When we look at the Miners that are running on Hive-Engine, they are all built the same way. Every hour, a certain number of staked Miners get a payout of a fixed amount. For most tokens, there are between 10 and 30 “winners” every hour.
The problem with traditional miners is the following. With every additional Miner token that is staked, the probability for mining new tokens decreases for all the existing owners.
Let’s calculate this together
In a first situation, I have 20 miners and there is a total of 2’000 staked miners. Let’s say that every hour there are 20 winners.
My chances to get a payout in 1 day: 480 / 2’000 * 20 = 4.8
In theory, in this situation I would have a probability to get 4.8 paiements in one day.
Now let’s look at situation two. I still have 20 miners but now there is a total of 20’000 staked miners. We still have 20 winners per hour.
My chances to get a payout in 1 day: 480 / 20’000 * 20 = 0.48
In this second situation, I will have a probability to get 0.48 paiements per day.
As you can see, my winning chances are linked in a proportional relation to the number of Miner tokens that are staked. The more miners staked, the less I will earn.
Why are LENM different?
The mining concept for Liotes Energy Mills is identical but there is a big difference with other hive-engine miners. Whenever a LENM token is sold, 100% of the proceeds is added to the Liotes fund. As we saw before, every increase in the fund represents a linear increase of the token buy back value.
For LENM, every hour 20 LENM get 0.3 LEN payout. This means that if I have a certain amount of LENM and the overall amount of staked LENM is growing, the chances to “win” are diminishing for me. This is not different from traditional miners.
To illustrate how LENM is different, I would like to make an example. For simplicity’s sake, I will take the same price for every LENM at 5 Hive. I will also make abstractions of certain effects that are a bit complicated to explain that would slow the buy back price adaptation.
Situation 1: 20 LENM and 2’000 LENM tokens staked overall
I will have a probability to get 4.8 rewards per day.
This means I could expect to earn 1.44 LEN tokens per day.
In this situation there would be 10’000 Hive Power in the Liotes fund. With an interest rate of 12%, this would give a buy back price per token of 0.005 Hive. Since I would earn about 1.44 LEN, this would represent
an income of 0.0072 Hive per Day.
Situation 2: 20 LENM and 20’000 LENM tokens staked overall
I will have a probability to get 0.48 rewards per day.
This means I could expect to earn 0.144 LEN per day.
There would be now 100’000 Hive Power in the Liotes fund. Again with the interest of 12%, this would give a buy back price for the token of 0.05 Hive. This would represent an income of 0.144 x 0.05 =
0.0072 Hive per Day.
When we compare situation 1 and 2 in this exemple, we see that even if the probability to get payouts decreases, my income stays the same because this decrease is compensated by the increase of the LEN token buy back price.
If the number of LENM increases you will get less payouts but it will be compensated by the buy back value of the token. Therefore the total number of staked LENM has little influence on your earnings.
This is the big difference for the Liotes Enegry Mills compared to normal Miners. If there are more LENM staked, I will get less rewards but my earnings will more or less remain the same!
Buying very small quantities of LENM could lead to very low winning probabilities. If the winning probability is very low, this could lead to not getting payouts at all. We suggest that you own at least 0.1% of the staked supply to make sure that you have a probability to get a payout every second day.
The machine sets in…
The great thing about these LENM is that when there are more miners sold and staked, the whole machine takes on speed. If the account grows it has an effect on the different income streams. The more funds are available, the more income streams we can develop. This will have a positive effect on the growth percentage. Therefore a bigger fund, will allow a slightly faster growth.
This also means that the holders of the LENM token are not in competition with each other. Everybody profits when there are tokens sold because the bigger the fund, the faster the growth will be...
Are you ready for this blockchain adventure ? We launch 9.3.2021 at 2 pm CET!