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Inflation and participation in stake-based token protocols

Doug Petkanics
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Stake based token protocols

  • Blockchain models use different methods of issuances for their tokens
  • A token issuance model can algorithmically incentivize participation in the network
  • The inflation rate is dependent on the level of participation, or number of users who bond a token

Advantages of this model

  • Higher participation means more people that invest in the long-term success of the network and contribute to that network as well as greater percentage of tokens someone needs to hold in order to mount an attack on the network
  • It is easier to calculate the value of the network based on participation
  • With the ability to target participation rate, the network can keep a percentage of tokens unbonded so that users can transfer the token

How to incentivize participation

  • Newly minted tokens are distributed to participants according to the size of their stake
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