Mining

TLDR; Mining on the Conduit Network is a race to meet thresholds of economic activity. More economic activity by a Party means more Mining opportunity.

Overview

Mining on the Conduit Network is done any time a CROP contribution is made on an economic transaction by participating parties. All economic transactions in the Conduit Network have a requisite CROP contribution of 2% of the transaction value, but parties participating in the transaction can voluntarily contribute more CROP up to the value of the transaction. For people familiar with blockchain tokenomics, this can be thought of as a hybrid of gas fees, staking, and block mining. All CROP contributions are placed in a distribution pool that is designed to support the Conduit Network and its participants, as well as incentivize economic activity within the network. CROP is like a gas fee because some of the distribution pool is allocated to compensating parties for running the network itself. It is like staking because at a transactional level it requires Parties to have some "skin in the game". Finally, CROP is like mining because blocks of CNDT are released to parties when economic activity thresholds are met.

Mining Mechanics

Every Party in the Conduit Network has a CROP Ledger which tracks the CROP contributions of that Party. The primary function of a CROP Ledger as it pertains to Mining is to keep a running total of CROP contributions for a Party in order to see if a Block Threshold has been met by the Party. When a Party meets a Block Threshold for a given Phase, they "win" the corresponding Block of CNDT.

Blocks of CNDT are grouped into Phases, which change the amount of CNDT in blocks as the total economic activity increases (by measuring total CROP contribution) as well as the number of Blocks in a Phase. The goal of these Phase changes is to distribute Block wins more widely across Participants as the overall economic activity of the Network increases.

Extra

The Conduit Rewards System adopts the term "mining" as aspects of the mechanics of how CNDT tokens are released resemble proof-of-work. A more accurate way of describing how tokens are released in the Conduit Network is "proof of economic activity". Conduit Network measures economic activity by a metric called CROP, which like "gas", is collected on every economic transaction, but unlike "gas", is used to Mine CNDT, the native token of the Conduit Network.

Mining

Mining on the Conduit Network is governed by a block release schedule that is divided into Phases representing thresholds of overall Conduit Network economic activity (think GDP), with a predetermined number of Blocks per phase. Each Block contains a predetermined amount of CNDT, based on which Phase the block is in.

When blocks are Mined by users, the released CNDT is distributed according to a set of distribution tables, often called "pools". These pools are designed to simultaneously reward parties for participating economically (contributing CROP), support the network, and incentivize additional economic and network activity. Distribution tables can be and often are nested and can be subject to Conduit Network protocols and governance, as well as contracts between parties. The following image is an example of the top-level distribution pool for the Conduit Network.

This serves as a high-level overview of how the Conduit Network Rewards System works. Additional pages of documentation will explore the topics of CROP, Mining, and Block Distribution.