Network Weight — October 31, 2018

A year in network weight for Qtum Mainnet

In this report, we look at the network weight for the first year of Qtum Mainnet. Network weight is an estimate by the wallets of the total number of coins being staked by all the wallets and is only used for calculating the time to an expected block reward. Network weight provides an interesting number about network operations and determines the return for staking wallets.

On a separate note, happy 10th Birthday to bitcoin! Satoshi Nakamoto published the bitcoin whitepaper 10 years ago on October 31, 2008.

I am an independent researcher, occasional blogger, social moderator, and appreciate the technical guidance from the Qtum Team and discussions in the Qtum Community. If you have any comments or corrections for this article, please reach out on social media.

Network Weight

For this analysis, we derive the network weight as the wallet does [reference 1], buy taking a moving average of the difficulty (difficulty is how hard it is to solve the SHA256 hash puzzle and win a block reward) for each block. Each block header has its difficulty as shown on the Explorer:

To get the block difficulties, read all the blocks in the blockchain and extract the difficulties for analysis in an Excel spreadsheet.

Looking at network weight for the past year we will discard the genesis blocks and other very early blocks before the ERC20 token swap for Mainnet QTUM. This analysis covers block 30,000 (October 20, 2017) to the present. During this time the minimum network weight was 5.5 million for block 32,615 on October 24, 2017, and the maximum was 34.7 million for block 98,677 on February 11, 2018:

Network weight, every 100 blocks

Zooming in on the last 6 months shows:

Network weight, every 100 blocks

Annual Return

The annual return for Qtum Proof of Stake moves inversely with network weight because for a fixed wallet weight the return is lower when the network weight is higher. The annual return calculation is simply the total block rewards in QTUM for a year (currently 876,000) divided by the network weight.

For the year since block 30,000 the chart of annual return shows a recent average a little over 6%:

Photo by Algont, cropped and overlaid

Keep in mind that network weight is an estimate by the wallets for an actual value that can never be actually determined for a decentralized network. The network weight algorithm gives considerable variation since Qtum adjusts the difficulty with every block. We can get a better estimate of network weight by looking at the block rewards for large staking wallets which gives a current network weight of 19.3 million and an annual return of 4.6% [Reference 2].

This chart shows the annual return for a given network weight:

Thanks for reading and stay safe online,

Jackson

References

  1. This formula gives the Network weight in units, code reference:

2. For October 10 to October 23, large staking wallets with a stable weight of 2.907 million QTUM won 1,261 block rewards out of 8,371 blocks, or 15.06%, giving a network weight of 19.3 million. This estimate has two orders of magnitude more data than the wallet’s estimate for network weight.

3. For more on Qtum Proof of Stake and Difficulty see this previous blog.

Blockchain researcher, occasional blogger