The issuance of currency is a very important aspect in any cryptocurrency project. It is a fundamental part of the identity of a blockchain project and in the case of CREA it is a main element to interact in the social network and use all the services it offers.
In this post we will focus on explaining the system based on a variable annual inflation percentage and the number of CREA tokens that will be activated with the release of version 2.0.
The current version 1.0 of CREA uses the consensus protocol known as Proof-of-Work (PoW) and distributes a reward for each mined block of 34 CREA. Every day, an average of 535 blocks are generated by the process known as mining, which means an emission of 18,000 new CREA per day and currently causing an annual inflation of around 40%.
This high percentage of daily coin issuance was designed to distribute CREA as much as possible during the first year of development of the platform. Afterwards, the blockchain was configured to decrease this reward by following a sequence of fibonacci arriving to offer a 1 CREA per block that would take approximately 80 years to arrive.
This was not the best decision in the design of the blockchain, since at present these inflationary parameters are creating pressure on the CREA price. This is due to the high number of currency issued daily and how affordable it is for a minority of users to mine it with specialized hardware or very cheap electricity.
One of the most important changes incorporated in the new version 2.0 is the implementation of a new consensus system known as Delegated Proof-of-Stake (DPOS) with a maximum of 25 witnesses (nodes) for each round of block validation.
DPOS is a more advanced and efficient system than the PoW system. With the activation of version 2.0, the enormous energy expenditure of the POW system and the distribution of 100% of the rewards issued by the blockchain to the miners that support the network in version 1.0 will no longer be necessary.
In the new version 2.0 the rewards will be much more distributed in proportion between the stakeholders that use the network: 70% for authors and curators of content, 15% among the holders of the token and the remaining 15% among the witnesses of the network.
How does the cryptocurrency issuing system work in CREA 2.0?
In CREA 2.0 the issuance of new currency will be based on a percentage of inflation over the total currency existing at the time.
The initial inflation will be 8% of the total supply and each 300,000 blocks (10 days approx) will drop 0.01%, so in a year we will go from an annual inflation of 8% to 7.65% until reaching 1% in 20 years.
If, for example, we start this issuance system with a circulating supply of 16.5 million CREA, 3616 CREA will be created per day.
With the Graphene technology that will be implemented in CREA 2.0, the speed of the blockchain increases and 1 block will be created every 3 seconds. This way, 28800 blocks will be created daily. This means that, if we start with an issue based on 8% inflation, 0.125 CREA will be generated per block.
To calculate the amount of new CREA issued by the system each time a block is produced, the following formula must be applied:
NEW_CREA_per Block = (virtual_monetary_mass * current_inflation_rate) / (10000 * BLOCKS_PER_YEAR)
Virtual_monetary_mass: It is the monetary mass of CREA (amount of CREA in circulation) + the monetary mass of CBD (if the CBD were converted to CREA at the price of that moment)
current_inflation_rate: The exact inflation value that will start at 8%.
BLOCKS_PER_YEAR: Fixed value of 10,512,000. A new block every 3 seconds results in 10,512,000 new blocks per year.
Of the total issued, 70% will be distributed among authors and curators, that is, those people who contribute value to the social network by publishing quality content, evaluating and voting the content. 15% will go to the owners of CREA Energy (CGY), always calculating that it is 15% of all existing tokens at the time and that will be distributed proportionally to the total accumulated by each user at the exact moment of the distribution.
Finally, there is a 15% that is distributed among a total of 25 witnesses that will vary (entering and leaving the list) according to the proportion of votes obtained by the users.
The blockchain of CREA 2.0 presents a more sustainable and controlled currency issue solution based on real-time inflation over the total currency issued at that time. At the same time, the reward is distributed to a greater or lesser extent to each and every one of the users of the network. Therefore, the currency will increase its distribution level since it is distributed to a greater number of people, converting all the users of the social network into CREA shareholders.
When going from version 1.0 to 2.0, it will go from issuing 18000 CREA per day to 3616 CREA per day. This will radically increase the shortage and difficulty of getting the cryptocurrency.
Undoubtedly, the new currency issuance system will bring more value to all the parties that make up the CREA ecosystem.
At this moment, with only a few weeks left for the launch of CREA 2.0, there is a very favorable transition scenario for miners and hodlers, since getting a lot of CREA won’t be so easy again.
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