The Monero community is working on some key measures to guard the interest of its miners. In this regard, Monero (XMR) shall be introducing an upgrade dubbed Tail Emission in the coming days.
Tail Emission, as the name suggests, is a “minimum subsidy” “to keep fees reasonable, ensure a lower bound of network security, and enable dynamic block sizes”. As part of tail emission, the Monero community has proposed that miners should get a minimum of 0.6 XMR for every block mined on Monero.
This is in contrast to the approach adopted by Bitcoin that allows block subsidy to go to zero. The official announcement notes:
“That 0.6 $XMR is linear, meaning Monero’s inflation rate approaches 0% in perpetuity. This makes Monero *disinflationary*, and unlike fiat or centralize cryptocurrencies, the supply is perfectly known, predictable, and able to be projected at any point in the future”.
The Benefits of Monero Tail Emission
In digital assets such as Bitcoin, the block subsidy will go to zsero in future. It means the security of the network will depend 100% on user’s transaction fees. However, the fees need to be enough to support a “competitive, decentralized mining environment”. Else the number of miners and BTC hashrate will drop drastically to meet market equilibrium.
Currently, the transaction fee is only 1% of the reward in each block. The rest 99% is composed of block subsidy which will eventually drop to zero. This puts the long term security guarantees for Bitcoin under question.
With Tail Emission, Monero will ensure that the miners are not 100% reliable on transaction fees. This guarantees a specific income for themselves regardless of the fee market. The announcement adds:
“Not only does this ensure Monero has a certain level of security forever, it removes the burden of security from being 100% on transaction fees, thus allowing transaction fees to remain reasonable long-term”.
The Monero community notes that Tail Emission will allow them to implement a fascinating unique “dynamic block size”. Thus, miners can automatically increase the block size to efficiently handle congestion. The dynamic block size also allows to keep block as small as possible during normal conditions.
The community notes: “The tail emission also ensures that there will always be new Monero entering the economy, replacing a portion of the Monero lost by clumsy users, incentivizing commerce, and allowing new entrants a way to get Monero without KYC (mining!) no matter the fee market”.
The tail emission ultimately means better network scalability and long-term security of XMR transactions.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draws his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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