Mining Program

This page explains the participation mining program.

The Kinto Mining Program is pending launch via a proto-governance proposal ENIP-3. It needs to be ratified by $ENGEN token holders and is scheduled to start in June 2024.

2,000,000 tokens will be initially allocated to the Mining Program, representing 20% of the initial total token supply. An additional 3M tokens will be distributed over the following years, up to a total of 5M tokens, or 33% of the max supply.

You can read the initial Medium announcement here.

TLDR

  • The Mining Program lasts for approx. 10 years. Rewards are front loaded and slowly decrease over time.

  • Between 20% and 33% of the max token supply will be allocated to the mining program.

  • The mining program rewards active users who deposit capital and app developers whose contracts receive that capital.

  • Prioritize active allocation of capital to protocols; idle capital receives less rewards.

  • KINTO Rewards are calculated off-chain and assigned on-chain weekly. Users and developers can claim their rewards into their wallet at any time from their dashboard.

  • The longer capital is deployed, the more Kinto tokens it is earning.

  • The more capital is deployed, the more Kinto tokens it is earning.

  • Engen founding members who hold $ENGEN Tokens will receive a permanent 15% bonus on their rewards.

Supply Curve

Let’s start with the supply curve. The supply curve is designed to optimize the protocol's long-term sustainability. The rewards are front-loaded, slowly decreasing quarter by quarter.

Participation rewards will run for at least 10 years. We are targeting a specific number of rewards per quarter, but the protocol may under-allocate or over-allocate depending on the market conditions.

Here is how we will calculate the rewards target for a given quarter E:

RewardsQuarter(E)=Rq(E)=RPβˆ’RPβˆ—(1/1.05)Eβˆ’RpSpent(E)RewardsQuarter(E)=R_q(E) = RP -RP*(1/1.05)^E - RpSpent(E)
RP=KINforMiningProgram=4,000,000RP = KIN for Mining Program = 4,000,000
RpSpent(E)=RewardsSpentUntilERpSpent(E) = Rewards SpentUntilE

This creates the following supply curve for the Participation Rewards Program:

Rewards per epoch and per second

The foundation will publish the monthly target rewards using the above supply curve as a guide. Here are the proposed targets for each month until 2025. The Community will create a proposal for the renewal of the program after December 2024.

MonthKINTO RewardsRewards per second

June 2024

70,000

0.027

July 2024

68,000

0.026

August 2024

66,000

0.025

September 204

64,000

0.024

October 2024

62,000

0.024

November 2024

60,000

0.023

December 2024

58,000

0.022

Given the rewards allocated per month, we can calculate how many rewards we can distribute per second of a specific month. Rm(E) for a given epoch E. An epoch is a given month. To simplify, we calculate the rewards per second assuming every month has 30 days. That means that shorter months have slightly higher rewards per block than larger months.

Then we calculate the max number of rewards to distribute in a second dividing by the number of seconds in the epoch. Rs (Rewards per second) is then calculated as follows:

Rs(E)=Rm(E)/(30βˆ—86400secs/day)Rs(E) = Rm(E) /(30 * 86400 secs/day)

Rewards per participant

At this point, we know how much Kinto to allocate per second on any given month. However, we still need to distribute the rewards among all the participants.

First, we are going to use the average TVL of the network in dollars during that week as the denominator and use it to calculate the rewards of any given smart contract (including wallets) in a week.

WeekRewards(Address)=Amount/TVLβˆ—Rs(E)βˆ—86400βˆ—7WeekRewards(Address) = Amount / TVL * Rs(E) * 86400 * 7

Then the rewards for every Kinto Wallet is calculated by going through every single asset as follows:

  • If the asset is held directly in the wallet, the user will receive 70% of rewards for the assets TVL held directly in the wallet (remaining 30% will not be allocated).

  • If the asset is held on a protocol and that protocol has been registered using the Kinto Registry smart contract, the wallet owner will receive 80% of the rewards and the developer of that application will receive 20%.

e.g. The Kinto Network has 100M in TVL and this user has 1M in his wallet. That $1M is split as follows:

  • 600k in USDC, ETH and DAI that is held directly in the wallet.

  • 400k deployed in a specific lending protocol called $RWALEND.

That 1M in TVL is allocated 1% of the rewards for that week (1M/100M), let's say that's 150 Kinto Tokens. Based on the assets held, the user would receive a total of:

  • Wallet owner receives 111 Tokens => 150 * 0.6 * 0.7 + 150 * 0.4 * 0.8 = 111 tokens

  • RWALend protocol receives 12 tokens => 150 * 0.4 * 0.2 = 12 tokens

  • 27 tokens will remain unallocated and back to the mining pool

Protocol Boosts

In addition to these baseline rewards, the network and the community may decide to incentivize usage of specific protocols. Those rewards will be added on top of the baseline rewards.

User Level Boosts

1.15x Multiplier in Kinto Rewards for Engen users

Engen users will receive permanent benefits in the Kinto Mining program. They will receive 15% additional Kinto rewards.

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