How much supply goes to voting rewards is first determined by deciding how much total supply of ICP utility tokens should be locked in neurons. We begin by deciding that 90 percent of the total supply of ICP should be locked in neurons. Then we estimate what returns, in the form of newly minted ICP, must be provided to those locking their ICP to incentivize 90 percent participation. This allows us to calculate the total rewards that must be paid if we are successful. We then decide to distribute this quantity of newly minted ICP regardless of the current level of participation, such that participants will receive larger rewards until participation reaches 90 percent, allowing the markets to persuade those who are not currently participating to participate.
We estimate required returns as a percentage of the current supply, and allow this to fall over time to account for the risk of locking balances falling as the network becomes more stable. We start by distributing 10 percent of supply (on an annualized basis), with this falling until we distribute 5 percent of supply in eight years.
For more details, please read, “Understanding the Internet Computer’s Network Nervous System, Neurons, and ICP Utility Tokens.”
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