#Sharpening the Edge of Economic Models: Spotlight on Shardeum’s Layer1 Project

On April 20, it was reported that the economic model announced by the Shardeum of Layer1 project, of which 49% would be allocated to the foundation, ecosystem, team and sales account, and the remaining 51% would be used as node rewards.

Shardeum announces economic model, 51% as node reward

As the digital landscape continues to evolve, blockchain technology has become an increasingly popular solution for various industries. Decentralized systems that prioritize security and transparency have led to the emergence of innovative blockchain initiatives such as Shardeum’s Layer1 project.
On April 20, 2021, reports flooded the news of the Shardeum’s Layer1 project unveiling a unique economic model that was met with excitement, curiosity, and criticism by industry players. The Layer1 project’s economic model allocates 49% of rewards to various stakeholders such as the foundation, ecosystem, team, and sales account while the remaining 51% will be used as node rewards.

Understanding Shardeum’s Layer1 Project

Shardeum is a blockchain incubator that focuses on fostering the growth of blockchain infrastructure through creating innovative solutions that solve complex problems. In 2019, Shardeum announced its Layer1 project, a unique initiative that aims to create a high-performance, parallelized blockchain infrastructure platform that will be accessible to all.
The Layer1 project is divided into subprojects aimed at solving various critical infrastructural problems, including scaling, validity proofs, decentralized storage, governance, and networks. Besides, the Layer1 project intends to leverage its unique economic model, which is designed to incentivize participation and reward contributions.

Breaking Down the Layer1 Economic Model

The Layer1 economic model is designed to enhance stakeholder participation while promoting the Layer1 project’s growth. By allocating 49% of their rewards to various stakeholders, the Layer1 project is creating a system that aims to reward all parties while promoting productivity and efficiency.
The 49% rewards allocation is divided as follows:
– 10% of rewards will be allocated to the Foundation to support the Layer1 project’s growth and development through grants, research, staffing, and other initiatives.
– 30% of rewards will be allocated to the layer1 ecosystem to incentivize developers and other stakeholders who will create dapps, integrate other chains with Layer1, and promote the Layer1 brand.
– 5% of rewards will be allocated to Sales Account to fund marketing and promotion activities that will help in promoting the Layer1 project globally.
– 4% of rewards will be allocated to Token Holders who would benefit from the rewards of node operators and validators.
The most contentious issue with the Layer1 economic model is the 51% rewards allocation for node rewards. Node rewards are rewards given to participants who run Layer1 nodes, which are responsible for validating and maintaining the Layer1 network. The 51% allocation has caused some concerns about the centralization of power by a few nodes.

Evaluating the Implications of Shardeum’s Layer1 Project

Shardeum’s Layer1 project has potential implications in various industries, including finance, healthcare, supply chain, gaming, and government. Suppose the economic model executed effectively, and stakeholders are incentivized optimally. In that case, Layer1 has the potential to create a more secure, efficient, and transparent infrastructure, benefiting multiple industries.
Regarding the 51% node rewards allocation, Shardeum’s response was that they intend to implement a system that ensures a well-distributed node population. Also, stakeholders will be able to vote on proposed governance structures, including how the node rewards are allocated.

Conclusion

In conclusion, Shardeum’s Layer1 project’s economic model is a significant innovation that reinforces the potential of blockchain technology in creating efficient, secure, and transparent systems. The rewards allocation model creates a system that incentivizes productivity, innovation, and collaborations. Though the 51% node reward allocation has its criticisms, Shardeum’s response to implement a well-distributed node system, coupled with community governance, is a step in the right direction.

FAQs

1. What is Shardeum’s Layer1 project?
Shardeum’s Layer1 project aims to create a high-performance, parallelized blockchain infrastructure platform that will be accessible to all. It intends to solve critical infrastructural problems, including scaling, validity proofs, decentralized storage, governance, and networks.
2. What is the Layer1 project Economic Model?
The Layer1 economic model is designed to enhance stakeholder participation while promoting the Layer1 project’s growth. By allocating 49% of rewards to various stakeholders, the Layer1 project is creating a system that aims to reward all parties while promoting productivity and efficiency. The remaining 51% of rewards are allocated to node rewards.
3. How does the Layer1 project’s economic model incentivize participation?
Through allocating 49% of rewards to stakeholders such as the foundation, ecosystem, team, and sales account, the Layer1 project aims to incentivize participation and reward contributions. Stakeholders will be rewarded for their roles in the project’s growth and development through grants, research, staffing, and marketing initiatives.