Archway's economic model is a unique part of the Archway ecosystem. This system is designed to allow dapps to capture the value they create within the network. The rewards system comprises three types of incentives: Gas Rebates, Dev Inflation Tokens and Contract Premiums. This guide will explore each type of incentive in greater detail with the aim to provide insights into how developers can best leverage these incentives.
Every transaction requires a specific amount of gas for execution, and typically, the account initiating the transaction bears the associated cost. In most Proof of Stake blockchains, the transaction fees associated with purchasing gas are redistributed to network stakers. However, in Archway, 50% of this transaction fee is distributed to the dapp on which the gas was spent, while the other 50% is permanently removed from circulation ("burnt").
The distribution ratio for gas rebates is a network parameter that can be modified through a community governance vote.
In the Archway ecosystem, inflation serves as a vital aspect of not only token economics but also network security. This mechanism incentivizes ARCH token holders to stake their tokens, thereby fortifying network security. The newly minted ARCH tokens are dispensed as rewards to validators and delegators for their role in securing the network. Similar to gas rebates, these rewards within Archway are now also distrbuted to developers, in addition to validators and delegators.
The share of newly minted tokens allocated to dapps is termed Developer Inflation Tokens (DIT), which denote the aggregate amount of ARCH tokens earmarked from inflation for developers within a block. Upon Mainnet launch, 25% of the DIT rewards will be allocated to developers, with the remaining 75% designated for validators and delegators. Thus, if the network experiences a total inflation of 8%, then 2% will be distributed to developers, and 6% will be awarded to validators and delegators.
This allocation ratio is a configurable parameter and can be altered over time through a governance vote conducted by the Archway community.
Archway enables dapp developers to define a custom flat fee for interacting with their smart contracts. These fees grant developers a versatile alternative to monetize their contracts. For the user’s experience, the Contract Premium will be paid alongside the gas fee.
For more details about contract premiums see our ADR document.
After the rewards are calculated, they are stored as reward records. These records establish claims that contracts can convert into ARCH tokens. To claim these rewards, a withdrawal operation must be executed. When a withdrawal is initiated, the tokens are transferred to the reward_address designated by the contract's owner.
For more details, see the developer rewards section.