What is the reason for using the smoothly decreasing block reward instead of a periodic "halving" like Bitcoin?
What impact does a smoothly decreasing reward have other than avoiding sudden dramatic changes to the Monero earned by miners?
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2 Answers
One of the pros for a smooth curve is to avoid the arbitrary sudden changes.
A second, more subtle, reason is to allow a block size penalty. In most Cryptonote coins, including Monero, it is possible for a miner to create blocks up to the current block size limit (that block size limit is variable, based on the recent history). However, if the block size is between M and 2M, with M being the median of the last 100 block sizes, the block reward will be less than the full reward. This incentivizes miners to not go over the median, which will cause the block size limit to shrink, unless they can make up the loss from transaction fees.
When such a penalty occurs, the recurrence function pushes back the unpaid block reward to the remainer of the emission, slightly increase every single block reward thereafter till the minimum emission (0.3 monero a minute) is hit. This would be difficult to do with a hard segmented block reward.
answered Jul 20, 2016 at 20:46
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In other words, a complexity clusterfuck design. Obviously the community is unfamiliar with the a concept “complexity budget” and how adding too much complexity ends up snaring the hare in the chicken wire. Thanks for the explanation though, as it is helpful to know the reason. Btw, your writing style is similar to @smooth. Jul 31, 2017 at 19:58
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Note that this is my interpretation after the fact. I do not know whether this was a consideration in the original design. Jul 31, 2017 at 22:26
It helps prevent supply shocks, like which Bitcoin experiences. This means that the hashrate is going to remain stable as the block rewards diminishes. I'm pretty sure this is also necessary for the tail emission and deferral of block rewards for the blocksize flexcap, as a blockreward penalty when blocks get progressively larger means that the block reward has to be able to change every single block in order for this mechanism to function properly.
answered Aug 10, 2016 at 10:02
