Today we received three major updates regarding the future of the eCash project:
- Staking rewards scheduled to launch on November 15, 2023
- Staking rewards to make up 10% of the block reward
- The IFP going from 8% to 32% of the block reward
After months of speculation, eCash supporters finally got word regarding the long awaited launch of staking rewards. They are set to coincide with the regularly scheduled network upgrade happening on November 15, 2023, which means those who run an Avalanche enabled eCash node will get to enjoy 5 months of staking rewards before the upcoming halving expected to occur sometime in April of 2024.
We also found out that the initial reward will be set at 10% of the block reward. That means 625,000 XEC will be rewarded to stakers with each block that is mined. There are currently 98.2B XEC staked in total. If that number doesn’t change when staking rewards launch, the annual percentage yield will be 33.4%. The way this is calculated is:
6.25M XEC per block x 10% x 144 blocks per day x 365 days per year = 32.85B XEC per year.
32.85B XEC/ 98.2B XEC = 33.4%
After the halving in April, that amount will be reduced by half to 16.7% since the block subsidy will be cut in half. (Transaction fees do not undergo a halving, but they are so negligible at this point they are not worth mentioning.)
These figures are also subject to change should the 98.2B XEC that is currently staked increase (or decrease) by the time staking rewards are activated. Though it is impossible to know with any certainty, my guess is we will see a slow but steady rise in the amount of XEC staked as we head towards November 15 and beyond.
As of this writing, there are 23 avalanche peers in total (source: ecash.coin.dance/avalanche). I’m happy to report that the 23 peers who are staking their XEC today represent a wide range of eCash holders with large and small holders alike. Seven stakers hold more than 10B XEC with the largest at nearly 18B, while ten stakers are doing so with anywhere from 100M to 200M XEC.
Though more stakers will lead to a lower APY for anyone who is already staking, I’d love to see hundreds of peers come online in the weeks and months ahead to both increase the network’s decentralization and security.
Last but not least, we also discovered that the amount of funding to pay for development and infrastructure will go from 8% of the block reward to a whopping 32%. Considering the upcoming halving, I see this as a necessary move to ensure there will be enough funding to keep the project going even if prices were to remain flat for the foreseeable future. Currently 8% of the block reward is the equivalent of 26.28B XEC per year, or $622K at the current price of $23.67 per 1M XEC.
Half of that amount goes into directly paying for the work of Bitcoin ABC, with the other half going to the Global Network Council (GNC) whose members decide what projects to fund in order to benefit the eCash ecosystem. Previously, the GNC has funded projects like the Chronik indexer, the recently launched PayButton project, as well as community rewards programs.
While some may see this change in a negative light, I consider it a huge improvement on the current state. $622,000 a year is frankly not enough to fund a project that is trying to achieve the kind of scale that eCash is striving for, but to then suddenly reduce that number by 50% would have been unthinkable.
As someone who has been closely monitoring the IFP address since its inception, I have the utmost confidence in both ABC and the GNC to use those funds wisely. Over the past three years I have watched them accomplish a great deal with minimal funding. They didn’t use the money to throw themselves lavish parties or collect a paycheck while doing little work. And despite having to endure one of the longest bear markets in the history of crypto, they never wavered. I saw no signs of them giving up or abandoning the project. They just kept building.
This is why I think they’ve earned the right to increase the IFP amount and can’t wait to see what they can accomplish with more money at their disposal, especially if the price of XEC can rebound and offer even more wiggle room going forward.
I want to finish off by saying I love how the eCash community seems to have immediately embraced these changes by realizing how they benefit the project overall. It demonstrates to me that the eCash community is aligned in its values, its goals, and its commitment to the long-term success of the project.