Hi all,
Following up on questions raised in this channel on the connection of the ICP price and the minting of node provider rewards, I thought it would be useful to share the following analysis. The underlying calculations are in this sheet.
Conducted analysis
- The NNS currently mints the equivalent of 1.38M XDR for all node providers per month.
- Based on that number, I have analyzed the relationship of minted node provider rewards and voting rewards under different price levels, including some extreme scenarios.
- Today: ICP/XDR=3.00,
- Scenario 1: ICP/XDR=1.5 and thus 50% down
- Scenario 2: ICP/XDR=0.75 and thus 75% down
- For each scenario, I have analyzed the relationship of node provider rewards compared to total rewards, total supply and the daily trading volume of ICP.
Conclusions
- The proportion of node provider rewards compared to the overall amount of rewards is relatively small. It varies between 12% for price levels as of today and reaches 35% for the most extreme scenario 2.
- Monthly node provider rewards compared to the average daily trading volume in Nov’22 are also small at 2.77% (daily trading volume= approx. 50M XDR as per coingecko)
- The proportion of monthly node provider rewards compared to total supply is 0.38% for the most extreme scenario 2 (ICP/XDR=0.75). Thus, even if the ICP price remained at 0.75 XDR for a whole year, the increase of the total supply due to the minting of node provider rewards would be only 4.51%.
- As mentioned above, @Kyle_Langham started publishing a monthly report on NNS and ICP Token metrics, which also includes node provider rewards. We can rely on this report for the monitoring of monthly ICP minting.
