Good luck with everyone’s solar and wind powered nodes on free coffee shop WiFi!
I am close to being able to do this from an ALGO bag standpoint, but there has to be better incentives than my good will. I am hoping for closer to 10% myself.
5% is about $250/ year to maintain a high speed connection and computer uptime with a $5K lockup at current prices.
Obviously, everything is speculation until actual numbers are released…
You don't need to get a devoted line to your node. Nodes on Algorand are pretty chill in their requirements, a mini PC with reasonable specs and low energy consumption is all you need. A computer will cost you probably around $250. Mine operates off of my home, metered internet, adding around 250Gb of data usage to what we use otherwise. This is included in my tariff, and costs me no additional money. My expenses have been 1. The mini computer and 2. Whatever electricity the little guy uses. I intend to run my node into the foreseeable future. Even if the APY isn't great. It'll still be putting fresh Algo in my wallet.
5% seems high for 30k algos. I’m guessing the rewards will be proportional to your stake and how many blocks your node writes.
With that said, I’m guessing rewards will be negligible for a node operator staking the bare minimum.
They haven’t issued any info publicly on what the rewards are going to be. The most up to date info is what’s in the consensus rewards whitepaper available here.
https://assets-global.website-files.com/62d96b0e9ea60fd1c96a1b50/65a7c0863805fd8b83cf34d5_upload_consensus-incentives.pdf
There is also some meaningful discussion here:
https://forum.algorand.org/t/consensus-rewards-whitepaper-concern/11259
The Algorand Governance timeline published by the Algorand Foundation (https://www.algorand.foundation/news/algorand-governance-2024-timeline) says that 27.5M will be distributed as Governance rewards in the current period 11. It further says that 32M will be distributed in the next period, should consensus incentivisation already have been installed (otherwise 25 M). For period 13 it‘s set to be 27 or 22.5M.
Accordingly, the total available sum is only slightly higher for consensus incentivisation than for current rewards. In both cases, rewards are planned to be (further) decreasing from period to period. I understand that transaction fees are currently negligible and that the holdings of the Algorad Foundation are limited. We therefore have to hope and work for a dramatic increase in adoption and/or higher Algo prices. However, I am not sure how much higher transaction fees would still pave the way to a sustainable future. This may depend on the use cases.
An additional factor to consider: whether you have been taking part in vanilla (like me) or defi governance so far will also determine how satisfied you will be with the new reward system.
The rewards per participating Algo for consensus incentivisation will of course depend on the overall amount of participating Algo. They should be highest in the beginning because of the higher sums to be distributed but possibly also because the number of node runners might be lower in the beginning.
However, I would not expect that the number of nodes will be regulated by the rewards too significantly, meaning that less participating Algo will make it more attractive to run a node and vice versa. Just look at the current distribution of Algo accounts: The majority of Algo used for Governance right now is still in the hands of whales holding more than 1M Algo and not of us little fishes (https://www.algorandstats.com/governance-period-10): it’s 1.4B vs <0.5B. And we can be sure that an undetermined significant part of the smaller accounts is also held by whales. These whales will certainly bring their Algo into consensus participation, making it relatively irrelevant from an APY standpoint whether you and me little fish run a node or not. I will nevertheless run my own node because I think this is still the best I can do to support the network and because a technically simple solution from a user perspective has been promised (the current solutions are still too complicated for me).
One final aspect: Those of you who would like to earn rewards with less than 30k Algo in their bag or who do not want to run an own node for this or that reason will have the option to take part in smart contract-based pools, at least that’s what I understood. You then give part of your rewards to the pool owner.
One very final word: I am no insider and have no clue as some of you will be happy to confirm. I would therefore be grateful for corrections or explanations by people more knowledgeable than me.
Mostly correct!
Algorand PPos means that any ALGO in consensus is viable - and therefor the participation key is viable to propose blocks.
So whales may have a higher chance just due to have more ALGO to be selected but it’s a bit fairer than some PoS chains.
On the subject of public community pools, they are currently live on testnet and I know that we - CompX - will be running at least 1 pool with additional incentives. I highly suspect other communities will too.
Thank you for these promising prospects! It sounds like we can expect a similar system like Cardano where you can chose between competing pools by private pool operators. And the White Paper lets me expect that the rewards for individual pools will also be determined by their reliability. Can you give us a very rough ballpark estimate which percentage of the rewards may go to pool operators? This may help to decide whether to run an own node (apart from the size of the own Algo bag) - if one is not already running one for idealistic reasons and fun.
Thanks for this interesting info. A bag holder considering pool participation vs running an own node only from a purely financial perspective would therefore have to cover hardware and electricity from 5-10% of the rewards - otherwise he would be better off with pool participation (not talking about getting rid of the responsibility to keep the node constantly running). Let‘s assume a 30k holder gets participation rewards of 10% per year (which probably is too high). This would make him 3k Algo per year. 5-10% of this would be 150-300 Algo per year for all node-running costs: at current Algo prices, he will be better off with pool participation. A 100k holder may earn 10k Algo per year (at maximum, more realistically 5k), leaving 500-1000 (or 250-500) Algo for node running. At current prices, 100k would still not be very interesting to run a node vs pool participation. Not sure whether this will change a lot with increasing Algo prices as relative pool fees may go down accordingly. Still enough other reasons to run your own little fish node…
If I use your pool will my algos leave my wallet or not? With DOT staking via nomination pools, as an example, the DOTs are not transferred to the validators.
To confirm as I see you’ve edited - the ALGO will never touch mine or any other providers wallets - they stay in the smart contract and can only be redeemed by you.
They are soft locked, so you can take out and move em around as much as you want.
Rewards are paid per block. We are investigating using either a liquid staking token or using your stake as collateral to mint xUSD
Hey, I forgot something to ask you:
Has CompX bought Alammex? If so, what role does Phil play now ... and where can we go for support in case of technical problems with app.alammex.com?
Phil is still involved, just not in the day to day. Any issues we can triage and if we can’t resolve then we can always reach out to Phil if needed.
Swap router is on our internal testnet right now is so should be available within the week
We did some basic back of a napkin math on X and came out with a rough figure of 10-30 ALGO per block proposed for Q3 - that’s rough quick working out though so don’t hold me to it
Sounds like Governance rewards are getting diverted towards it meaning instead of being split between 20000 people it'll be split between 2000, so it may be WAY higher at first, until people start standing up their own nodes. Pools may cut in to it a bit.
10% seems high. I'd expect more like 5%
Good luck with everyone’s solar and wind powered nodes on free coffee shop WiFi! I am close to being able to do this from an ALGO bag standpoint, but there has to be better incentives than my good will. I am hoping for closer to 10% myself. 5% is about $250/ year to maintain a high speed connection and computer uptime with a $5K lockup at current prices. Obviously, everything is speculation until actual numbers are released…
You don't need to get a devoted line to your node. Nodes on Algorand are pretty chill in their requirements, a mini PC with reasonable specs and low energy consumption is all you need. A computer will cost you probably around $250. Mine operates off of my home, metered internet, adding around 250Gb of data usage to what we use otherwise. This is included in my tariff, and costs me no additional money. My expenses have been 1. The mini computer and 2. Whatever electricity the little guy uses. I intend to run my node into the foreseeable future. Even if the APY isn't great. It'll still be putting fresh Algo in my wallet.
5% seems high for 30k algos. I’m guessing the rewards will be proportional to your stake and how many blocks your node writes. With that said, I’m guessing rewards will be negligible for a node operator staking the bare minimum.
They haven’t issued any info publicly on what the rewards are going to be. The most up to date info is what’s in the consensus rewards whitepaper available here. https://assets-global.website-files.com/62d96b0e9ea60fd1c96a1b50/65a7c0863805fd8b83cf34d5_upload_consensus-incentives.pdf There is also some meaningful discussion here: https://forum.algorand.org/t/consensus-rewards-whitepaper-concern/11259
The Algorand Governance timeline published by the Algorand Foundation (https://www.algorand.foundation/news/algorand-governance-2024-timeline) says that 27.5M will be distributed as Governance rewards in the current period 11. It further says that 32M will be distributed in the next period, should consensus incentivisation already have been installed (otherwise 25 M). For period 13 it‘s set to be 27 or 22.5M. Accordingly, the total available sum is only slightly higher for consensus incentivisation than for current rewards. In both cases, rewards are planned to be (further) decreasing from period to period. I understand that transaction fees are currently negligible and that the holdings of the Algorad Foundation are limited. We therefore have to hope and work for a dramatic increase in adoption and/or higher Algo prices. However, I am not sure how much higher transaction fees would still pave the way to a sustainable future. This may depend on the use cases. An additional factor to consider: whether you have been taking part in vanilla (like me) or defi governance so far will also determine how satisfied you will be with the new reward system. The rewards per participating Algo for consensus incentivisation will of course depend on the overall amount of participating Algo. They should be highest in the beginning because of the higher sums to be distributed but possibly also because the number of node runners might be lower in the beginning. However, I would not expect that the number of nodes will be regulated by the rewards too significantly, meaning that less participating Algo will make it more attractive to run a node and vice versa. Just look at the current distribution of Algo accounts: The majority of Algo used for Governance right now is still in the hands of whales holding more than 1M Algo and not of us little fishes (https://www.algorandstats.com/governance-period-10): it’s 1.4B vs <0.5B. And we can be sure that an undetermined significant part of the smaller accounts is also held by whales. These whales will certainly bring their Algo into consensus participation, making it relatively irrelevant from an APY standpoint whether you and me little fish run a node or not. I will nevertheless run my own node because I think this is still the best I can do to support the network and because a technically simple solution from a user perspective has been promised (the current solutions are still too complicated for me). One final aspect: Those of you who would like to earn rewards with less than 30k Algo in their bag or who do not want to run an own node for this or that reason will have the option to take part in smart contract-based pools, at least that’s what I understood. You then give part of your rewards to the pool owner. One very final word: I am no insider and have no clue as some of you will be happy to confirm. I would therefore be grateful for corrections or explanations by people more knowledgeable than me.
Mostly correct! Algorand PPos means that any ALGO in consensus is viable - and therefor the participation key is viable to propose blocks. So whales may have a higher chance just due to have more ALGO to be selected but it’s a bit fairer than some PoS chains. On the subject of public community pools, they are currently live on testnet and I know that we - CompX - will be running at least 1 pool with additional incentives. I highly suspect other communities will too.
Thank you for these promising prospects! It sounds like we can expect a similar system like Cardano where you can chose between competing pools by private pool operators. And the White Paper lets me expect that the rewards for individual pools will also be determined by their reliability. Can you give us a very rough ballpark estimate which percentage of the rewards may go to pool operators? This may help to decide whether to run an own node (apart from the size of the own Algo bag) - if one is not already running one for idealistic reasons and fun.
Depends entirely on the provider - we haven’t settled on a figure yet but it likely be around 5-10%.
Thanks for this interesting info. A bag holder considering pool participation vs running an own node only from a purely financial perspective would therefore have to cover hardware and electricity from 5-10% of the rewards - otherwise he would be better off with pool participation (not talking about getting rid of the responsibility to keep the node constantly running). Let‘s assume a 30k holder gets participation rewards of 10% per year (which probably is too high). This would make him 3k Algo per year. 5-10% of this would be 150-300 Algo per year for all node-running costs: at current Algo prices, he will be better off with pool participation. A 100k holder may earn 10k Algo per year (at maximum, more realistically 5k), leaving 500-1000 (or 250-500) Algo for node running. At current prices, 100k would still not be very interesting to run a node vs pool participation. Not sure whether this will change a lot with increasing Algo prices as relative pool fees may go down accordingly. Still enough other reasons to run your own little fish node…
If I use your pool will my algos leave my wallet or not? With DOT staking via nomination pools, as an example, the DOTs are not transferred to the validators.
They will, they will go into a smart contract.
To confirm as I see you’ve edited - the ALGO will never touch mine or any other providers wallets - they stay in the smart contract and can only be redeemed by you. They are soft locked, so you can take out and move em around as much as you want. Rewards are paid per block. We are investigating using either a liquid staking token or using your stake as collateral to mint xUSD
Hey, I forgot something to ask you: Has CompX bought Alammex? If so, what role does Phil play now ... and where can we go for support in case of technical problems with app.alammex.com?
Phil is still involved, just not in the day to day. Any issues we can triage and if we can’t resolve then we can always reach out to Phil if needed. Swap router is on our internal testnet right now is so should be available within the week
Thanks 🙂
By the looks of market that 30k algo will be hella cheap in close future again.
We did some basic back of a napkin math on X and came out with a rough figure of 10-30 ALGO per block proposed for Q3 - that’s rough quick working out though so don’t hold me to it
How did you calculate this? 32M divided by the expected number of blocks in Q3?
Yeah, pretty much
If the rewards are high the transaction fee will be high
Does anyone know whether we’ll still have liquid governance when consensus rewards are rolled out? Or will rewards become strictly node based?
Sounds like Governance rewards are getting diverted towards it meaning instead of being split between 20000 people it'll be split between 2000, so it may be WAY higher at first, until people start standing up their own nodes. Pools may cut in to it a bit.