Pi Network Mining Rate Declines: The Formula Explained

Summary: 

• Pi Network introduced the "Declining Rewards Issuance Formula" in March 2022 to manage mining rewards.
• The formula maintains a monthly supply limit and adjusts the Base Mining Rate (B) accordingly.
• This system aims to keep Pioneer mining rewards within the 65 billion Pi supply limit and offers a fair and stable user ecosystem.

Introduction

Pi Network introduced the “declining rewards issuance formula” on March 1, 2022. The formula defines a monthly supply limit, determining how the Base Mining Rate (B) is reduced. 

Therefore, B remains constant monthly and is reduced based on the formula the following month. This means that B is adjusted/decreased at the beginning of every new month. 

As part of the protocol’s plan to use the reward issuance formula, B was reduced on October 1, 2023. According to Pi News Media, B has reduced by 5.6% in October, from 0.0101105 to 0.0095401 Pi per hour. 

What is the Reward Issuance Formula

As stated above, the Rewards Issuance Formula was introduced in 2022. According to Pi Network’s documentation on the mobile application, It determines the declining exponential function whereby, combined with mining activities, the systemwide B is reduced based on a monthly supply limit. 

B’s monthly decrease occurs on the first day of each new month and remains constant through the end of that month. It will continue to be adjusted based on the formula and decrease monthly in the future.

Pi Network stated that the reward issuance formula was introduced to ensure that Pioneer mining rewards are within the total supply limit of 65 billion allocated for mining rewards, as announced in the December Whitepaper. 

Below is the first version of the rewards issuance formula with 35 billion remaining supply for future mining rewards, based on past data, simulations, and best assumptions: 

supply_limits (expressed in Pi/day) = exp (-last_day_total_mining_rewards / 1220) • 35,000,000,000, 

where: 

• Supply_limits represent the results generated by this formula, distributing a set quantity of Pi per day indefinitely while ensuring that the overall future issuance remains within the remaining supply.
• Last_day_total_mining_rewards corresponds to the total Pi mining rewards disbursed on the preceding day.
• The number 1220 is a tuning factor that will undergo further adjustments in the upcoming months.
• 35 billion is the estimated amount of Pi accessible for Pioneers to mine in the foreseeable future.

Calculating the Monthly Base Mining Rate (B) 

Now that the Reward issuance formula is outlined, how is monthly B calculated? Pi Network’s December Whitepaper stated that the systemwide B will be dynamically adjusted to keep the mining rewards issuance within supply limits for a certain period.

The choice of a monthly period offers a balance between prompt correction of deviations from the rewards issuance formula, preventing over- or under-issuance of Pi while ensuring that B remains stable for a sufficiently extended duration. This stability allows Pioneers the time needed to adapt their contributions to the network and engage in mining for rewards.

The calculation of B for each month relies on two key elements: the supply limit for that month, derived from the rewards issuance formula, and the summation of reward coefficients from all active Pioneers on the final day of the preceding month.

In specific terms, as quoted from Pi Network’s blog, “The value of B for a given month is calculated by summing up the daily supply_limits for the month from the above rewards issuance formula and dividing it by the number of days in the month for even daily allocation within the month and dividing it again by the sum of coefficients of mining rewards of all active Pioneers of the last day of the previous month—including their multiples of Referral Team, Security Circle, Pi Lockup, App usage, and Node Operation rewards.”

Conclusion

Pi Network introduced the Declining Rewards Issuance Formula in March 2022 to bring transparency and predictability to its mining rewards system. This formula, which determines the monthly supply limit and adjusts the Base Mining Rate (B) accordingly, ensures that Pi mining rewards align with the total supply limit of 65 billion Pi. 

Furthermore, the monthly calculation of B balances timely corrections and stability, allowing Pioneers to adapt their contributions and engage in mining for rewards. 

What is Pi Network:

Pi Network is a mobile mining blockchain with an application that lets people earn Pi coins by doing simple tasks on their phones. However, the project remains in its development stage with delivery of an open mainnet still a matter of speculation, with no launch date confirmed. 

With this in mind, the protocol remains in its testnet stage and will apparently go live when many users (Pioneers) complete the mandatory KYC procedure while the core team works on developing its ecosystem.

Pi Network is also reported to be under investigation by authorities in Vietnam and users should exercise a high degree of caution when interacting with the project and ensure they have conducted sufficient research before doing so.

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