Author: Anoma Foundation
Compiled by Nicky, Foresight News
Anoma Foundation, a cryptocurrency infrastructure company, is in talks for a new round of funding that will value it at $1 billion. The company currently manages the multi-chain privacy-focused blockchain Namada and the privacy protection protocol Anoma. The Namada protocol brings many innovative mechanisms, such as the Multi-Asset Shielded Pool (MASP), a zero-knowledge (ZK) solution that makes the Namada mainnet a multi-chain shielded token hub. The protocol also innovates in many other aspects of the stack, such as Cubic Proof of Stake (CPoS), Shielded Set Rewards (SSR), and on-chain Public Goods Fund (PGF).
Namada Creation Process
The Anoma Foundation recently released a candidate version of the Namada protocol mainnet and will publish the balances.toml file proposed by the Anoma Foundation. If adopted by the Namada community, anyone can use it to create and propose Namada's genesis block.
In order to launch the Namada mainnet, Namada community members are discussing the following in various forums:
Namada Protocol Mainnet Releases Release Candidate
Initial Allocation Proposal (this article)
The proposed balances.toml file
Genesis parameters
transactions.toml file creation plan and balances.toml file processing flow
Merge parameters, balances, and transactions into genesis block proposal
A mainnet launch date that must be agreed upon by both staking operators and the active community
Namada’s 5-phase roadmap to mainnet launch
This article is intended to provide useful information and context for the discussion and decision-making process.
The role of the native token NAM
The Namada protocol’s native token, NAM, is not only used to pay transaction fees, but also for the following:
Securing the network using the Cubic Proof of Stake network
Rewarding participation in shielded sets (shielding rewards)
Voting rights for on-chain governance
Funding public goods contributors
To achieve these functions, the protocol is equipped with the following on-chain mechanisms: Cubic Proof of Stake (CPoS), Shielded Set Rewards (SSR), Governance, and Public Goods Fund (PGF).
Namada Creation Parameters
If someone decides to use the provided open source code and documentation, they will have to decide on genesis parameters, which are currently being discussed in the Namada Community Forum (see Ongoing Discussion).
The following table lists key parameters and includes example values to facilitate understanding of the innovative token mechanism in the protocol and how parameter choices affect network behavior. Please note that this is for illustrative purposes only:
A complete list of all customizable parameters can be found in the sample_parameters.toml file of the Namada protocol.
The following sections will dive deeper into how each mechanism works and how these parameters will affect network behavior.
Token Economics in the Namada Protocol
Namada Cubic Proof of Stake (CPoS)
Namada uses Cubic Proof-of-Stake as its anti-Sybil attack mechanism and PBFT (specifically CometBFT) as its consensus mechanism.
CPoS does not encourage stakers (network operators) to deviate from the protocol or consensus. In other words, CPoS encourages stakers to maintain the liveness (online verification and signing of blocks) and security (not signing the same block twice or signing invalid blocks) of the Namada network.
CPoS rewards stakers and agents for protecting the network by minting NAM, with the amount of rewards depending on the total amount of NAM staked and the maximum annual inflation rate parameter value. CPoS uses a PD controller, a protocol mechanism that dynamically adjusts the inflation rate to change staking incentives to match the target ratio of staked to unstaked NAM. If the current staking ratio is below the target, the mechanism will increase the inflation rate of staking rewards to incentivize more staking, and if the current ratio is above the target ratio, it will reduce the inflation rate.
Pledger
To be part of the consensus set, stakers need to stake NAM to secure the network. The consensus set is an upper limit on how many stakers in the network can participate in consensus at any time, and its maximum number is a protocol parameter. The stakers in the consensus set are determined by the total stake: the NAM staked by the staker plus the total NAM they received from token delegators. The protocol ranks and selects stakers based on the total stake to determine which stakers make it to the consensus set. For example, the consensus set can only have 100 stakers, so the top 100 stakers by NAM stake will be part of the consensus set.
If a staker makes a security error (such as double signing) that puts the total amount of NAM at risk, the CPoS mechanism will cut up to 100% of the staked tokens.
In Namada’s Cubic Proof-of-Stake, the staking reduction rate is related to the voting power ratio.
Namada’s CPoS mechanism is unique, and its mechanism for reducing violations is particularly special. Specifically, the intensity of punishment for a certain violation is not considered in isolation, but will refer to the number and frequency of other violations detected in the same or adjacent periods. If multiple pledgers are in violation during the same or close time period, the reduction rate they each face will increase significantly, far exceeding the penalty for a single pledger's violation during that period. This Cubic reduction mechanism not only effectively curbs collusion among stakers, but also incentivizes stakers operating multiple nodes to optimize and decentralize their security architecture, thus improving the security and stability of the entire network.
Token Delegator
NAM holders who do not want to be stakers themselves can delegate their NAM to stakers to contribute to the security of the network and receive rewards. Since delegated NAM is also subject to slashing for security and liveness violations, NAM holders are encouraged to research stakers themselves before delegating and to spread delegation across multiple staker nodes to reduce risk.
Namada's Shield Set Rewards
Another unique token economic mechanism is Namada’s Shielded Set Rewards (SSR), which is part of the Multi-Asset Shielded Pool (MASP). Since the strength of on-chain data protection increases with the number of tokens in the shielded set, SSR is designed to reward Namada users for transferring and storing tokens in the shielded set.
Namada Protocol rewards data protection as a public good
The mechanism is not dependent on a specific token, which means that the protocol can provide SSR rewards for any native token (such as NAM) or non-native token that the governance layer deems eligible for SSR requirements. To receive rewards, users only need to transfer eligible tokens to Namada's shielded set, and the protocol will automatically distribute rewards to eligible accounts. Tokens in the shielded set are not locked and can be used freely, which allows the mechanism to reward users who always keep their tokens in the shielded set (where they can send any number of shielded transactions). Once a token is transferred out of the shielded set, it will no longer meet the SSR reward eligibility requirements.
In the SSR mechanism, the reward amount for each token is determined independently on a case-by-case basis by a sophisticated PD controller, similar to the PoS mechanism, but with the goal of optimizing for the specific holdings of each token in the shielded set. For the SSR mechanism to work effectively, the governance layer needs to make clear the following key decisions: defining which tokens are eligible to participate in the SSR, setting the target holdings of each token in the shielded set, and setting the maximum NAM inflation rate for each token each year.
Namada’s on-chain governance
The Namada Protocol has an on-chain governance mechanism to determine future upgrades and changes to the protocol. After depositing a certain amount of NAM, anyone can propose a protocol upgrade to determine future versions of the Namada Protocol. NAM stakers vote on governance proposals, and they can choose to vote in favor, against, or abstain. Stakers and token delegators have voting power proportional to their staked amount. By default, stakers vote on behalf of token delegators, but any token delegator can override their staker's vote by voting directly.
Namada Public Goods Fund (PGF)
The Public Goods Fund (PGF) is another innovative mechanism in the Namada protocol, where a certain percentage of NAM is minted to be used specifically to fund public goods that have no private profit motive and are typically underfunded, such as technical research, educational products, and technical contributions such as protocol improvements or open source products to the broader Namada ecosystem.
The inflation rate of PGF is determined by the governance, and the fund is allocated by the PGF Manager (which can also be allocated through separate governance proposals). Anyone can submit a PGF Manager candidate proposal to run for election, which is voted on in the same way as other governance proposals. Candidates become managers after passing a majority of affirmative votes, and managers can submit public product fund proposals. PGF Managers can resign or be voted out by the governance. PGF Managers are eligible to receive a certain percentage of NAM determined by the governance as a reward for their work on public products.
Namada Genesis Token Allocation (balances.toml)
As mentioned during the Namada genesis process, the Anoma Foundation is preparing to propose a series of initial allocations for the balances.toml files required for mainnet launch.
If the Namada community decides to move forward with the mainnet launch, they will discuss the initial allocation, initial parameters, and software readiness in various forums before the mainnet launch.
The proposed initial total supply is 1 billion NAM with no lock-up period, and the specific distribution is as follows:
Overview of the initial Namada distribution plan proposed by the Anoma Foundation
An initial balances.toml file is in production and will be published to the open source repository for community review.
What’s next for the Namada community?
The Anoma Foundation will release its proposed balances.toml file in the coming weeks, and if adopted by the Namada community, anyone can use it to create and propose Namada’s genesis block.
In preparation for the launch of the Namada mainnet, members of the Namada community are having lively discussions on various forums:
Namada Protocol Mainnet Releases Release Candidate
Initial Allocation Proposal (this article)
The proposed balances.toml file
Genesis parameters
transactions.toml file creation plan and balances.toml file processing flow
Merge parameters, balances, and transactions into genesis block proposal
Agree on the mainnet launch date with stake operators and active community members
Namada’s 5-phase roadmap to mainnet launch
