Since we updated our White Paper, infrastructure and token model our community has had a number of questions about how this will work in practice, as well as plenty of helpful feedback. This article presents some of the key ideas in more detail, including relevant figures and estimates.
The LaborX marketplace and its economy will be hosted on an Ethereum sidechain due to the cost improvements and efficiency that this approach offers over the main chain. TimeX, ChronoBank’s decentralised exchange, will also be hosted on the same sidechain. You can read about the basics of the LaborX sidechain and economy in this article:
We are going to use Parity and Pluggable Consensus for our sidechain. This is a powerful way of launching a sidechain with pre-set mining parameters built in. The default consensus method is the same PoW algorithm that the main Ethereum blockchain uses, but there are others. This is extremely helpful for our application, because it enables us to use TIME as a staking token.
Users who deposit sufficient TIME tokens to a smart contract will be able to participate in the mining and staking process, similar a node in a conventional PoS system. More accurately, it is a delegated Proof-of-Stake or dPoS system, rather than vanilla PoS. If you don’t have enough TIME tokens, or don’t want to mine directly for one reason or another, you can delegate or ‘lease’ your tokens to the ChronoBank mining pool and earn Labour-Hour tokens (LH tokens or LHT) that way, minus a commission fee.
Holders who don’t lock their TIME in the smart contract can still act as node validators on the sidechain, though without receiving rewards for mining blocks. No specialist and costly mining hardware is required, and a regular VPS is perfectly adequate for running a node. Node validators help ensure the security and stability of the sidechain and still play an important role in maintaining the ecosystem, just as non-mining full nodes do in the Bitcoin network.
Block rewards themselves are dependent on at least two factors. Firstly, the amount of TIME locked, as a proportion of the total TIME locked by all miners. The more you lock, the more LH tokens you will earn. Secondly, the number of mining nodes on the network. Mining nodes are selected on a round robin basis that does not depend on the amount of TIME they hold (unlike bitcoin miners’ hashrate). There is no weighting by stake. However, the LHT rewards they receive are proportional to the TIME they hold. A miner who has 100000 TIME has an equal chance of mining a block as one with 10000, but would receive 10 times higher earnings. Parameters for fee distribution to miners can be changed as the ecosystem develops, to make the system as attractive as possible to all stakeholders.
Let’s assume the minimum amount of TIME required to serve as a node on the LaborX sidechain is 10000 TIME. We will also assume that the initial block rewards are 0.01 LHT for every 10000 TIME staked.
Take the case of a mining pool owner who has 50000 TIME on deposit. The pool owner will receive 0.05 LHT per block. As the market grows, block rewards may be increased; initially, rewards need to stay low to avoid flooding the market with excess LHT supply from miners.
ChronoBank Mining Pool
Now let’s look at the specific example of the ChronoBank mining pool. We will set the commission fee at 10%, so a user who delegates 1000 TIME will receive 0.0009 LHT for each block found by ChronoBank’s nodes. (The average block time is 3–5 seconds.)
It is important to stress that setting up a mining node doesn’t require users to provide a private key. TIME can be delegated to a mining account, reducing the security risk. The table below gives some sample figures for revenues in different cases.
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