MIP07: Mythos Token Economics V2

Formal MIP
1

Overview

With the Mythos substrate parachain fully operational and the Mythical Marketplace running efficiently, daily transaction volumes are poised for significant growth. With DMarket’s successful migration, Mythos Chain hosts approximately 6 million user addresses and ~100,000 transactions per day, comprising 1.3M events on-chain daily. These milestones reflect the increasing adoption and utility of the network and underscores the need for enhanced network security and decentralization. To address these needs, this proposal introduces mechanisms aimed at engaging users and allows the Mythos network to incentivize contributions for improved security and decentralization.

Summary of Proposals:

  • Delegated Proof of Stake (DPoS) - To bring greater decentralization to Mythos Chain, the Mythos Foundation proposes to implement a Delegated Proof of Stake (DPoS) system to incentivize highly available and non-collusive performance by Collators.
  • Staking Rewards & Token Supply - to provide sufficient incentives to secure the network, this proposal would implement a system of rewards for collator operators and stakers. In the first twelve (12) months of its implementation, rewards would be distributed from a fixed pool funded by the Mythos Foundation. The final staking reward model for Year 2 and onward will be decided via on-chain governance at a later stage.
  • Gas Fees - In anticipation of dramatic growth in transaction volume, it’s imperative to remove any incentives in the network to negatively impact its performance or cost-effectiveness by network participants and at the collator level. Current gas price levels provide neither a sufficient security budget to prevent attacks nor to subsidize stakeholders securing it. To address all concerns this proposal would:
    • increase gas price parameters by 600% (7x)
    • burn all base gas fees and/tipping fees on the Mythos Chain

Proposal Details

Delegated Proof of Stake (DPoS)

To maintain a robust and sustainable level of security and decentralization, this proposal would implement the following mechanisms:

  • Collator Set: The active set will increase to seven (7) collators able to submit transactions to the Polkadot Relay Chain. The set will include one (1) Invulnerable collator that will persistently be part of the active collator set and will receive no delegated stake nor earn any rewards. The remaining six (6) Candidate collators are eligible to receive delegations and generate rewards.
  • Staking Lock: To participate in staking, token holders must first lock their MYTH before executing any delegation transactions. If stakers wish to transfer their tokens, their MYTH will be subject to an unlocking period – the time it takes for users to withdraw their staked tokens – that will be set to 3 days (43200 blocks). This duration balances user flexibility with network security.
  • Collator Candidacy Requirements: To become a collator, participants must meet an initial self-bond requirement of 100,000 MYTH, ensuring that only committed and capable participants are entrusted with serving as collators to the network. Collators also have a bond unlock delay of 28 days.
  • Collator Delegation: Network participants may delegate their tokens to collators, who produce blocks and secure the network. The top collators, determined by delegated stake, will handle block production, distribute network control and increase security. Stakers may change their delegations at any time, promoting flexibility and allowing delegation based on user preferences and trust. A maximum of 200,000 users may delegate to a given candidate. If all collators are at capacity, a runtime update will be required to add more active collators.
  • Slashing: In the first year, there will be no automated slashing penalties for uptime or other poor performance at the collator level. A governance vote will be required to implement any future slashing penalties.
  • Minimum Stake Requirement (MSR): 500 MYTH minimum required to stake per delegator.
  • Kick Threshold: If a collator stops producing blocks for 12 hours (2 sessions), they will be kicked from the collator set and no longer receive rewards. The collator will also begin the unbonding process and has to either deposit more MYTH to re-bond or wait for the 28-day unbonding period. Users will need to re-delegate to active collators, and can do so without any delay.
  • DAO Voting with Staked Tokens: While staking, users can vote in DAO governance on-chain with their staked MYTH.
  • Exclusively Mythos Chain: While MYTH tokens exist on both Ethereum and Mythos Chain, staking to secure Mythos Chain can only take place natively on Mythos Chain.

Staking Rewards & Token Supply

  • 1st Year – 50m MYTH Pool: The Mythos Foundation will fund a fixed 50 million MYTH staking rewards pool. This fixed pool will be distributed linearly over the course of the year on a stake-proportional basis (e.g., assuming one’s delegated collators miss no blocks or rewards, 1% of the total stake in a given period earns 1% of that period’s rewards.)
  • After 1st Year: The MYTH fully diluted supply is fixed at 1B MYTH across Mythos Chain and Ethereum. During the 1st year, Mythos Foundation will collect data on transaction volumes, gas fees and network performance to determine an appropriate long-term plan for funding staking rewards in subsequent years. In the meantime, this proposal’s approval would require Mythos Foundation to provide an additional annual 50 million MYTH rewards pools to maintain rewards distribution indefinitely until a new MIP establishing the long-term funding plan is ratified.
  • Auto-Compounding of Staking Rewards: Staking rewards can auto-compound for users whose balance exceeds 2,500 MYTH. Users must claim their rewards manually, allowing control over when to realize rewards.
  • Maximum Time for Unclaimed Rewards: Users must claim their rewards periodically with a maximum time between claims set to two years. Rewards that are unclaimed after two years will be burned.
  • Collator Commissions: Each candidate collator can charge a commission on the staking rewards earned by their delegators. This proposal will not set a hard-coded minimum or maximum at this time, but a suggestion of 10% is the default value.

Gas Fees

On-chain transactions now exceed 3m+ per month with more than 75% driven by NFT game asset trades. In anticipation of explosive transaction volume growth, it’s critical to deter any incentives to spam the network or submit empty transactions that may congest the network, especially at peak times. Presently, gas fees on the Mythos chain are significantly lower than those on comparable networks like Base, Polygon, and Ethereum. A typical transfer costs about 0.013 MYTH (~$0.0026). This is a factor of 10-100 lower than other chains. Even if transaction volumes increase by 10-20x, such gas fees would provide neither a sufficient security budget nor sufficient rewards to sustain collator operations. To address these concerns, this proposal would execute the following changes:

  • Base Price Increase & Future Tipping - This proposal would increase the gas base price by 600% (i.e. 7x) the current amount MYTH per on-chain event while the network is operating below congestion thresholds. Should the network reach congestion levels, future adjustments by DAO governance may be required.
  • Gas Fee Burn - This proposal would implement a burn mechanism (i.e. removal of MYTH from fully diluted token supply) of both base and priority / tip fees generated as a result of on-chain transactions. Applying similar logic to Ethereum’s EIP-1559, the removal of gas fees as a direct contributor to collator or staking rewards removes the incentive to drive up empty transactions alleviating congestion or excessive tipping on the network. Of course, gas fee burns will only apply to transactions generated on the Mythos Chain paid in MYTH and will have no effect on MYTH-related transactions on the Ethereum blockchain.
  • Collected Gas Fees - Initially, the network was designed to deposit all gas fees on the Mythos chain into a pool for use by the Mythos Foundation. The pool was intended to provide incentives for further development on the network. At present, the Mythos Foundation is sufficiently funded to carry out its mission.

Code and Security

  • Expert Guidance and Auditing: The staking and rewards system code has been developed with guidance from Parity Technologies and will undergo a full audit to ensure high security and functionality standards before deployment. The audit results will be shared with the community for transparency. Additionally, final parameters may depend on the advice or feedback from auditors to ensure the security and functionality of the staking mechanism. If significant changes are warranted, an amendment to this proposal will be publicized.
  • Open-Source Commitment: The collator-staking pallet will be delivered as open-source software, available in a public repository under the BlockDeep GitHub organization and licensed under the Apache-2.0 license. This ensures full transparency and community accessibility. GitHub - blockdeep/pallet-collator-staking: A simple DPoS pallet for collators in a parachain.

Conclusion

Adopting a DPoS model, positions Mythos to benefit from proven advantages in decentralization, user participation, and network security, as demonstrated by networks like Ethereum and Polkadot. The implementation of staking will provide a scalable, secure, and community-driven foundation for future growth. Coupling a consistent staking rewards program with a burn mechanism for gas fees will allow the network to grow based on real demand without conflicting incentives.

By carefully planning staking mechanics and making data-driven decisions, Mythos is doing everything it can to ensure its transformation into a robust, decentralized, and highly participatory ecosystem. The commitment to transparency through open-source contributions and collaboration with leading blockchain experts will strengthen the Mythos chain as it moves into its next phases of growth.

Community members and stakeholders are encouraged to participate in the discussion and implementation of this proposal. Your insights and feedback are valuable in shaping the future of the Mythos network.