DAPS reward system in a nutshell

“If you don’t find a way to make money while you sleep, you will work until you die.”

Warren Buffet, American mega investor

Proof-of-Work vs Proof-of-Stake

Two most important ideas in the crypto space are Proof-of-Work (PoW) and Proof-of-Stake (PoS). Each of them has pros and cons.

Proof-of-Work is one of the biggest concepts behind the Nakamoto Bitcoin white paper (2008). In the Proof-of-Work, the right to mine the next block is granted to the first miner to solve a hash mathematical problem, which is directly related to the miner’s amount of computer resources. Recently, some researchers argued that bitcoin transactions may consume as much electricity as Denmark by 2020. PoW prevents the cyber-attacks such as Distributed Denial-of-Service (DDoS), but needs strong computing rigs and is vulnerable to a 51% attack (as happened during the Bitcoin Cash Hard fork).

In the Proof-of-Stake, the builder of a new block is selected depending on some factors such as its wealth (stake) and the coin age. The main strength of Proof-of-Stake over Proof-of-Work is that it utilizes significantly less energy and as a result is more cost effective.

DAPS reward system

DAPS chain verification and consensus will be achieved via Proof-of-Audit miners, Masternodes, and Proof-of-Stake v3 nodes. This will give the DAPS network resistances against most known attacks and ensure the chain is secure while allowing it to be publicly scrutinized. 

In the following, I will explain each of them:

Proof-of-Stake v3

DAPS coin will have energy-efficient Proof-of-Stake v3 (PoSv3) where a wallet needs to be online 24/7 in order for the coins to age and receive stake rewards comparing with previous PoS versions where the coins are ageing even when the wallet is offline and the stake rewards are received as soon as the wallets are resynced with the blockchain. In DAPS coin, you will need to keep your wallet online 24/7 in order for your coins to be staking. You can use your own laptop/PC or a VPS for staking Similar to MN. The only exception is that a Masternode (collateral-locked) will need to run on a device (physical or virtual) that has a static IP. The staking node’s reward is based on luck which is calculated from the staker weight vs the network. So, it’s a factor of difficulty and luck. Only one staker can win this reward per block.

Masternodes

A Masternode is a server on a decentralized network. It is employed to complete unique functions in ways conventional nodes cannot. Masternodes essentially are "incentivized" nodes that run 24/7 to strengthen the network and provide certain functionality such as InstantSend (Doing instant transactions), PrivateSend (Increasing privacy of transactions) and decentralized governance mechanisms.

The DAPS Masternode system is modelled after the PIVX Masternode system. This has many bonuses, including preventing a 51% attack unless both Proof-of-Stake and Masternode layers are compromised simultaneously. DAPS Masternodes are required to have 1,000,000 DAPS coin collateral, a dedicated IP address, and be able to run 24 hours a day without more than a 1-hour connection loss. Masternode reward is round-robin based, not luck based. So eventually you will get paid if other MNs are paid (guaranteed payout). For example, If you have 1MN of 100, you will get a reward every 100 blocks. You can use some platforms like Gin if you don’t want to manually setup a MN or use a VPS, although we will publish some explicit tutorials about how to setup the MNs on a VPS in near future.

Note 1: DAPS does not use the Super-Masternodes with more than 1 million DAPS as collateral, but instead you can run multiple Masternodes (called Multinodes) on 1 fixed IP address. the exact number is not known yet.

Note 2: A lot of cryptocurrency users think that Masternodes are included in PoS category, but that’s not true. There are some PoW projects (e.g. Dash) that make use of Masternodes. Nevertheless, running a Masternode is PoS-like as you obtain the passive income through a Masternode by holding your coins.

PoA miner

DAPS Coin is considered a hybrid blockchain, with PoA as a subchain. Masternodes are not a trustless governance implementation since you have to trust the nodes. Here is where we need PoA miners. The Proof-of-Audit technology and DAPS protocol implementation is called the HARPOCRATES protocol and will set out to be a new industry standard. PoA miners are also incentivized to run 24/7. They will receive the 100 coins reserved from each of the PoS block rewards for each PoS block that the miner audits and verifies. PoA mining is more like PoW in that it comes down to hash power in order to generate the next PoA block. PoA mining can also potentially be more lucrative, but will cost more to run.

Reward system

DAPS supply cap will be 60 billion (initial) plus 10 billion (block reward). The DAPS coin emissions will be 1050 DAPS per block and block time is 1 minute. As a result, the yearly emission will be 1050 multiplied by 60 multiplied by 24 multiplied by 365 that equals around 551 million DAPS per year until the total amount of emissioned DAPS equals 10 billion. This works out to about 16 years of emissions, after which the rewards will rely on transaction fees to provide the rewards for those who secure the network. Development allocation per block equals 50 DAPS. Of the remaining 1000 DAPS, 100 are allocated to PoA miners and 900 are split between Masternodes and staking nodes through SBRS (See-Saw Balance Reward System). SBRS has a 60/40 MN/PoS reward split balancing to a maximum of 40/60 MN/PoS reward split. Rebalancing depends on Masternode dominance. The rewards favor the Masternodes (up to 60% of rewards) unless Masternode dominance is higher than a certain percentage. When Masternode dominance increases, the rewards favor the stakers (up to 60% of rewards). This will give a fair reward to holders with too little coins to partake in a Masternode, an issue in many Masternode coin networks.

The following figure only provides a rough estimation about the gain of 1 Masternode in DAPS blockchain. Notice that the actual numbers are determined with regard to the network conditions.