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Fix cluster economics figures and spelling in docs (#8502)
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jstarry authored Feb 27, 2020
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4 changes: 3 additions & 1 deletion docs/src/implemented-proposals/ed_overview/README.md
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Transaction fees are market-based participant-to-participant transfers, attached to network interactions as a necessary motivation and compensation for the inclusion and execution of a proposed transaction \(be it a state execution or proof-of-replication verification\). A mechanism for long-term economic stability and forking protection through partial burning of each transaction fee is also discussed below.

A high-level schematic of Solana’s crypto-economic design is shown below in **Figure 1**. The specifics of validation-client economics are described in sections: [Validation-client Economics](ed_validation_client_economics/), [State-validation Protocol-based Rewards](ed_validation_client_economics/ed_vce_state_validation_protocol_based_rewards.md), [State-validation Transaction Fees](ed_validation_client_economics/ed_vce_state_validation_transaction_fees.md) and [Replication-validation Transaction Fees](ed_validation_client_economics/ed_vce_replication_validation_transaction_fees.md). Also, the section titled [Validation Stake Delegation](ed_validation_client_economics/ed_vce_validation_stake_delegation.md) closes with a discussion of validator delegation opportunties and marketplace. Additionally, in [Storage Rent Economics](ed_storage_rent_economics.md), we describe an implementation of storage rent to account for the externality costs of maintaining the active state of the ledger. [Replication-client Economics](ed_replication_client_economics/) will review the Solana network design for global ledger storage/redundancy and archiver-client economics \([Storage-replication rewards](ed_replication_client_economics/ed_rce_storage_replication_rewards.md)\) along with an archiver-to-validator delegation mechanism designed to aide participant on-boarding into the Solana economy discussed in [Replication-client Reward Auto-delegation](ed_replication_client_economics/ed_rce_replication_client_reward_auto_delegation.md). An outline of features for an MVP economic design is discussed in the [Economic Design MVP](ed_mvp.md) section. Finally, in [Attack Vectors](ed_attack_vectors.md), various attack vectors will be described and potential vulnerabilities explored and parameterized.
A high-level schematic of Solana’s crypto-economic design is shown below in **Figure 1**. The specifics of validation-client economics are described in sections: [Validation-client Economics](ed_validation_client_economics/), [State-validation Protocol-based Rewards](ed_validation_client_economics/ed_vce_state_validation_protocol_based_rewards.md), [State-validation Transaction Fees](ed_validation_client_economics/ed_vce_state_validation_transaction_fees.md) and [Replication-validation Transaction Fees](ed_validation_client_economics/ed_vce_replication_validation_transaction_fees.md). Also, the section titled [Validation Stake Delegation](ed_validation_client_economics/ed_vce_validation_stake_delegation.md) closes with a discussion of validator delegation opportunities and marketplace. Additionally, in [Storage Rent Economics](ed_storage_rent_economics.md), we describe an implementation of storage rent to account for the externality costs of maintaining the active state of the ledger. [Replication-client Economics](ed_replication_client_economics/) will review the Solana network design for global ledger storage/redundancy and archiver-client economics \([Storage-replication rewards](ed_replication_client_economics/ed_rce_storage_replication_rewards.md)\) along with an archiver-to-validator delegation mechanism designed to aide participant on-boarding into the Solana economy discussed in [Replication-client Reward Auto-delegation](ed_replication_client_economics/ed_rce_replication_client_reward_auto_delegation.md). An outline of features for an MVP economic design is discussed in the [Economic Design MVP](ed_mvp.md) section. Finally, in [Attack Vectors](ed_attack_vectors.md), various attack vectors will be described and potential vulnerabilities explored and parameterized.

![](../../.gitbook/assets/economic_design_infl_230719.png)

**Figure 1**: Schematic overview of Solana economic incentive design.
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**Subject to change.**

Long term economic sustainability is one of the guiding principles of Solana’s economic design. While it is impossible to predict how decentralized economies will develop over time, especially economies with flexible decentralized governances, we can arrange economic components such that, under certain conditions, a sustainable economy may take shape in the long term. In the case of Solana’s network, these components take the form of token issuance \(via inflation\) and token burning.
Long term economic sustainability is one of the guiding principles of Solana’s economic design. While it is impossible to predict how decentralized economies will develop over time, especially economies with flexible decentralized governances, we can arrange economic components such that, under certain conditions, a sustainable economy may take shape in the long term. In the case of Solana’s network, these components take the form of token issuance \(via inflation\) and token burning.

The dominant remittances from the Solana mining pool are validator and archiver rewards. The disinflationary mechanism is a flat, protocol-specified and adjusted, % of each transaction fee.

The Archiver rewards are to be delivered to archivers as a portion of the network inflation after successful PoRep validation. The per-PoRep reward amount is determined as a function of the total network storage redundancy at the time of the PoRep validation and the network goal redundancy. This function is likely to take the form of a discount from a base reward to be delivered when the network has achieved and maintained its goal redundancy. An example of such a reward function is shown in **Figure 3**
The Archiver rewards are to be delivered to archivers as a portion of the network inflation after successful PoRep validation. The per-PoRep reward amount is determined as a function of the total network storage redundancy at the time of the PoRep validation and the network goal redundancy. This function is likely to take the form of a discount from a base reward to be delivered when the network has achieved and maintained its goal redundancy. An example of such a reward function is shown in **Figure 1**

**Figure 3**: Example PoRep reward design as a function of global network storage redundancy.
![](../../.gitbook/assets/porep_reward.png)

In the example shown in Figure 1, multiple per PoRep base rewards are explored \(as a % of Tx Fee\) to be delivered when the global ledger replication redundancy meets 10X. When the global ledger replication redundancy is less than 10X, the base reward is discounted as a function of the square of the ratio of the actual ledger replication redundancy to the goal redundancy \(i.e. 10X\).
**Figure 1**: Example PoRep reward design as a function of global network storage redundancy.

In the example shown in **Figure 1**, multiple per PoRep base rewards are explored \(as a % of Tx Fee\) to be delivered when the global ledger replication redundancy meets 10X. When the global ledger replication redundancy is less than 10X, the base reward is discounted as a function of the square of the ratio of the actual ledger replication redundancy to the goal redundancy \(i.e. 10X\).

2 changes: 1 addition & 1 deletion docs/src/implemented-proposals/ed_overview/ed_mvp.md
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**Subject to change.**

The preceeding sections, outlined in the [Economic Design Overview](./), describe a long-term vision of a sustainable Solana economy. Of course, we don't expect the final implementation to perfectly match what has been described above. We intend to fully engage with network stakeholders throughout the implementation phases \(i.e. pre-testnet, testnet, mainnet\) to ensure the system supports, and is representative of, the various network participants' interests. The first step toward this goal, however, is outlining a some desired MVP economic features to be available for early pre-testnet and testnet participants. Below is a rough sketch outlining basic economic functionality from which a more complete and functional system can be developed.
The preceding sections, outlined in the [Economic Design Overview](./), describe a long-term vision of a sustainable Solana economy. Of course, we don't expect the final implementation to perfectly match what has been described above. We intend to fully engage with network stakeholders throughout the implementation phases \(i.e. pre-testnet, testnet, mainnet\) to ensure the system supports, and is representative of, the various network participants' interests. The first step toward this goal, however, is outlining a some desired MVP economic features to be available for early pre-testnet and testnet participants. Below is a rough sketch outlining basic economic functionality from which a more complete and functional system can be developed.

## MVP Economic Features

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## Storage Rent Economics

Each transaction that is submitted to the Solana ledger imposes costs. Transaction fees paid by the submitter, and collected by a validator, in theory, account for the acute, transacitonal, costs of validating and adding that data to the ledger. At the same time, our compensation design for archivers (see [Replication-client Economics](ed_replication_client_economics.md)), in theory, accounts for the long term storage of the historical ledger. Unaccounted in this process is the mid-term storage of active ledger state, necessarily maintined by the rotating validator set. This type of storage imposes costs not only to validators but also to the broader network as active state grows so does data transmission and validation overhead. To account for these costs, we describe here our preliminary design and implementation of storage rent.
Each transaction that is submitted to the Solana ledger imposes costs. Transaction fees paid by the submitter, and collected by a validator, in theory, account for the acute, transactional, costs of validating and adding that data to the ledger. At the same time, our compensation design for archivers (see [Replication-client Economics](ed_replication_client_economics.md)), in theory, accounts for the long term storage of the historical ledger. Unaccounted in this process is the mid-term storage of active ledger state, necessarily maintained by the rotating validator set. This type of storage imposes costs not only to validators but also to the broader network as active state grows so does data transmission and validation overhead. To account for these costs, we describe here our preliminary design and implementation of storage rent.

Storage rent can be paid via one of two methods:

Method 1: Set it and forget it

With this approach, accounts with two-years worth of rent deposits secured are exempt from network rent charges. By maintaining this minimum-balance, the broader network benefits from reduced liquitity and the account holder can trust that their `Account::data` will be retained for continual access/usage.
With this approach, accounts with two-years worth of rent deposits secured are exempt from network rent charges. By maintaining this minimum-balance, the broader network benefits from reduced liquidity and the account holder can trust that their `Account::data` will be retained for continual access/usage.

Method 2: Pay per byte

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As previously mentioned, validator-clients will also be responsible for validating PoReps submitted into the PoH stream by archiver-clients. In this case, validators are providing compute \(CPU/GPU\) and light storage resources to confirm that these replication proofs could only be generated by a client that is storing the referenced PoH leger block.

While replication-clients are incentivized and rewarded through protocol-based rewards schedule \(see [Replication-client Economics](../ed_replication_client_economics/README.md)\), validator-clients will be incentivized to include and validate PoReps in PoH through collection of transaction fees associated with the submitted PoReps and distribution of protocol rewards proportional to the validated PoReps. As will be described in detail in the Section 3.1, replication-client rewards are protocol-based and designed to reward based on a global data redundancy factor. I.e. the protocol will incentivize replication-client participation through rewards based on a target ledger redundancy \(e.g. 10x data redundancy\).
While replication-clients are incentivize and rewarded through protocol-based rewards schedule \(see [Replication-client Economics](../ed_replication_client_economics/README.md)\), validator-clients will be incentivized to include and validate PoReps in PoH through collection of transaction fees associated with the submitted PoReps and distribution of protocol rewards proportional to the validated PoReps. As will be described in detail in the Section 3.1, replication-client rewards are protocol-based and designed to reward based on a global data redundancy factor. I.e. the protocol will incentivize replication-client participation through rewards based on a target ledger redundancy \(e.g. 10x data redundancy\).

The validation of PoReps by validation-clients is computationally more expensive than state-validation \(detailed in the [Economic Sustainability](../ed_economic_sustainability.md) section\), thus the transaction fees are expected to be proportionally higher.

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