Dec 3, 2021
The TEA Project’s Mining Rewards Design
The TEA Project has now had 6 epochs and just finished its 5th mining contest. One feature of the project that has evolved significantly over the epochs is how miners are paid out. What started out as a simple mining reward function — fixed TEA token payouts per fixed block duration — has now evolved to include TApp token payouts. We’ve found that incentivizing miners through TApp tokens allows them to participate in the upside of the TApp. And we certainly hope that TApp developers on our platform all think their apps will blow up big.
But miners are rational actors — they have computing bills to pay and need to be fairly rewarded by TApp developers for hosting their TApps. This leads to miners having to choose between TApps with two very different payout models when it comes time for them to choose which ones to host. We’ll discuss each payout option below and look at which one will give better payouts to miners according to different scenarios.
An Overview of the Rewards for TEA Project Miners: TApp Tokens and TEA
TEA Project miners are economically rewarded for hosting TApps through either of two billing models: TApp tokens or TEA tokens. The choice of payout is set by the TApp creator and are given out as follows:
- Fixed TEA payment per fixed block duration (1000 blocks). This pays out miners the fixed TEA amount per 1000 blocks. This amount doesn’t change and guarantees a set TEA amount to miners that doesn’t fluctuate with regard to the TApp’s popularity. One risk in this payout model is if the TApp doesn’t generate any revenue, miners will still get paid. This could lead to bankrupting the TApp owner.
- Fixed TApp token dividend payments per fixed block duration (1000 blocks). This payment model incentivizes miners by giving them staked TApp tokens. These staked tokens aren’t able to be sold — they are created when a miner hosts a TApp and destroyed when they unhost. So long as they exist in a miner’s wallet, they miners a stake in dividend payouts that result from a TApp’s consume action. That is, anytime someone pays TEA to use that TApp, the miner will receive TApp tokens relative to their staked token amount. They can either hold these TApp tokens or sell them for TEA to the TApp token’s bonding curve.
Which is the Better, TEA or TApp Tokens?
Before deciding which TApps to host based on whether they payout in TApp tokens or TEA tokens, let’s do a review of both so you know what exactly you’d be earning as a miner.
TEA Tokens
TEA is a stable coin pegged to the cost of computing resources (cpu/ram usage, hard drive space occupied, network bandwidth usage etc.) This leads to a couple forces acting on the price of TEA:
- Computing costs are always decreasing relative to USD, so this should also put downward pressure on the price of TEA which is pegged to computing costs.
- The cost per computing task should remain stable relative to TEA. But the demand for computing services is increasing every year, which will have a positive effect on the price of TEA tokens.
TApp Tokens
A TApp’s token is like an ownership stake in the TApp. Anyone who holds a TApp’s token (including miners holding staked TApp tokens) will benefit as more people consume the app (which generates TApp token dividends to the token holders) or purchase the TApp token itself. Because these tokens follow a bonding curve, supply increases will cause the token price to rise. Even though miners hosting the TApp will only receive staked TApp tokens which can’t be sold, they token dividends they earn can be sold into the TApp token’s bonding curve.
We actually encourage TApp developers to pay out their rewards in TApp token dividends as long as there is steady usage of the TApp. With staked TApp tokens as the mining reward payout, miners don’t earn anything if the TApp doesn’t have any customers. But once the TApp has regular usage, its hosting miners start sharing in the profits proportional to its use. But in a case where a TApp has low usage, a TEA token payout model would reward miners better than minuscule consume event payouts. The mining reward scheme is chosen by the TApp creator so miners must be wise when choosing which TApps to host.
What About CML Owners Who Don’t Want to Mine?
The staking option is available for those who want to participate alongside miners but don’t want the technical hassle of maintaining mining machines. As long as their CML is defrosted, the CML owner can stake into an A or B CML mining machine and earn a share of the mining revenue.
Staking is therefore another way for CML holders to earn passive rewards (in either TEA or TApp tokens) by holding CML. We still recommend those with technical knowledge and experience in crypto mining use their CML to run their own TEA nodes. Mining on the TEA network offers plenty of strategies to be successful, and earning TApp tokens will give you a privileged look at which TApps are the most popular on the network.
If you’re interested in mining on the TEA Project network, visit our Github wiki to get started.
