Mining Program

This page explains the participation mining program.

The Kinto Mining Program has been approved via the proto-governance proposal ENIP-3. It is ratified by $ENGEN token holders and started on June 18th 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 participants 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. A specific number of rewards per quarter will be targets, 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:

$$RewardsQuarter(E)=R_q(E) = RP -RP*(1/1.05)^E - RpSpent(E)$$

$$RP = KIN for Mining Program = 4,000,000$$

$$RpSpent(E) = Rewards SpentUntilE$$

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

Rewards over the next years per quarter

Rewards per epoch and per second

The Kinto 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. After December 2024, the community will create a proposal for renewing the program.

Month	KINTO Rewards	Rewards per second
June 2024	70,000	0.027
July 2024	68,000	0.026
August 2024	66,000	0.025
September 2024	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 can be distributed per second of a specific month. Rm(E) for a given epoch E. An epoch is a given month. To simplify, rewards will be calculated per second assuming every month has 30 days. That means that shorter months have slightly higher rewards per block than larger months.

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

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

Rewards per participant

At this point, it is known how much $Kinto to allocate per second on any given month. However, the rewards still need to be distributed among all the participants.

First, an average TVL of the network in dollars during that week will be used as the denominator and to calculate the rewards of any given smart contract (including wallets) in a week.

$$WeekRewards(Address) = Amount / TVL * Rs(E) * 86400 * 7$$

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-1.20x 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.

They will receive 15–20% additional Kinto rewards based on the number of Engen credits they hold.