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December 19, 2023

Enjin Governance and 250M ENJ Early Governance Rewards Pool

Enjin Governance and 250M ENJ Early Governance Rewards Pool
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Enjin Blockchain is being secured and holders are being incentivized to participate in governance and validator oversight, after its token migration launched last September 13. A 250 million Enjin Coin (ENJ) early governance rewards pool was created to facilitate this. These rewards are to be released in 10 equal intervals beginning January 15, 2024.

250M ENJ Early Governance Rewards Pool

Enjin Blockchain is a Substrate proof of stake blockchain custom built for non-fungible token (NFT) transactions. Being a proof of stake chain, it is secured through holders staking its native coin, ENJ.

A sufficient number of ENJ must be staked to ensure security and prevent any single holder from controlling the chain. More broadly, a sufficient number of ENJ holders must participate in chain governance and validator oversight to ensure its independence and decentralization. Holders participate by staking ENJ, subject to certain incentives and penalties.

Early Governance Rewards Release. Given the importance of securing a new proof of stake chain, Enjin Blockchain was created with a 250 million Enjin Coin (ENJ) early governance rewards pool to facilitate this by incentivizing migrating holders to stake ENJ and participate in governance and validator oversight. These rewards are to be released in 10 equal intervals beginning block height 3,247,000 (expected January 15, 2024 (Singapore time)). Each interval will be 30 eras in Enjin Blockchain or approximately 30 calendar days, and 25 million ENJ will be released at each release date.

An era in Enjin Blockchain is approximately 24 hours.

Greater Rewards to Earlier Pools. Early governance rewards will be released to holders who stake ENJ in nomination pools before before block height 3,247,000. These rewards will be distributed to nomination pools at this block height, with more rewards distributed to older pools following a linear formula. Thus, holders who staked ENJ in nomination pools that formed earlier (meaning, holders who staked longer) would receive a greater share of the rewards.

Nomination pools will then distribute these rewards to holders in proportion to their ENJ staked in the pool.

Participation in Early Governance Rewards. Holders may use external interfaces such as Enjin Wallet and Enjin Blockchain Console, an advanced interface, to stake ENJ in nomination pools. (Note ERC-20 ENJ must first be migrated from Ethereum to Enjin Blockchain as ERC-20 ENJ cannot be staked.)

Read:

How to migrate ERC20 ENJ / EFI tokens to Native ENJ

Migrating on Enjin Wallet (video)

How to participate in Enjin Blockchain governance and staking

Participating in Enjin Blockchain Governance and Staking on Enjin Wallet (video)

55% of ENJ allocated for swaps of ERC-20 tokens have been successfully claimed as of December 14, following the launch of Enjin Blockchain and its token migration last September 15. Holders of native ENJ are invited to help secure the chain and join governance.

Enjin Governance

Staking is the core of Enjin Blockchain security and governance, being a proof of stake chain. Validators and staking holders receive validator rewards and governance rewards to incentivize security and governance and 19 million ENJ of governance rewards have been released as of December 15, 2023.

Validators. Enjin Relaychain transactions are processed by validators. Transactions must be processed by multiple validators, ensuring security.

The chain sets a maximum number of nominated validators, and validators must be successfully nominated in order to process transactions and receive rewards. This nomination process and its incentives is the core of validator oversight.

Validator Rewards. Enjin Blockchain features token inflation to support network governance at a rate of 4.8927482% per annum, with new tokens released per era (or approximately daily). This ENJ is distributed in equal shares among active network validators.

Each such validator retains a chosen percentage (currently from 0.1-5.0%), then in turn distributes the remaining ENJ to the nomination pools that nominated that validator. These rewards are received to offset the costs of maintaining the validator, such as server costs.

Enjin Blockchain currently consists of Enjin Relaychain and Enjin Matrixchain, with transactions processed in Enjin Relaychain. (Please see the Enjin Blockchain whitepaper.)

Nomination Pools. Validators may only be nominated through nomination pools, not directly by holders. Nomination pools may only be formed by holders of the special Degen NFT collection, whose release details will be announced at a later date.

A nomination pool nominates validators as a pool, as chosen by the pool creator, and:

  • Each pool has a maximum size of ENJ that may be staked in it, determined by the pool’s Degen NFT.
  • A pool must have a minimum of 2,500 ENJ staked in order to nominate.
  • Each pool has a set duration from 30 to 1,000 eras, with longer duration pools receiving more rewards as discussed below.
  • A pool may allocate all its staked ENJ to nominate one validator or split this among multiple validators.
  • Transferring a Degen NFT transfers the attached nomination pool to the new holder.

The validators nominated by pools with the highest aggregate ENJ staked to support their nomination will be chosen to process transactions.

Governance Rewards. A nomination pool creator receives a percentage (typically 5%) of the rewards received from validators, then distributes the rest to holders that staked ENJ in the pool in proportion to their ENJ staked. These rewards are received for providing validator oversight.

Validators distribute governance rewards to nomination pools, after deducting the validator’s share, in two ways:

  • 80% as a “pool reward balance,” based on the amount of ENJ staked; and
  • 20% as a “bonus balance,” based on the duration of the pools.

These distributions are outlined in the example below.

Governance rewards are distributed at the end of each Enjin Blockchain era.

Governance Rewards Example

The rewards distributed per era depends on how much ENJ is minted due to token inflation in that era. 

In this simplified example, assume there are:

• Only 100,000 ENJ staked for governance

• Only 2 validators: 

  • Validator 1 (50,000 ENJ nominations, 5% commission)
  • Validator 2 (50,000 ENJ nominations, 4% commission)

• Only 3 nomination pools: 

  • Ali (60,000 ENJ staked, 100 era duration, 3% commission)
  • Bart (20,000 ENJ staked, 50 era duration, 2% commission)
  • Chao (20,000 ENJ staked, 750 era duration, 1% commission)

Assume the 3 nomination pools nominate validators as follows:

Assume 200,000 ENJ is released as governance rewards In the first era. These would be distributed to validators and nomination pools as follows:

1. Validator Rewards. Because there are two validators, each receives half of the governance rewards (100,000 ENJ each).

2. Validator Commission. Validator 1 receives a commission of 5,000 ENJ (because it set a rate of 5%). Validator 2 receives 4,000 ENJ (rate of 4%).

3. Nomination Pool Share. The remaining governance rewards (95% for Validator 1 and 96% for Validator 2) are split 80:20 among their nomination pools’ Pool Reward Balance and Bonus Balance.‍

Validator 1

Pool Reward Balance. Of the 95,000 ENJ in remaining governance rewards post-commission, 76,000 ENJ (80%) of this goes to the Pool Reward Balance of each nomination pool that nominated Validator 1, or Ali and Bart’s. The pools share the 76,000 ENJ in proportion to their ENJ staked towards Validator 1:

  • Ali’s pool, with 60% of the total stake towards Validator 1 (30,000 out of 50,000 ENJ), will receive 45,600 ENJ.
  • Bart’s pool, with 40% of the total stake towards Validator 1 (20,000 out of 50,000 ENJ), will receive 30,400 ENJ.

Bonus Balance. The remaining 19,000 ENJ will be credited to each pool’s Bonus Balance, in proportion to each pool’s duration.

  • Ali’s nomination pool has a duration of 100 eras while Bart’s has a duration of 50 eras.
  • Ali’s Bonus Balance will receive 12,666.67 ENJ (based on 100 divided by 150).‍
  • ‍Bart’s Bonus Balance will receive 6,333.33 ENJ (based on 100 divided by 150).

Validator 2 

Pool Reward Balance. Of the 96,000 ENJ in remaining governance rewards post-commission, 76,800 ENJ (80%) of this goes to the Pool Reward Balance of each nomination pool that nominated Validator 2, or Ali and Chao’s. The pools share the 76,800 ENJ in proportion to their ENJ staked towards Validator 2:

  • Ali’s pool, with 60% of the total stake towards Validator 2 (30,000 out of 50,000 ENJ), will receive 46,080 ENJ.
  • Chao’s pool, with 40% of the total stake towards Validator 2 (20,000 out of 50,000 ENJ), will receive 30,720 ENJ.

Bonus Balance. The remaining 19,200 ENJ will be credited to each pool’s Bonus Balance, in proportion to each pool’s duration.

  • Ali’s nomination pool has a duration of 100 eras while Chao’s has a duration of 75 eras.
  • Ali’s Bonus Balance will receive 10,971.43 ENJ (based on 100 divided by 175).
  • Chao’s Bonus Balance will receive 8,228.57 ENJ (based on 75 divided by 175).

4. Bonus Balance Transfer. Every era, a small amount of ENJ (based on the remaining eras) is taken from each pool’s Bonus Balance and transferred to and restaked in the Pool Reward Balance. The amount transferred increases as a pool’s duration decreases, based on this formula:

ALI

  • Ali’s pool has a total Bonus Balance of 23,638.10 ENJ (12,666.67 ENJ from Validator 1 and 10,971.43 ENJ from Validator 2.
  • 99 out of 100 eras remain.
  • 238.77 ENJ (23,638.10 / 99) will be transferred to Ali’s Pool Reward Balance.

‍

BART

  • Bart’s pool has a Bonus Balance of 6,333.33 ENJ, from Validator 1.
  • 49 out of 50 eras remain.
  • 129.25 ENJ (6,333.33 / 49) will be transferred to Ali’s Pool Reward Balance.

5. Pool Reward Balance. At the end of the first era, each Pool Reward Balance holds (i) its 80% share of the pool’s rewards for that era, and (ii) the amount transferred from the Bonus Balance for that era. Therefore, each nomination pool in this example would have a Pool Reward Balance of:

  • Ali: 45,600 + 46,080 + 238.77 = 91,918.77 ENJ
  • Bart: 30,400 + 129.25 = 30,529.25 ENJ
  • Chao: 30,720 + 111.20 = 30,831.20 ENJ

6. Degen Commission. Each Degen holder backing a nomination pool receives a commission at the end of each era, depending on the commission rate set. For the first era: 

  • Ali (commission set at 3%) receives 2,757.56 ENJ (91,918.77 x 0.03).
  • Bart (commission set at 2%) receives 610.59 ENJ (30,529.25 x 0.02).
  • Chao (commission set at 1%) receives 308.31 ENJ (30,831.20 x 0.01).

7. Pool Reward Balance Restaked. After deducting the Degen commission, the remainder of each Pool Reward Balance is then restaked toward the pool’s nominated validators.

  • Ali: 91,918.77 – 2,757.56 = 89,161.21 ENJ restaked. This is split in the existing 50:50 ratio, or 44,580.61 ENJ restaked toward each validator.
  • Bart: 30,529.25 – 610.59 = 29,918.66 ENJ restaked toward Validator 1.
  • Chao: 30,831.20 – 308.31 = 30,522.89 ENJ restaked toward Validator 2.

Existential Deposit. A wallet must maintain at least 1 ENJ to receive governance rewards.

Overview of Enjin Blockchain

Enjin Blockchain is a blockchain custom built for NFT transactions at the protocol level, and is supported by an app layer for no-code NFT integration into indie games and other platforms. Features and apps include:

  • Fuel tanks, an on-chain feature that allows developers to subsidize users’ transaction fees. Beyond simply free transactions, fuel tanks allow targeted subsidies such as free transactions for entry-level or beginner NFT collections, or specific featured collections.
  • Enjin Platform, APIs and SDKs that grant even solo indie developers no-code NFT integration into games and other platforms within 48 hours, without need to spend for expensive blockchain development.
  • Enjin Wallet Daemon, an automated system for signing blockchain transactions that frees developers from having to manually sign transactions such as NFT issuances within games. This comes with a visual user interface that makes it easy to use for even novice developers.
  • Enjin Wallet, a secure and easy-to-use mobile blockchain wallet that seamlessly plugs into games and other platforms with Enjin Platform.
  • NFT.io, a proprietary NFT marketplace supporting Enjin Blockchain.
  • Beam, a QR code NFT distribution system which supports conditional claims (such as requiring a claimant to hold the creator’s previous NFT before claiming the new one).

ENJ was the first NFT/metaverse token, launched in 2017 and became the foundation for the world’s first NFT gaming ecosystem and one of the world’s largest token ecosystems. This became a decentralized, self-selected community of NFT and NFT gaming enthusiasts, with over 170,000 unique addresses (excluding accounts in centralized platforms) pre-migration. This community in turn drew from the users of Enjin, a gaming community software company founded by Maxim Blagov and Witek Radomski in 2009 whose Enjin CMS (content management system) had 21 million users at its peak. Witek later authored ERC-1155, one of the most widely used Ethereum NFT standards.

Enjin Blockchain’s launch involved a successful “triple migration” of both tokens and NFTs across three chains, Ethereum, Polkadot and Enjin Blockchain. Over 200 million NFTs were migrated from Ethereum to Enjin Blockchain.

Enjin Governance and 250M ENJ Early Governance Rewards Pool
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Oscar Franklin Tan (press@enjin.io) is the Chief Financial Officer and Chief Legal Officer and Isabel Guidote-Pangalangan is the General Counsel of Atlas Development Services, a core contributor to Enjin Blockchain.

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