RELEASE DATE: MONDAY, DECEMBER 16TH

THIS IS THE FINAL PROPOSAL.

Summary of Catapult Migration and Tokenomics Proposal For NEM Community POI Vote

Translations:
Japanese: Here
Spanish: Here
Russian: Here
Italian: Here
Chinese: Here

VOTING AND TOKENOMICS PROPOSAL LAUNCH

On December 16, 2019 at 3:00 PM PST (December 17, 2019 at 8:00 AM, UTC+9) there will be a POI vote on the proposed data migration process and tokenomics. It will be a yes/no vote on the combined items summarized below.

  • Data and Token Migration
  • Tokenomics

After significant work, the migration and tokenomics teams have reached an agreement on this proposal. Contributions came from NEM Ventures, NEM Studios, NEM Foundation, supernode owners, community members, and ecosystem partners.

We believe this is the right solution, but it comes at a difficult time. If this proposal doesn’t pass, additional rounds of debate will cause further Catapult launch delays. We realize this puts pressure on this vote, and that’s not good, and we apologize for this.

Voting Information/Rules

Voting will take place on the NEM public chain using the NEM Wallet. :arrow_right: Please note: In order to vote you must download and upgrade to the latest version of the NEM Wallet (version 2.4.7) found at https://nem.io/downloads/.

The voting process is as follows:

  1. Voting will commence on December 16, 2019 at 3:00 PM PST and will end on December 21, 2019, at 3:00 PM PST.
  2. Voting will be considered valid if there is a minimum of 3% POI voting in either direction. (Note: “YES” & “NO” votes are not combined .)
  3. A YES vote must win a 65% majority for the vote to be considered successful.
  4. Step-by-step voting instructions can be found here.
  5. Once the voting period has ended, the results and next steps will be announced by the Migration Committee.
  6. If the result ends in ‘YES’ votes with the minimum of 3% POI and 65% majority criteria, the migration and tokenomics proposal will be considered as approved and the migration committee will proceed with meeting the project timeline. If the result ends with insufficient ‘YES’ votes without the minimum of 3% POI or 65% majority criteria, the migration and tokenomics proposal will be considered as rejected and the Migration Committee will respond with a reworked proposal based on feedback provided. This might result in delays to the launch.
  7. This proposal was developed with guidance and contribution from: supernode owners, community members, ecosystem partners alongside NEM Ventures, NEM Studios, NEM Foundation.

Note: As the branding proposal has not been released or approved yet, the name “Catapult” and “CAT” will remain placeholder names in this document. A branding, naming, and ticker proposal will come separately.

DATA AND TOKEN MIGRATION

High-level Summary - Users can claim CAT tokens using their NIS1 account and will receive 1 CAT : 1 XEM

Video Summary: click here

Video scripts for alternate languages:
Japanese: Here
Spanish: Here
Russian: Here
Italian: Here
Chinese: Here

Catapult will use opt-in account migration

  • Users will manually claim their CAT tokens via an on-chain opt-in on NIS1 prior to a publicized block height. An app-based solution will be provided with clear guidance to claim tokens.
  • Data migration will include token balances, multi-sig account configurations, and root namespaces.
    • Correct data migration will be verifiable on-chain.
  • Catapult accounts will be based on a snapshot of the current NEM blockchain. Date, time, and block of the snapshot will be publicly announced a number of weeks before launch date. Changes to NEM accounts after this snapshot will not affect Catapult accounts.
    • IMPORTANT: For a claim to be valid, users must have the XEM in their account before and at the snapshot block. XEM deposits after this block will not be used to allocate or claim CAT.
    • Users can claim accounts after the snapshot, either before Catapult launch, or after launch for up to 6 years from the launch date.
    • After the 6 year claim period has ended, unclaimed tokens remaining will be burned.
  • NIS1 token supply will not be affected.
  • A more detailed migration discussion can be found here.

TOKENOMICS

This proposal is comprised of 4 sections:

  1. Reduced Token Supply and Inflationary Block Rewards - Reduce core funds to start the chain with fewer tokens, then use the new built-in Catapult inflation mechanism to re-inflate it back to 9 Billion via block rewards to harvesters. Inflation will match Bitcoin.
  2. Node Service Rewards - These are rewards to the node owner from blocks harvested on their node by delegated harvesters, using a new Catapult feature.
  3. Supernode Program Extension and Phase-Out - This is reduced over 6 years and made more accessible to the wider community via tiering. Block rewards more than replace the reduced income.
  4. Early Node Incentives - There are two early node incentives to encourage node deployment on Catapult and provide node stability on NIS1.

More detailed documentation here:

  • Detailed tokenomics proposal is here .
  • Calculations and projections are linked here.
  • 2-page tokenomics summary is here.

Section 1: Reduced Token Supply And Inflationary Block Rewards

  • CAT Max Supply: 8,999,999,999

  • CAT supply at launch will be 1.17 Billion fewer than XEM, to be distributed as inflation.

  • The system uses new Catapult features on the public chain to achieve this.

  • This reduces core team funds from approx. 35% max supply to 22%.

  • These 1.17 Billion inflationary tokens will be added to supply in the form of block rewards to node operators and delegated harvesters. This raises expected returns substantially.

  • Calculations aim for an annual return in the initial years (primarily block rewards):

    • Around 6% for node operators.
    • Around 3% return for delegated harvesters.
  • The inflation rate will match Bitcoin’s inflation for the next 120 years but will be smoothed to quarterly reductions instead of 4-year halvings so as to avoid halvening cliffs.

    • This means Catapult will have a higher earn rate than Bitcoin for approx. 2 years after the next Bitcoin halving in May 2020. Even delegated harvesters will earn higher returns than Bitcoin miners for most of the first year (with no expenses).

This chart compares the % of max supply added (as inflation) per quarter for Bitcoin vs. Catapult’s smoothed match for the first 25 years.
imageLikeEmbed

Section 2: Node Service Rewards

  • From all block rewards (inflation + transaction fees) earned by delegated harvesting stakes, the node operator will receive 25% and the delegated harvester will receive 75%. This split can’t be easily changed without a network update (this would be a default that is configurable).
  • Node operators keep 100% of block rewards earned by their own token balances.
  • Transaction fees are set by node operators and will change with supply and demand. Spreadsheet estimates use conservative assumptions of 0.25 CAT average transaction fee and CAT price under 1 USD for 5 years.

Section 3: Supernode Program Extension and Phase-Out

  • A reduced supernode (SN) rewards program will continue for 6 years after launch. About 33 Million CAT will be allocated from the current supernode fund for this. Payouts will decrease over the 6 years. Table here, on row 13.
  • The need for supernode rewards is greatly diminished due to the high block rewards.
  • There are 3 tiers of CAT requirements to receive rewards from this program: 1 Million, 2 Million, and 3 Million. The higher the tier, the greater the rewards. This is an incentive for node operators to keep high balances while opening a way for others to join in rewards more easily. Table available here.
  • Performance/uptime monitoring, payouts, and other administration to be run by a future designated ecosystem entity.

Section 4: Early Node Incentives

  • Approximately 1.9 Million CAT will be allocated to “Early Adoption Node Bonuses” to ensure a strong number of early nodes. This will be shared among a maximum of 75 nodes that begin before launch and continue for 18 months and will be administered by a future ecosystem entity.
  • Approx. 3.1 Million CAT allocated to “NEM Ecosystem Bonuses” for nodes verified to run both Catapult and NIS1 nodes for 18 months, ensuring ongoing support for NIS1 public chain.

Thank you for your consideration and support!

Catapult Migration Committee
Alexandra Tinsman
Dave Hodgeson
David Mansell
Greg Saive
Iain Wilson
Jeff McDonald
Jian Chan
Kailin O’Donnell
Victor Ruscitto

Tokenomics Team
Brian Tinsman
Dave Hodgson
Helmut Siedl
Iain Wilson
Jeff McDonald
Erik Van Himbergen
Yu Kimura