A network-dependent rewarding system: proof-of-mining

TL;DR

This paper proposes a dynamic reward system for proof-of-work cryptocurrencies that adjusts rewards based on network activity to promote fairness and control network costs.

Contribution

It introduces a novel network-dependent rewarding model with encouraging and discouraging phases, differing from traditional constant rewards in cryptocurrencies.

Findings

Balances reward distribution among contributors

Limits network activity to reduce maintenance costs

Encourages active participation for maximum rewards

Abstract

A soft control of the network activity through varying reward in a proof-of-work (PoW) cryptocurrency is reported. Rewards are the necessity to incent the contributors activities (i.e., mining) in order to maintain the PoW network. Contrary to constant rewarding in a certain period implemented in most of cryptocurrency, such as bitcoin, we propose a network-dependent rewarding model system, primarily including two phases: 1) activities encouraging phase in which higher rewards are issued at higher network activities; and 2) discouraging further increase of activities by reducing rewards. The advantages of this system include 1) fair distribution of rewards among a variety of contributors, and 2) enforcing a limit to the network activity and hence the cost of maintaining the PoW network. This mechanism requires network contributors to show their participation in order to earn maximum rewards, i.e., proof-of-mining.