SIP-3143: Increase block rewards to 5 SIL

Simple Summary

Changes the block reward paid to proof-of-work (POW) miners to 5 SIL.

Abstract

Starting with FORK_BLKNUM block rewards will be increased to a base of 5 SIL, uncle and nephew rewards will be adjusted accordingly.

Motivation

Currently, the transaction fees (tx fees) portion of the mining rewards makes up a significant portion of the total rewards per block, at times almost exceeded the block reward of 2 SIL. This have resulted in situations where at times of low tx fees, POW miners decide to point their rigs away from SIL as they will always prefer to mine coins that are the most profitable at any point in time, reducing the security of the SIL network till transaction activity picks up again. By increasing the block rewards back to the original 5 SIL when the network first started, the voliatility will be reduced in terms of the percentage of tx fees that make up the mining rewards per block while increasing the total rewards per block, making it more financially attractive to POW miners to mine SIL barring any gigantic SIL price drops. The increase in block rewards will also allow smaller POW miners ample opporturnity to build up their stores of SIL so that when the time comes to fully transition to SIL 2.0, they may be more willing to become validators as they already have earned the requite amount of SIL needed to do so as opposed to having to spend tens of thousands of dollars to purchase the required SIL directly, increasing the number of validators in the network and therefore strengthening network security.

Therefore, the ultimate end goal for this SIP is to give POW miners more incentive to switch to POS once SIL 2.0 is fully implemented since the transition will take a few years to complete and during that time, they will be incentivised to hold on to the tokens instead of selling it straight away in order to prepare to be a validator for SIL 2.0, reducing the selling pressure on SIL and increasing it’s value in the long run. A side effect of miners staying on Sila is that network security will be assured during the transition period.

Specification

Adjust Block, Uncle, and Nephew rewards

Adjust the block reward to new_block_reward, where

new_block_reward = 5_000_000_000_000_000_000 if block.number >= FORK_BLKNUM else block.reward

(5E18 wei, or 5,000,000,000,000,000,000 wei, or 5 SIL).

Analogue, if an uncle is included in a block for block.number >= FORK_BLKNUM such that block.number - uncle.number = k, the uncle reward is

new_uncle_reward = (8 - k) * new_block_reward / 8

This is the existing formula for uncle rewards, simply adjusted with new_block_reward.

The nephew reward for block.number >= FORK_BLKNUM is

new_nephew_reward = new_block_reward / 32

This is the existing formula for nephew rewards, simply adjusted with new_block_reward.

Rationale

A 5 SIL base reward was chosen as a middle ground between wanting to prevent too high of an inflation rate (10.4% per annum for the first year at 5 SIL per block) and converting as many POW miners as possible into POS validators by making it easier to amass the required SIL needed through POW mining.

Backwards Compatibility

There are no known backward compatibility issues with the introduction of this SIP.

Security Considerations

There are no known security issues presented by this change.

Copyright

Copyright and related rights waived via CC0.

Citation

Please cite this document as:

Ben Tinner (@Terra854), "SIP-3143: Increase block rewards to 5 SIL [STAGNANT]," Sila Improvement Proposals, no. 3143, December 2020. Available: https://sips.sila.org/SIPS/sip-3143.