Introducing TENOM: native token in the MONET ecosystem
In the previous posts we talked about the MONET ecosystem, but an attentive reader might have noticed that we didn’t touch on the most important part of it, a missing piece that unites all the parts of the ecosystem and makes them work as one organism — the Token.
We are happy to finally introduce TENOM — a native token of Monet Hub.
Monet Hub:
Let’s first take a closer look at TENOM’s place in Monet Hub. The always-on blockchain is powered by DPoS, which means that validators “deposit” some portion of their TENOM as collateral in return for the right to secure Monet Hub. Validators can stake the tokens they own directly, or other token holders can delegate their tokens for validators to stake.
The initial number of validators in the Monet Hub will start with the 20 largest stakers and will gradually grow up to 100.
Anyone can declare an intention to become a validator and stake a portion of their TENOM tokens. If validator candidates stake enough of their tokens and/or are able to acquire enough support from others (delegators) to get into the top hundred by the bonded stake, they become a validator. That means a top TENOM holder may be surpassed by a smaller holder with a large delegators’ support. This mechanism enables those who are truly interested in the network to contribute to the governance, while the large holders, to whom participating in governance might not be a priority, do not automatically become validators. (for example, because the holding represents a small portion of their overall wealth and, hence, receives little attention).
There are also technical requirements that validators need to fulfill in order to be able to set up and maintain a node. More information on that will be available on our GitHub.
What’s in it for delegators who support a candidacy of particular candidates?
By delegating a stake to a validator, a delegator supports this validator in his or her votes and entrusts a validator to make decisions on a delegator’s behalf. For that, after subtracting their commission and receiving their reward, a validator distributes a portion of the validator remuneration to the delegates in proportion of the TENOM they staked.
Validators are free to determine their own commission rate. It is in their interest to gather support from the delegators, so they can offer competitive commission rates as one of the instruments to outcompete other validators.
As the amount of tokens delegated for staking and the amount of tokens staked by validators directly will vary, the total amount of staked tokens required to be a validator will be determined by a free market. Ultimately, only the top 100 stakers (people staking their own + delegated tokens) will become the validators of the Monet Hub. This is, by definition, a dynamic group of people.
It’s important to mention here that, once the Monet Hub reaches 100 validators and the number of Babble blockchains increases, to maintain the speed and to continue expanding the throughput, new Hubs may appear. New Hubs will have a different set of validators, but other than that they will be based on the same principles as the Monet Hub.
How does the network incentivize validators to stake the tokens and to secure the network?
For their work, validators are entitled to 50% of annual emission as well as transaction fees, paid by ad hoc blockchains and Monet Hub users. The remuneration is divided proportionally to the amount of the total stake.
Validators of the Monet Hub will each create blocks individually and asynchronously. Meanwhile the consensus algorithm will ensure that they create the same blocks, in the same order, with instant finality. In other BTF-style proof of stake consensus mechanisms, a validator weight, determined by the staked tokens, affects the chance of being a block proposer. Since Babble is a unique consensus system, there are no block proposers per se. The consensus algorithm ensures that they create the same blocks, in the same order, with finality (once a block is created, it can be used right away). As a result, every validator has the same weight in consensus mechanism: one node — one vote. Note that this is different for the governance decisions (more on that below).
Ok, but what if the delegated validator misbehaves?
There are a variety of ways a validator can misbehave. This includes malicious behavior and forking, unavailability and failure to keep the node up, or non-participation in the governance. Depending on the severity of misbehavior, TENOM previously staked by a validator gets “slashed”, i.e. taken away from a validator. Delegates who delegated TENOM to a misbehaving validator may also lose tokens as the result. That’s why the commission rate the validator charges should not be the only factor taken into consideration while choosing who to delegate the tokens to.
The “slashed” tokens go to the MONET reserve that is further used to incentivize the community and continuous development of the network.
Ad hoc blockchains:
When it comes to ad hoc blockchains, the participants of a temporary network would need TENOM as a means of transacting between ad hoc blockchains and Monet Hub: accessing of Smart Contracts, saving a log of transactions on Monet Hub and connecting ad hoc blockchains to one another.
It’s worth noting that the participants do not need TENOM to launch or terminate a network and to save the log of transaction on their own devices. Native currency is only required at the point when there is a need to persist the blockchain information, and to save the proof of actions on another network.
We deliberately leave it up to app developers, innovating in the Monet ecosystem, to decide whether or when a blockchain information persists and who will have access to the info later on. We are laying the founding bricks of the ecosystem, providing all the necessary tools for future developments. We prefer not to bind developers by specific rules because the area for innovation is too wide, and potential use-cases are too diverse.
TENOM can also be used within specific apps that an ad hoc blockchain powers, where the app developers are free to use TENOM as a payment method.
Governance:
In the early stages, community sentiment and the MONET roadmap will guide the development of the network. Later down the road, MONET will implement on-chain governance, where validators will vote on the parameters of the network, transaction fees, slashing fees, as well as the usage of the funds in reserve, motivation of the developers and community members who contribute to the Monet ecosystem and other items. A validator weight in governance voting, unlike in consensus voting, will be determined by the weight of their total token stake: the more the stake, the more power it possesses in voting.
Emission:
Earlier in the article we mentioned that validators are rewarded with both: transaction fees as well as percentage of annual emission. So where does the emission come from and where does it go?
TENOM token supply is not fixed. Monet Hub will annually emit additional TENOMs to incentivize validators who secure the network (50% of annual emission) and to incentivize the community that contributes to the development of the Monet ecosystem (50% of annual emission). The annual rate of emission will fluctuate to serve primarily as an incentive for staking, but also to facilitate the community’s participation in the ecosystem’s development.
Given the specifics of the project, this is extremely important to constantly grow the community of contributors, innovating on top of MONET. Typically projects incentivize the interested people with bounty tokens / airdrops only at the starting point: before and at the moment of the tokensale. But what happens next? How do they keep attracting new talent after all the tokens are distributed?
Having a long term vision of the project’s development in mind, we have decided that people should feel motivated to contribute to the common goal at all the stages of the project’s life cycle. It is never too late to write a good piece of content or to come up with a feature that the core team has not initially thought of — this will be rewarded with annual emission of TENOM.
While the details and mechanics of participation in the ecosystem development incentives are still in the concept stage, we will soon be ready to share the token sale bounty for early contributors, that you do not want to miss.
The portion of the emission aimed at rewarding the ecosystem development initiatives initially goes to the MONET reserve fund. Validators periodically vote on the way it will be distributed among the people who influenced the development of Monet.
Finally, there are many elements of a token design that may require more detail in the future as we progress with the development. We are open to the community’s thoughts, feedback and suggestions.
In the next post, we will talk more about the upcoming bounty program, in the meantime:
Take a look at our White Paper on our site: Monet.network
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