Phase 2: Protocol Scaling
Last updated
Last updated
Phase 2 is expected to start after two key dependencies have been cleared:
Completion of Phase 1 and confirmation of minimum hashrate-per-token
Migration of legacy token contracts to new token contract (i.e., PIP-4 which will be put on Snapshot for community voting shortly)
There are multiple existing frictions that will be resolved with the new unified token contract; for more details you can refer to the proposal here)
There is no new token being launched in this process; PROS will remain the only native token for the protocol (1:1 swap of current PROS tokens to new contract)
Post token contract migration, the PROS token will be enabled with a new minting function, which will be a critical part of the protocol’s scaling. It is important to note that there will not be any arbitrary minting—new PROS tokens will only be minted into existence when there is a corresponding amount of hashrate being procured and brought online to the protocol—and the resulting hashrate-per-token ratio must be higher in order for this action to be implemented.
The animation below provides a graphical illustration of this concept:
Assuming Phase 1 ends with a minimum peg of 5 GH per token
DAO proposes a potential new issuance of 10m unit of tokens that would enable addition of another 200 PH/s of hashrate to the DAO
The resulting ratio of 6.4 GH per token (700 PH/s vs. 110m unit of total supply) is higher than the existing ratio of 5 GH—satisfying a necessary condition to proceed
Only after the new 200 PH/s is actually live on the dApp and running steadily will the new 10m units of PROS tokens will be minted into existence
(with a further example of growing to 1 EH/s)
For each approved addition of hashrate and new token issuance, the new minting will first be opened for purchase by wallets that hold an amount of PROS tokens above the required threshold (to be announced later)—the new issuance will be available at a discount to market price with a corresponding lock-up period.
Any remaining tokens not purchased by existing PROS token holders will be opened for purchase by other wallets.
New PROS tokens will only be minted into existence and be available for claim by purchasers once 1/ the lock-up period ends and 2/ the new hashrate is live on the dApp.
The objective of this is to create an intuitive supply modulation mechanism that achieves the following benefits:
No arbitrary increase in token supply (it only happens if it’s accretive to existing holders)
Each PROS token represents more underlying hashrate over time
Limits sell pressure from increase in supply (if hashrate-per-token ratio is fixed, then for the protocol to double in scale, the supply would need to be doubled which is not ideal)
Protocol has the flexibility to rapidly grow hashrate in the right market conditions
Preferred access to purchase new issuance at discounted price
