Credits is cooking up a big change: How we're going to change the future of our financial technology.

Staking and Mining Program. Increasing remuneration for trusted nodes. 

Credits’ team prepared this detailed article to provide an explanation of the mechanism of choice for rewarding trusted nodes at this moment and the introduction of a new reward program for nodes.

We received a proposal for this from our loyal Credits community and node holders. We would like to hear your thoughts on this.

Introduction

In order to attract new users to the blockchain, as well as strengthen decentralization efforts, we propose to have a vote on the introduction of an additional system of remuneration for trusted owners who hold nodes and participate in the consensus and create new blocks.

We are aiming to achieve the following results:

1. An increase in the number of nodes from today’s 100 to 500-1000 in the coming year

2. Increasing rewards for participating node runners

3. Development of the staking program

4. Creation of mining pools for those who can't run a node, or nodes that are ready to delegate their coins (through the Delegation tool)

The current mechanism of consensus

Decentralized environment

Credits Blockchain is a public open-source protocol based on the principles of complete decentralization and BFT.

There are rules of conduct within the protocol, but there are no selective restrictions or bias towards the participant. Everyone is equal. Note again; it is an open network that does not limit any new or previous users and node owners.

Anyone can use the source code provided on GitHUB https://github.com/CREDITSCOM/node to assemble a node to connect to the blockchain network and take part in maintenance of the network.

The node can participate in two ways:

1. Regular node. They read information from the blockchain. They act as a storage and synchronization node, without participating in consensus.

2. Trusted node. A node participating in the consensus. This node takes part in the creation of a new block.

Trusted nodes are selected according to a number of criteria, among them: speed of operation, stability, quality of inter-node connection, the relevance of storage, the relevance of software, existence of the staking on account of at least 50 thousand CS coins, and others.

Consensus and choice of trusted nodes imply competition between nodes for the ability to create blocks. Yet, at the same time, as with Bitcoin, it does not guarantee that this particular node/set of nodes will create that particular block. No one can influence the choice of the trusted node, including none of Credits’ team. The implemented policies of the network are the same for all network participants.

Read an article on how Credits consensus works https://credits.com/news/121-credits-blockchain-why-are-we-the-fastest.html

Choice of trusted nodes

In the Bitcoin network, one node creates a new block on the basis of the selection of who has aggregated more resources. This node receives 100% of the reward. 

It's different with Credits. It is always assisted by several nodes working on the principles of the collective agreement of participants on the principles of BFT, checking each other, and choosing trusted nodes. Therefore, the consensus we have developed is called Proof of Agreement.

This is an example https://monitor.credits.com/CreditsNetwork/block/40626082

In this block, there are 11 trusted nodes from a total of 141 nodes. All options: 

A large number of trusted nodes, with an open network, makes Credits’ blockchain one of the most decentralized. Anyone who fulfills the requirements of the network can participate in the consensus and receive a reward. 

Reward

All fees from transactions and smart contracts that were in this block are distributed to all 9 trusted nodes that created this block. In the next round, they may be different. Everything is constantly changing based on the competition and openness of the blockchain.

At the moment, according to the community and node holders, the distributed commissions from transactions are not enough to cover the costs of maintaining the host and have some disadvantages:

Current disadvantages

1. Transaction fees do not cover server host costs

2. There is no motivation to attract new miners, of which there are a lot (total miners can be estimated of around 500k-1M people) around the world

3. If the company is rewarded from coins, it creates a bias towards centralization 

4. Rewards from team coins are limited

5. All this is restricting the launch of an ample staking program 

New mechanism

This is a proposal from the community that the team has brought up for general discussion.

We emphasize that Credits’ blockchain is a decentralized environment based on blockchain principles. That is, that absolutely any node meeting the necessary rules and policies of the network specified earlier can become a trusted node.

Based on the above principles, it is proposed that everyone together should consider introducing additional rewards for trusted nodes which have created a new block. 

Please note that since this is a decentralized environment, all users and trusted owners will benefit from this. Everyone will benefit from mining.

Reward

We would like to propose the implementation of the following system of rewards for trusted nodes on the blockchain protocol. From the network system, all trusted nodes participating in the creation of the block will be rewarded with newly created coins, which will be divided into equal parts between all BFT participants by trusted nodes, which will average around 11 nodes and then will increase to between 13 and 15 nodes. 

Basic terms

We are proposing to introduce certain mechanisms that will limit the amount of performing node runners.

1. Only those who have a volume of CS coins of at least 50K can participate. Some of them can be collected on a wallet from delegated funds.

2. The reward will always be split between the trusted nodes during the round. The reward is always split between 11-15 or more nodes.

3. Real costs are required for the server and its maintenance. The equipment must be powerful and the Internet must be fast.

4. It is necessary to block the amount of CS stake on the account for at least 3 months. If CS is not blocked, then you cannot participate in mining. The lock cannot be removed before the expiration date.

5. Those who want to mine will need to block coins on their accounts for the intervals from 3 to 12 months. The longer the block period is, the higher the reward. The base reward

• When the block term is less than 3 months, compensation is 0%.

• for 3 months - 0.25 CS per block 

• for 6 months - 0.50 CS per block 

• for 9 months - 0.75 CS per block 

• for a 12 month block, it is 1.0 CS per block.

1. To limit the cap value of the participation stake in receiving rewards (mining) to no more than 500K CS for a node with staking. To motivate an increase in the number of nodes requires public discussion.

2. To limit the concentration of more frequent formation of trusted nodes, it is proposed to discuss adding a factor for choosing a random selection of nodes from the number of large stacks (requires public discussion).

Calculation of remuneration

Despite the emission of new coins, all these factors should lead to the fact that the miner will be forced to spend real money on buying new coins (freezing them a minimum of three months) and spending money on hosting servers (approximately min $100 per month). Mining will not be free for node runners.

All this will lead to a significant increase in the motivation for holding coins.

Halving

After every 100 million blocks, which should take about four years, the reward is halved. The total coin pool will last over 40 years and be about 199,804,688 coins. Starting with 1 CS for all trusted nodes for 1 block. In the first year, about 25 million coins will be mined (about 10% of the total coin supply in the first year), then from the 5th year, about 5% per year.

Blockchain Reward Distribution

It has been proposed to introduce a mechanism for distributing rewards between staker accounts in proportion to the contributed stake at the level of the blockchain core. In the case, the Staker can delegate it to the mining account, the blockchain itself will distribute the reward. However, this mechanism needs further development.

Pools and staking program

At the moment, the blockchain has implemented a mechanism for delegating its coins, so that another account can have a larger stake to participate in the consensus. In this case, there is no direct translation. This tool will provide an opportunity to develop pools. These pools will enable the holder, even with a small amount, to delegate them to another to receive a reward for keeping coins at the moment.

 A new ample staking program for CS holders is being structured. 

Staking pool

The team will support them, advertise staking, run nodes, and transfer the coins that have been earned.

1. To add the mechanism into Credits Wallet and create an independent service.

2. To offer people a lock for a long period of 3-9-12 and more months (it is impossible to take money out from account before the end of the lock period)

Important: The mechanism of Mining reward distribution is such that there is no 100% guarantee of getting a reward for the miner. Such a mechanism is similar to Bitcoin/Ethereum.

Launching a new mechanism

The Сredits’ blockchain is an open system owned by CS holders. The platform belongs to the coins' owners, and support of the proposal and decisions on new business initiatives can be taken only by voting.

The approximate implementation period of the new mechanism is about 1-2 months. A test net takes at least 1 month.

We will hold an open vote on the agenda for launching a new mining reward mechanism on Apr 10th 2023. 

The decision will be made by the majority of CS holders to accept or reject the proposal.

Two wallet addresses will be created for the poll. We will share them closer to the election date. To participate you will need to send 0.01 CS to one of the addresses with your opinion (either to approve or disapprove).

Be with us, more announcements on this proposal are to come out shortly.