Ontology Announces the Economic Model Design of the Triones Consensus System
Ontology is committed to building an open-source, open-minded, and collaborative distributed trust ecosystem.
Establishing the trust ecosystem relies on the technology, applications, and governance of the entire Ontology chain network.
Ontology has designed a governance plan for the chain network.
1. Triones Consensus System Economic Model
The value of the information industry does not lie solely in the new technology created. The industry uses informatization and the philosophy of the internet to redefine and reposition traditional industries. Blockchain is taking this exploration to another level.
“Blockchain services” include the basic underlying blockchain network services, as well as the various on-chain services. The value of the former lies in the operation capacity of the blockchain network, and the value of the latter lies in the capabilities of each on-chain business.
Based on the Triones Consensus System, the Ontology team uses:
· ONT, a cryptocurrency coin of main chain services.
· ONG, a utility token of main chain operations.
· Ontology adopts a stake-based consensus algorithm to optimize performance, which requires an economic tool to participate in node staking. The Triones economic model also uses ONT for node staking designed for flexibility and easy use of the economic model.
ONG is used by on-chain services for basic blockchain services.
The ONG circulating supply on the ONT Main Chain must meet the requirements of the chain’s scale.
The Triones economic model uses ONT/ONG and combines the VBFT consensus algorithm and a consensus management smart contract to form the Ontology governance model, which solves several core issues:
1）Decoupling the value of on-chain services and basic blockchain services
On-chain businesses promote the development of the blockchain ecosystem, but the value measurement of on-chain services and basic blockchain services depends greatly on several economic characteristics. Using a set of value tools to simultaneously satisfy both value measurements is a huge challenge.
2）Balanced cost design
Consensus nodes require hardware investment, which includes hardware costs and operation costs. Using a stake-based consensus algorithm requires giving up part of ONT’s liquidity to improve the performance of the blockchain network. All must be considered as costs to nodes. The Triones Consensus System takes into consideration hardware and staking costs and gives ONG incentives based on assessment. The degree of participation of consensus cluster nodes has been expanded to make the system as fair as possible.
In the stake-based incentive plan there is a relationship between the stake amount and the incentive amount. As a result, malicious competition may develop. The changes in liquidity also have a direct impact on the development of on-chain businesses.
The Triones economic model proposes a “Triones incentive curve equation” which reduces ONG incentives if too much ONT is being used in staking. A game design is created for the participant: enough ONT stake will allow them to join the consensus network, but too much ONT will reduce ONG rewards. Only a balanced ONT stake can receive the maximum benefit. The balance achieved by the incentive curve provides a more fair and decentralized governance participation for the entire node network.
Furthermore, when there is enough on-chain business development and demand for ONT liquidity, less ONT can be required for staking and more liquidity added by adjusting the parameters of the incentive curve, whilst maintaining the same maximum ONG reward.
4）ONT/ONG creation design
ONT and ONG are a dual token mechanism that are bound together; ONG is locked within ONT. From when the ONT MainNet goes live, a fixed number of ONG will be unlocked periodically (e.g. 100 ONG per 30 seconds) until all is unlocked and distributed to ONT holders based on the amount of ONT they hold. ONG will unlock in uniform from each ONT.
5）Incentive plan design
Nodes qualify for providing blockchain management services by providing hardware and ONT stakes. They are then [MOU1] rewarded ONG for providing blockchain governance services. On-chain services will also use blockchain services, therefore, the development of the Triones Consensus System cannot be separated from the development of on-chain businesses.
The development of each business requires a process, and most high-quality businesses experience a stage of explosive growth. Before this, however, improving the business may take some time. The same goes for on-chain business development. The Ontology team has paid attention to the development of the Triones Consensus System and the development of on-chain businesses and created an additional incentive design. In the initial three years, the Ontology Foundation has prepared an additional incentive of at least 1% per year for the Triones Consensus System. After the three years, the incentive quota will be adjusted according to the extent of applications running on Ontology (https://medium.com/ontologynetwork/ontology-introduces-the-triones-membership-system-5211294976bf).
The Triones node incentive design aims to better blockchain services, supporting on-chain applications whilst motivating node participation through incentives. Participants with smaller ONT stakes can pool together stakes with other participants and jointly agree on an incentive distribution model.
Ontology also encourages Triones consensus nodes to contribute to on-chain business, providing more on-chain services whilst supporting basic blockchain services. At the same time, ONG unlocked from ONT will meet the costs of chain-based services using blockchain services.
6) Open design of the economic model
In accordance with Ontology’s distributed trust strategic goals, information will be gradually formed on the identity and reputation of participating nodes using the ONT ID/distributed identity system and distributed reputation evaluation system. This “trust quantification” system will serve as another reference for the Triones economic model. The Triones economic model will gradually open up and connect with the trust system.
Design flaws and future directions
The design of the Triones economic model can only satisfy assumptions based on a game design system which is relatively rational, fair, and credible. However, there is a possibility that rational game logic outside the system may cause irrational behavior within the system. This is a risk the Ontology Foundation recognizes. During the initial stage, the Ontology Foundation will carry out duties such as risk control and emergency handing under an open and transparent mechanism.
Ontology will continue to share experiences of practice and continue to work on the governance and continuous optimization of public chains and realization of their values.
2. Ontology Chain Network Economic Model
Ontology has proposed a constituent economic model for the Ontology chain network based on the economic model of a single chain.
Conformance with the Ontology chain network economic model mainly includes two aspects:
1. ONG is used in the cross-chain system for blockchain network operations;
2. For blockchains entering the chain network that use a PoS-like consensus algorithm, only its governing token can be used for stake proofing, for example only ONT can be used for stake proofing on the ONT Main Chain.
Ontology uses ONG as a value measure for basic blockchain services.
Ontology will also be careful in the selection of blockchain networks it chooses to enter the ecosystem to ensure the stability and take control of the ecosystem development.