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Cryptoeconomics

Loki is a Blockchain network oriented toward the provision of privacy-preserving services over a network of Service Nodes. The salient cryptoeconomic problem is how to incentivise actors in the Loki network to operate Service Nodes in a manner compatible with the objectives of the Loki network, in particular decentralisation and privacy.

To solve this problem the Loki Project team commissioned two Economic papers:

  1. Cryptoeconomics of the Loki Network: This Economic Report was commissioned to characterise the game theory behind incentivising Service Node operators.
  2. Loki Cryptoeconomics: This Report was commissioned to apply the game theory specific to the Loki Networks economics.

These 2 papers analysed the Block Reward, Block Reward Split, Inflation, Circulating Supply and the amount of potential Service Nodes on the network to develop a cryptoeconomic solution to incentivise Service Node Operators.

Block Rewards

A block reward is the reward created when a new block has been generated. The reward is distributed to the peers in the network that helped facilitate the generation of the block. In most cases, the miners are the individuals who receive this reward as they collect and write transactions into blocks.

Loki Block Reward

The Loki Block Reward is generated in a similar manner to most proof-of-work cryptocurrencies. Miners use proof-of-work to generate a block and then a reward is released to the network. The reward is then distributed not only distributed to the Miner but to a Service Node Operator and the Governance pool.

The amount of Loki rewarded BR to the network at each block height h follows the following equation:

Block Reward Formula

This block reward formula is a result of Loki's Cryptoeconomic study, on the 30th of July, 2018, at block 64324, the Loki block reward went from being calculated in terms of the circulating supply with an emission speed factor of 20, to be derived from the block height.

Block Reward Split

As Service Node's went live on 20th of September, 2018, at block 101250, the addition of a Block Reward split was required to financially incentivise Service Node Operators to maintain and run Service Nodes. During the fork on the 30th of July, 2018, the Block Reward was hard coded to split the reward as follows:

Party Percent of Reward
Service Nodes 50%
Miners 45%
Governance 5%

Mining Reward

As well as collecting transactions fees, 45% of the block reward is awarded to the miner that constructs the block.

Service Node Reward

The second output in each block (50% of total reward) goes to a Service Node, or two Service Nodes if a relay is selected. Service Nodes are rewarded based on the time since they last received a reward (or time since they registered), with a preference for nodes that have been waiting longer. Each time a Service Node registers with the network it assumes the last position in the queue. If the Service Node maintains good service and is not ejected from the queue by a swarm flag, it slowly migrates to the higher positions in the queue. Nodes at or near the front of the queue are eligible for a reward, and once awarded, the node again drops to the last position in the queue and begins slowly working its way back up.

Governance Reward

The final 5% portion of the block reward is distributed towards governance operations;

Inflation

Click to expand data

Year BH Circulating supply Inflation
0 0 22500000 77.12%
1 262800 39852116.29 19.79%
2 525600 47738927.03 15.48%
3 788400 55129105.11 13.35%
4 1051200 62489416.22 11.78%
5 1314000 69847931.15 10.53%
6 1576800 77206338.06 9.53%
7 1839600 84564738.47 8.70%
8 2102400 91923138.5 8.00%
9 2365200 99281538.5 7.41%
10 2628000 106639938.5 6.90%
11 2890800 113998338.5 6.45%
12 3153600 121356738.5 6.06%
13 3416400 128715138.5 5.72%
14 3679200 136073538.5 5.41%
15 3942000 143431938.5 5.13%

Circulating Supply

The Circulating Supply is the total amount of $Loki in circulation. The below table "Circulating Supply Distribution" shows the predicted circulating supply and the overall amount of Loki the Premine, Governance, Miners and Service Nodes have received.

Circulating Supply

Circulating Supply Data

Click to expand data

Months BH Circulating supply Premine Governance Miners Service Nodes
0 0 22500000 22500000
1 21600 25124173.21 22500000 131208.66 2492964.552
2 43200 27695047.09 22500000 259752.35 4935294.732
3 64800 30195981.57 22500000 384799.08 7311182.49
4 86400 31765098.95 22500000 463254.95 8801843.998
5 108000 33135278.15 22500000 531763.91 9898775.969 204738.28
6 129600 34347560.03 22500000 592378.00 10444302.82 810879.22
7 151200 35434518.72 22500000 646725.94 10933434.22 1354358.56
8 172800 36422008.33 22500000 696100.42 11377804.55 1848103.36
9 194400 37330549.27 22500000 741527.46 11786647.97 2302373.83
10 216000 38176428.61 22500000 783821.43 12167293.67 2725313.51
11 237600 38972573.41 22500000 823628.67 12525558.84 3123385.91
12 259200 39729243.88 22500000 861462.19 12866060.55 3501721.14
13 280800 40454583.56 22500000 897729.18 13192463.4 3864390.98
14 302400 41155055.96 22500000 932752.80 13507675.98 4214627.18
15 324000 41835791.19 22500000 966789.56 13814006.84 4554994.80
16 345600 42500861.03 22500000 1000043.05 14113288.26 4887529.71
17 367200 43153497.23 22500000 1032674.86 14406974.55 5213847.82
18 388800 43796264.85 22500000 1064813.24 14696219.98 5535231.62
19 410400 44431199.76 22500000 1096559.99 14981940.69 5852699.08
20 432000 45059917.87 22500000 1127995.89 15264863.84 6167058.13
21 453600 45683701.67 22500000 1159185.08 15545566.55 6478950.04
22 475200 46303569.13 22500000 1190178.46 15824506.91 6788883.77
23 496800 46920328.18 22500000 1221016.41 16102048.48 7097263.29
24 518400 47534620.09 22500000 1251731.00 16378479.84 7404409.24
25 540000 48146953.82 22500000 1282347.69 16654030.02 7710576.11
26 561600 48757733.34 22500000 1312886.67 16928880.8 8015965.87
27 583200 49367279.29 22500000 1343363.96 17203176.48 8320738.85
28 604800 49975846.16 22500000 1373792.31 17477031.57 8625022.28
29 626400 50583635.92 22500000 1404181.80 17750536.96 8928917.16
30 648000 51190808.9 22500000 1434540.44 18023764.8 9232503.65
31 669600 51797492.33 22500000 1464874.62 18296772.35 9535845.37
32 691200 52403787.21 22500000 1495189.36 18569605.04 9838992.81
33 712800 53009773.7 22500000 1525488.68 18842298.96 10141986.05
34 734400 53615515.42 22500000 1555775.77 19114882.74 10444856.91
35 756000 54221062.86 22500000 1586053.14 19387379.08 10747630.63
36 777600 54826456.1 22500000 1616322.81 19659806.04 11050327.25
37 799200 55431726.96 22500000 1646586.35 19932177.93 11352962.68
38 820800 56036900.68 22500000 1676845.03 20204506.1 11655549.54
39 842400 56641997.3 22500000 1707099.87 20476799.58 11958097.85
40 864000 57247032.73 22500000 1737351.64 20749065.53 12260615.57
41 885600 57852019.59 22500000 1767600.98 21021309.61 12563109.00
42 907200 58456967.9 22500000 1797848.40 21293536.35 12865583.15
43 928800 59061885.62 22500000 1828094.28 21565749.33 13168042.01
44 950400 59666779.05 22500000 1858338.95 21837951.37 13470488.72
45 972000 60271653.2 22500000 1888582.66 22110144.74 13772925.80
46 993600 60876512.06 22500000 1918825.60 22382331.23 14075355.23
47 1015200 61481358.77 22500000 1949067.94 22654512.25 14377778.59
48 1036800 62086195.85 22500000 1979309.79 22926688.93 14680197.13
49 1058400 62691025.28 22500000 2009551.26 23198862.18 14982611.84
50 1080000 63295848.64 22500000 2039792.43 23471032.69 15285023.52
51 1101600 63900667.18 22500000 2070033.36 23743201.03 15587432.79
52 1123200 64505481.89 22500000 2100274.09 24015367.65 15889840.15
53 1144800 65110293.57 22500000 2130514.68 24287532.91 16192245.99
54 1166400 65715102.84 22500000 2160755.14 24559697.08 16494650.62
55 1188000 66319910.2 22500000 2190995.51 24831860.39 16797054.30
56 1209600 66924716.04 22500000 2221235.80 25104023.02 17099457.22
57 1231200 67529520.67 22500000 2251476.03 25376185.1 17401859.54
58 1252800 68134324.35 22500000 2281716.22 25648346.76 17704261.37
59 1274400 68739127.27 22500000 2311956.36 25920508.07 18006662.83
60 1296000 69343929.59 22500000 2342196.48 26192669.11 18309063.99
61 1317600 69948731.42 22500000 2372436.57 26464829.94 18611464.91
62 1339200 70553532.88 22500000 2402676.64 26736990.6 18913865.64
63 1360800 71158334.04 22500000 2432916.70 27009151.12 19216266.22
64 1382400 71763134.96 22500000 2463156.75 27281311.53 19518666.68
65 1404000 72367935.69 22500000 2493396.78 27553471.86 19821067.05
66 1425600 72972736.27 22500000 2523636.81 27825632.12 20123467.34
67 1447200 73577536.73 22500000 2553876.84 28097792.33 20425867.57
68 1468800 74182337.1 22500000 2584116.85 28369952.49 20728267.75
69 1490400 74787137.39 22500000 2614356.87 28642112.62 21030667.89
70 1512000 75391937.62 22500000 2644596.88 28914272.73 21333068.01
71 1533600 75996737.8 22500000 2674836.89 29186432.81 21635468.10
72 1555200 76601537.94 22500000 2705076.90 29458592.87 21937868.17
73 1576800 77206338.06 22500000 2735316.90 29730752.93 22240268.23
74 1598400 77811138.15 22500000 2765556.91 30002912.97 22542668.28
75 1620000 78415938.22 22500000 2795796.91 30275073 22845068.31
76 1641600 79020738.28 22500000 2826036.91 30547233.03 23147468.34
77 1663200 79625538.33 22500000 2856276.92 30819393.05 23449868.36
78 1684800 80230338.36 22500000 2886516.92 31091553.06 23752268.38
79 1706400 80835138.39 22500000 2916756.92 31363713.08 24054668.40
80 1728000 81439938.41 22500000 2946996.92 31635873.09 24357068.41
81 1749600 82044738.43 22500000 2977236.92 31908033.09 24659468.42
82 1771200 82649538.45 22500000 3007476.92 32180193.1 24961868.42
83 1792800 83254338.46 22500000 3037716.92 32452353.11 25264268.43
84 1814400 83859138.47 22500000 3067956.92 32724513.11 25566668.43
85 1836000 84463938.47 22500000 3098196.92 32996673.11 25869068.44
86 1857600 85068738.48 22500000 3128436.92 33268833.12 26171468.44
87 1879200 85673538.48 22500000 3158676.92 33540993.12 26473868.44
88 1900800 86278338.49 22500000 3188916.92 33813153.12 26776268.44
89 1922400 86883138.49 22500000 3219156.92 34085313.12 27078668.45
90 1944000 87487938.49 22500000 3249396.92 34357473.12 27381068.45
91 1965600 88092738.49 22500000 3279636.92 34629633.12 27683468.45
92 1987200 88697538.5 22500000 3309876.92 34901793.12 27985868.45
93 2008800 89302338.5 22500000 3340116.92 35173953.12 28288268.45
94 2030400 89907138.5 22500000 3370356.92 35446113.12 28590668.45
95 2052000 90511938.5 22500000 3400596.92 35718273.12 28893068.45
96 2073600 91116738.5 22500000 3430836.92 35990433.12 29195468.45
97 2095200 91721538.5 22500000 3461076.92 36262593.12 29497868.45
98 2116800 92326338.5 22500000 3491316.92 36534753.12 29800268.45
99 2138400 92931138.5 22500000 3521556.93 36806913.12 30102668.45
100 2160000 93535938.5 22500000 3551796.93 37079073.12 30405068.45
101 2181600 94140738.5 22500000 3582036.93 37351233.12 30707468.45
102 2203200 94745538.5 22500000 3612276.93 37623393.12 31009868.45
103 2224800 95350338.5 22500000 3642516.93 37895553.12 31312268.45
104 2246400 95955138.5 22500000 3672756.93 38167713.12 31614668.45
105 2268000 96559938.5 22500000 3702996.93 38439873.12 31917068.45
106 2289600 97164738.5 22500000 3733236.93 38712033.12 32219468.45
107 2311200 97769538.5 22500000 3763476.93 38984193.12 32521868.45
108 2332800 98374338.5 22500000 3793716.93 39256353.12 32824268.45
109 2354400 98979138.5 22500000 3823956.93 39528513.12 33126668.45
110 2376000 99583938.5 22500000 3854196.93 39800673.12 33429068.45
111 2397600 100188738.5 22500000 3884436.93 40072833.12 33731468.45
112 2419200 100793538.5 22500000 3914676.93 40344993.12 34033868.45
113 2440800 101398338.5 22500000 3944916.93 40617153.12 34336268.45
114 2462400 102003138.5 22500000 3975156.93 40889313.12 34638668.45
115 2484000 102607938.5 22500000 4005396.93 41161473.12 34941068.45
116 2505600 103212738.5 22500000 4035636.93 41433633.12 35243468.45
117 2527200 103817538.5 22500000 4065876.93 41705793.12 35545868.45
118 2548800 104422338.5 22500000 4096116.93 41977953.12 35848268.45
119 2570400 105027138.5 22500000 4126356.93 42250113.12 36150668.45
120 2592000 105631938.5 22500000 4156596.93 42522273.12 36453068.45