We have done some overhauling of this RFC. I’ll highlight a few of the changes, but it has been pushed to the main branch, so feel free to go read it.
Runaway Timing Attack
The biggest changes were driven by a desire to address @Otzi’s original concerns of the RFC. Essentially, we are striving to create a system wherein it is never beneficial, or even reward-neutral, to universally stop minting. The code as it currently stands can be considered reward-neutral, as the reward you earn today you can easily just wait to earn tomorrow without any cost. With the addition of an inflation adjustment variable that changes with time, there could be situations where you could earn more tomorrow than today. We want to fix that to prevent a runaway state where everyone turns off their minters at once.
Static Subsidy
Creating a constant block reward is a strategy that has been well-explored in crypto. Bitcoin, for example, has a clearly defined constant block reward. However, in Peercoin such a strategy would result in a ‘stake grind’ attack, whereby minting with lots of smaller stakes is beneficial compared to minting with one big stake. Still, a constant block reward would certainly give incentive to continue to mint at all times. So we decided to work the static subsidy concept into rfc11.
Dynamic Weight
Specifically, we have chosen to give out 75% of the inflation-adjusted coinage-dependent reward, and 25% a static reward. We feel this addresses both sides of the issue by creating lost reward when stake is withheld, but also giving a bigger reward to those that mint with stakes that are greater than dust values. Because of the design of rfc11, we can normalize both components to be a % of the total supply, and thereby compare them in size for a global PoS inflation rate that maintains its target of 1%/year.
What does this mean for my reward?
The static portion comes out to around 1.24 PPC/block (0.25 * 26mil * 0.01 / [365 * 144]).
The dynamic portion will be around 3x current rewards (if we assume that the current state of the chain is about 25% participation, for an adjustment of 4, with a 75% weight)
So overall, you should still expect to see a significant increase in rewards. More to the point, you should expect to see the maximum rewards when you behave the way we ideally would like you to: namely, leave your client on and minting at all times and let the automatic split function of the wallet do what it was designed to do.
With all of these changes put together, I personally believe that this will greatly increase continuous minting and ultimately the PoS difficulty. Delving deeper into a lot of these numbers, I was very surprised by the apparent difference between continuous minting and periodic minting. It seemed to me that we have ~10% continuous participation, i.e. the portion of minters that are actually helping to secure the network on a regular basis. On the other hand, we seem to have 20-50% of minters claiming yearly rewards. I sincerely believe that rfc11 can boost the continuous participation and the PoS difficulty to new levels not seen since this project began.