Update on fee structure.
Dear Mina community,
This report will go over what Piconbello has done so far for the Mina ecosystem this year, as well as the path forward from now on.
This year has been great for the Mina ecosystem, since the ecosystem that we are striving for has its first steps planned and taken. As Piconbello, we have been present in every ZkIgnite from ZkIgnite 0, as a mentor and various needed roles. Since ZkIgnite has been full of developers that need both some consultancy and some idea sharing, we have always tried to pass our knowledge and assist the developers that have been already working on the ecosystem.
We strongly believe that one of the fundamental problems still existing in the general blockchain ecosystem is the sybil issue, hence we made a lot of research, brainstorming and development around the idea of attacking the sybil issue through some external, secure and private verification of one’s liveliness and identity.
For the infrastructure that we have been running, we ran various infrastructure tool testing that Mina ecosystem offers, to ensure we are up to date with the infrastructure tools, as well as give feedback/catch some bugs if necessary.
The long awaited and delayed hard fork will bring the supercharged rewards to an end, hence for most of the people, their rewards will be cut in half. The idea of supercharged rewards was great from inception, since it created a great incentive for people to stake their balances and participate in the chain’s security, as well as getting increased rewards. It has been quite a long time since the Genesis, hence the supercharged rewards, now it is rather not needed and dilutes the investors’ staked balance.
With the upcoming fork, our expectation is early January of next year, it is not only the rewards of stakers’ that are being cut but also the validators’. Hence, we would like to announce that within the first epoch of 2024, that is the epoch 68, which will be between 23rd of December and 6th of January, we will raise our validator fee from 2% to 4%. This is a requirement for most of the validators like us, since staking rewards being nearly halved also means our income is being halved.
Just like last year, in which we increased our fee from 0% to 2%, let’s take a look at an artificial example of an investor staking to us, and briefly compare how the rewards change if we had 4% for this year.
Let’s assume Alice, a staker delegated to us, starts staking with 1000 Mina, at epoch 42. She will take the first rewards by the end of epoch 44, which was the first epoch that we started taking 2% fee. Below, you will see a table consisting of our yearly returns. APRs that we announce have always been feeless, hence the table below is feeless APRs, yet during the period given, we have 2% fee and rest of the calculations were carried with this in mind.
The table below shows how Alice’s balance changes with a 2% fee, what we applied during the timeframe, and how it would be if we had a 4% fee during that period instead. The balances that are given are the balances of Alice during that epoch, assuming Alice has never added any new balance and only gets staking rewards.
As it can be seen from the table above, with a 2% fee, Alice has gained around 155 Mina as staking rewards. If the fee was 4%, she would have gained around 151 Mina, around 3 Mina would be taken by us in addition to the existing validator fee.
If you are not happy with the changes that are being introduced and want to redelegate to someone else, you need to change your delegation at latest on the 66th epoch, which will make you gain 2% fee rewards at 67th and 68th epoch for the last time.
Hence, we believe that the difference that we are introducing as a fee is again competitive enough across the ecosystem and sustainable for our operations after the upcoming fork.
As Piconbello, we strive for Mina’s progress and success. With the upcoming fork and new releases, we strongly believe that Mina will stand out with its technology and usability, giving the community a strong ecosystem as a result.
