Aelf is on the verge of its next step in the blockchain journey. The decentralized platform is soon releasing its mainnet, a move that is important for the future of the platform. In line with its mainnet release, the platform released its economic whitepaper. The whitepaper explains, among other things, the financial structure of running a node for the Aelf blockchain.
Having a financial whitepaper is crucial given that people also join the decentralized ecosystem for financial gains. The incentives ensure that platforms run efficiently, effectively and without fail. The economics of a platform is such that they can either make or break the entire platform based on their core principles.
Information is Key
A decentralized platform is dependent on the number of nodes and voters that support the network. Supporters of decentralized platforms need to be aware of the type of supporting a platform expects and the type of reward that is offered for the support. They also need to understand whether their voice will make a difference when it comes to making decisions about the platform. In short, information on governance and reward mechanisms is a prerequisite before any supporting parties offer their services.
Aelf’s economic whitepaper provides answers to some of the key questions that are likely to arise from their prospective supporters.
The whitepaper is categorized into three; the incentive structure, the token model and the system of governance. Through these three categories, prospective Aelf supporters can find positions that they can comfortably fill.
Further, economic incentives may increase the adoption of blockchain technology globally.
The Token Model Employed
Aelf has three tokens. These are:
- ELF — This is used in the main incentive system. It is also used for fees paid within the platform for activities such as side chain creation or staking by nodes and voters.
- Resource token — These are available for purchase by developers as they are essential to their d’Apps. Developers use this token to purchase resources such as RAM, CPU, STORAGE, and TRAFFIC among other resources. Resource tokens can be traded for ELF.
- “Developer tokens” — These last types of tokens are those created by developers for their respective d’Apps. Their existence means that the Aelf blockchain could house as many blockchains as created by developers within their network. Developers can use this token as incentives for their applications.
The Reward Pool
Through the reward pool, Aelf distributes its rewards based on the type of supporters within the ecosystem.
Funds from the reward pool are expected to be generated from some of the fees charged for using the Aelf blockchain. The fees are expected to fund up to 50% of the reward pool.
The Incentive Structure Employed
As a user, earning on Aelf means either voting or becoming a node for the platform. Rewards for users are via the ELF token.
Becoming a node requires some show of dedication. For this reason, the node applicant must stake 100,000 ELF. The stake is also a safeguard against those who plan on manipulating the network. In case of any attempted manipulation, the 100,000 ELF is forfeited.
Users who opt-out of block producing receive their 100,000 ELF upon stepping down.
There are further requirements including a powerful device that has a minimum of 16GB of ram, an 8 core CPU, 500GB HDD, and enough bandwidth to continually produce blocks without fail.
Aelf categorizes their nodes into two, based on their status as per the community’s voting. These are candidate nodes and producer nodes. Producer nodes are the top 17 nodes elected to produce blocks for the Aelf blockchain; the top 85 nodes after the top 17 act as a back up to producer nodes, performing block verification to support producer nodes in the blockchain.
For block production, there is a fixed reward which is halved after every four years. Once the mainnet is launched, block producers will be earning 0.125 ELF for each block produced. This will reduce by half after four years. The reward table for block producers is as follows:
Earning on Aelf doesn’t get easier than this. Voters earn through a simple staking mechanism. Users vote for a node they wish to be elected by staking on that node. The amount staked is then locked up for a period, ranging from 3 months to 3 years. During this period, the staked amount earns daily interest based on the lock-up period selected.
The longer the lock-up period, the higher the daily interest rate. Users can earn up to 0.2% daily interest on the ELF locked up.
The Governance Models
Two governance systems will be active in the Aelf network. These are:
- Parliamentary governance system
- Associate governance
Users on Aelf will have their voices heard through the democratic system that will be employed on the platform.
The initial governance model will involve a parliamentary system where decisions will be made based on a two-thirds majority of production nodes. As previously established, production nodes are elected by voters within the Aelf ecosystem. These producer nodes form the parliament which is responsible for making decisions affecting the platform.
In its economic paper, Aelf also addresses the issues that may arise within small communities in the ecosystem. The parliamentary system addresses governance for the entire Aelf community whereas the associate system handles smaller communities.
The referendum model was created to address decisions that may be beyond the associate and parliamentary systems. The process is quite complex and may even involve the entire community depending on the decision that needs to be made.
However, it is likely to be used in side-chain specific issues, thus, its implementation will likely vary depending on the sidechain.
The Aelf economic whitepaper dropped at the right time. For anyone planning to support the platform, going through the whitepaper will help in decision making especially on the economic viability of the planned support.
Issues on governance are adequately covered with different levels that meet the diverse needs of the Aelf community.
On rewards, the economic whitepaper is clear on the formula, method and way rewards will be offered to their supporters. Both developers and users could improve economically through this platform.
Lastly, through this economic whitepaper, Aelf is showing that blockchain is here to stay. Its planned mainnet launch and other plans set for the future are indications that the technology is only growing stronger. Hopefully, this growth may translate to more users in the decentralized ecosystem.
For access to the document, follow this link.
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Disclaimer: Please only take this information as my OWN opinion and should not be regarded as financial advice in any situation. Please remember to DYOR before making any decisions.