I have been trying my best to learn the core functions of the ICP network. I am currently looking into the staking and reward mechanisms. I have learned that the reward amount is based on the total supply of ICP coins. My question has to do with how the undistributed voting rewards affects the calculation of the reward pool for voters.
Does the nns include the undistributed voting rewards into the calculation for the reward pool?
(If the answer is yes then the following questions do not matter.)
2)When the rewards are distributed could it lead to an increase of inflation above the target rate?
3)Will this affect the timeline in which we reach the goal of 5% inflation?
As a side note these questions also apply to the node provider rewards?
my understanding is that undistributed voting rewards are rewards accumulated till 13/14th of each month. It only applies to node provider rewards afaik.
There is a separate section for Voting rewards and node provider rewards.
The portion I am wondering about is the maturity reward that is not being spawned. The node providers reward does increase total supply so that will be included in the calculations for total voting reward pool.
@Mico The carry of undistributed voting rewards is described here.
Does the nns include the undistributed voting rewards into the calculation for the reward pool?
(If the answer is yes then the following questions do not matter.)
Yes, it carries over undistributed voting rewards to the next day.
2)When the rewards are distributed could it lead to an increase of inflation above the target rate?
No. Just rewards which were previously not distributed are distributed once a proposal settles again.
3)Will this affect the timeline in which we reach the goal of 5% inflation?
No, the voting reward function is not affected by this.
Im not sure if the rollover is what I am talking about but that is great info for my research.
I learned that the rewards for the voting rewards is calculated on the basis of the total supply of the icp tokens. I learned that the maturity that isnt spawned does not change the total supply metric of icp.
If the maturity that is not spawned does not change the total supply then will that change the amount of rewards possible for that day/year, or does the maturity that is not spawned get calculated into the reward pool for the year?
I am not able to post a picture of the metric from the dashboard I am referencing but it is in the circulation tab of the icp dashboard.
I guess my confusion comes from the fact that if the total supply of icp goes up then the icp allocation for the reward pool would also increase due to it being a percentage of the total supply.
That brings another question. Maturity will need to be converted/spawned into ICP sooner or later. Is the reported inflation (around 7% if I remember correctly) not taking into account this unspawned maturity? Obviously, users have a choice to spawn maturity, keep it as is or restake it but does that affect the total supply number? I am assuming in ICP max supply is kept unbounded?
The voting reward function, currently at 7.08%, determines the current total voting reward pool, and thus measures the total current voting reward inflation (but not the much smaller inflation related to node provider rewards).
If we you focus on pure ICP inflation (i.e. the increase of the total supply of ICP year on year) then you get a lower number around 3%. This is because unspawned maturity is not included, and also because other factors such node provider rewards and ICP burned affect it.
No it does not. The total reward pool for a given days is calculated as total supply of ICP * voting reward function / 365.25.
If it does not included them then will the allocation for the pool increase based on the total supply increase from the maturity being spawned?
The allocation of the pool is based on the relative voting power of neurons. In particular the allocation scheme of the reward pool is not linked to the total supply (or changes in the total supply).
Lets say all 78 million icp is minted from maturity today. Tomorrow the calculation would become
Total supply of ICP(The plus 78mil) *voting reward function/365.25
Yes, that is correct.
If the current total supply (TS_0) increases today by a certain amount (let’s denotes this increase by delta), then the calculation of the total reward pool for the following day will be based on the new total supply, which is TS_0 + delta.
This means that total reward pool on the following day will (TS_0 + delta) * voting reward function / 365.25.
The day the unspawned maturity is finally spawned will be a great boost for long term stakes.
Thank you for your patience and persistence on this topic.