 7,000).
As for penalties, there are currently no burn/slashing penalties to block producers. If you miss too many blocks, you are taken out of rotation. If you miss so many blocks that your productivity drops below 85%, your node will be disqualified and removed.
Voters
Most importantly, you must stake and vote in order to get rewards. There is no reward for only staking.
Voters receive the same reward no matter which P-Rep they vote for. The reward rate is lower when more people are voting and higher when less people are voting, with a maximum annual reward rate of 36% and a minimum annual reward rate of 6%. The current reward rate can be found here.
When an ICX holder chooses to unstake, there is a variable unstaking period from 5–20 days based on how many people are currently staking. If more people are staking the period is shorter, and if less people are staking the period is longer. The current unstaking period can be found here (scroll all the way down to the bottom and look on the right side).
As for penalties, there are no penalties for voters. If you vote for a P-Rep that ends up getting disqualified, your tokens will be un-voted and you will simply need to vote again to resume receiving rewards.
We hope this helps your understanding of ICON’s economics. Thanks for reading and please let us know if you would like something added or clarified.
Your Partner in Blockchain,
ICX Station
