21 lines
2.5 KiB
Markdown
21 lines
2.5 KiB
Markdown
---
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title: Solana Economics Overview
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---
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**Subject to change.**
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Solana’s crypto-economic system is designed to promote a healthy, long term self-sustaining economy with participant incentives aligned to the security and decentralization of the network. The main participants in this economy are validation-clients. Their contributions to the network, state validation, and their requisite incentive mechanisms are discussed below.
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The main channels of participant remittances are referred to as
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protocol-based rewards and transaction fees. Protocol-based rewards
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are generated from inflationary issuances from a protocol-defined inflation schedule. These rewards will constitute the total protocol-based reward delivered to validation clients, the remaining sourced from transaction fees. In the early days of the network, it is likely that protocol-based rewards, deployed based on predefined issuance schedule, will drive the majority of participant incentives to participate in the network.
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These protocol-based rewards are calculated per epoch and distributed across the active
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delegated stake and validator set (per validator commission). As discussed further below, the per annum inflation rate is based on a pre-determined disinflationary schedule. This provides the network with supply predictability which supports long term economic stability and security.
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Transaction fees are participant-to-participant transfers, attached to network interactions as a motivation and compensation for the inclusion and execution of a proposed transaction. A mechanism for long-term economic stability and forking protection through partial burning of each transaction fee is also discussed below.
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First, an overview of the inflation design is presented. This section starts with defining and clarifying [Terminology](inflation/terminology.md) commonly used subsequently in the discussion of inflation and the related components. Following that, we outline Solana's proposed [Inflation Schedule](inflation/inflation_schedule.md), i.e. the specific parameters that uniquely parameterize the protocol-driven inflationary issuance over time. Next is a brief section on [Adjusted Staking Yield](inflation/adjusted_staking_yield.md), and how token dilution might influence staking behavior.
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An overview of [Transaction Fees](transaction_fees.md) on Solana is followed by a discussion of [Storage Rent Economics](storage_rent_economics.md) in which we describe an implementation of storage rent to account for the externality costs of maintaining the active state of the ledger.
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