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Masternodes: DAPS Block Reward Detail Part 1

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  • Masternodes: DAPS Block Reward Detail Part 1

    Of the three pieces of DAPS, masternodes are the easiest to calculate the estimated block rewards. Each masternodes has a guaranteed reward, in return for securing the network and enabling certain features of the blockchain. This guarantee means we can obtain a pretty good idea of how the rewards are distributed. I will describe the method of calculation, then provide a couple resources to help illustrate and visualize the reward landscape. We will calculate for 365 days for one masternode. If you grasp how it's done, you can change the formula as you wish to match your own network projections.

    First we have the total block reward of 1050 DAPS. 50 DAPS are paid to the Dev fund, then 100 DAPS go to PoA mining. This leaves a remainder of 900 DAPS to split between staking and masternodes. For 40% masternode dominance, 60% of the reward goes to the masternode. 540 DAPS go to the winning masternode for each block. There will be approximately 1440 blocks per day.

    1050 - 50 = 1000
    1000 - 100 = 900
    900 * 60% = 540
    540 * 1440 = 777,600
    777,600 * 365 = 283,824,000 total DAPS minted across all masternodes per year

    So that's simple enough, but the distribution depends on two variables: the total number of masternodes on the network and the ratio of the number of Masternodes to the number of staking nodes (Masternode Dominance). There is a maximum capacity of 60,000 masternodes that can possibly run on the DAPS network. It is fair to assume this will never happen. 24,000 is 40% of the maximum capacity, so any more than this will force the masternode dominance over 40%, assuming the entire other 60% of the network is staking. This is also an unlikely situation. We will assume for the entire range of the DAPS lifespan, there will never be more than 20,000 masternodes. In all likelihood, it will be far less than this. We will also assume a minimum of 500 nodes, as this is a fairly low number and any number under this will have an obscenely high ROI. We will call the range between 500 and 20,000 "x".

    Then there is the Masternode Dominance. DAPS uses a system that re-balances the rewards if between 40-60% of the total nodes on the network are masternodes. If the Masternode Dominance is 40%, masternodes receive 60% of the block reward. As the Masternode Dominance increases from 40%, that same amount will be taken from the percentage of the masternode block reward and added to the staking node block reward, up to 60% Masternode Dominance. This mechanism creates a balance between the two methods of securing the network, and create opportunities for more advanced market dynamics. We will call the range of Masternode Dominance "y".

    We can create a 3D surface plot from these numbers to visualize all these possibilities at once, instead of doing a new calculation for each specific network projection we may have.*(100-(y%2F1000))*1440*365)%2Fx)%2F1000000&xRange=500%2C %2B20000&yRange=40000%2C%2B60000&resolution=50

    So, "x" is the number of masternodes on the network and "y" is the Masternode Dominance. The "z" expression calculates the percent ROI for every number in the two ranges. But why is the "y" value 40,000 to 60,000 not between 40 and 60? It is to compensate for the resolution of this particular chart creator, and if I didn't, the chart produced is not easy to use. See for yourself.

    Let's break it down.


    We know that the first part, (1050-150), is line 1 and 2 from the first set of calculations a few paragraphs ago. Which means the next part, *(100-(y/1,000)), takes the Masternode Dominance in the range and converts it to a number between 40 and 60, essentially making it a percentage, and multiply this by the first part. Next, *1440*365), takes that number, and multiplies it by the number of minutes in a day, then the number of days in a year. So the output of this part of the equation, (((1050-150)*(100-(y/1000))*1440*365), is the same as the output of line 5 of the first set of calcuations on the y = 40,000 line on the graph.

    Now we divide this output by the number of masternodes "x". This shows how much of the total yearly masternode emissions goes to 1 masternode on the "x" axis. The last division, /1000000, takes masternode collateral into account.

    We can also display the actual number of DAPS produced per masternode by changing the /1000000 figure into /100. Doing this removes the masternode collateral and leaves the amount produced by 1 masternode per year with y number of masternodes.

    To convert to BTC value, multiply the amount produced per masternode per year by the value in decimal BTC. To obtain USD, multiply that number by the current bitcoin price.

    For the sake of thouroughness, the simplified equation for DAPS MN percent ROI is ((900(100-y)t)/x)/1,000,000, where y is the masternode dominance as a number between 40 and 60, t is the desired timeframe in minutes, x is the total masternodes on the network.

    Feel free to try it out for yourself, and let me know if I've made any mistakes (especially in the last algebraic formula)! Before I started really diving into the rewards, I had never even heard of a 3D surface plot, and I have no formal education in mathematics. You never know what you can achieve if you just try to do it.
    Last edited by CloudOne; 5th September 2019, 11:47 AM.