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What is Static Rewards?

Kieren Hyland
18 Dec 2018

NavCoin 4.5.1 is now available for download! And along with it is a soft fork for ‘static rewards’ (that turns on when 75% of nodes signal for this fork).

NavCoin 4.5.1 is now available for download! And along with it is a soft fork for ‘static rewards’ (that turns on when 75% of nodes signal for this fork).

This is essentially a change to the Proof of Stake algorithm, and the mechanism for how stakers are rewarded. As the Core Developers manifesto states: “we will always operate in the best interest of the network” and this change aims to do exactly that.

Currently, NavCoin uses ‘coin age’ to determine how much NAV you receive when staking a block. What this means is the amount of NAV changes to ensure you receive roughly 4% after a years time.

So why is this a problem?

It makes it easy to get reward 4% per year, without actually staking the network. You could turn on staking at the start of the year, turn it off, and then just before a year has passed you could turn it back on and receive the full 4% amount.

This doesn’t benefit the NavCoin network. In order to be protected against malicious attacks, the more NAV staking at any one time increases the cost to pull off an attack.

Introducing static rewards

Static rewards are part of the Proof of Stake version 3 specifications and aim to increase network security through incentivising stakers to remain online as much as possible. Instead of a variable amount, stakers will receive 2 NAV every time they stake.

How does this change inflation?

At the moment, inflation is very low and sitting around 1.2%. While stakers receive 4% per year - there is usually only 25-30% of NAV used in staking, which is why the total inflation rate is only 1.2%.

If implemented - static rewards will mean that NavCoin has ‘fixed’ inflation. There will always be roughly 2,102,400 NAV created per year for staking and 525,600 NAV per year created for the community fund totalling 2,628,000 new NAV created per year. This equals an initial inflation rate of 4.1%.

The benefit of static rewards is that 4.1% is the maximum inflation rate NavCoin will have. As each year passes, the new coins make up a smaller & smaller amount relative to the total coins over time - effectively decreasing the inflation rate over time.

Will the amount of NAV I receive when staking increase or decrease?

It is likely to increase to be at a minimum of 4% per year, and at the higher end 11%. This changes based on how many stakers there are - fewer participants means you’re more likely to stake, which means you receive more NAV. You can see Craig’s original post here for more detail on this.

What is the best way to stake?

You essentially have two options for how to stake:

  • Hardware options (NavPi & NavDroid) for staking are generally the best option, as they can run 24 hours a day while using only small amounts of electricity. This will require the purchase of a hardware device (an ODROID is recommended).
  • The easiest way is to install a full wallet on your computer and have it running in the background. Although to maximise your opportunities to stake, we would recommend eventually moving to a dedicated hardware option.

We will soon be releasing an article that goes into more detail the best way to do this.

Download the latest wallet

So download the latest wallet here!

Kieren Hyland
18 Dec 2018