From bb13aecf92acbd71c922babc13946635c91491f0 Mon Sep 17 00:00:00 2001 From: anilchinchawale Date: Thu, 19 Feb 2026 23:53:17 +0530 Subject: [PATCH 1/3] feat: Add XDC Network Protocol Upgrade Proposal - Three-tier node system (Master, Protector, Observer) - Unlimited staking with fixed per-node rewards - Fee burning mechanism (30% base fee) - Gas redistribution model - Technical V2Config implementation - Timeline and security considerations Author: Community Proposal Date: February 2026 --- .../proposal-reward-mechanism-upgrade.md | 193 ++++++++++++++++++ 1 file changed, 193 insertions(+) create mode 100644 docs/xdcchain/governance/proposal-reward-mechanism-upgrade.md diff --git a/docs/xdcchain/governance/proposal-reward-mechanism-upgrade.md b/docs/xdcchain/governance/proposal-reward-mechanism-upgrade.md new file mode 100644 index 0000000..f069f12 --- /dev/null +++ b/docs/xdcchain/governance/proposal-reward-mechanism-upgrade.md @@ -0,0 +1,193 @@ +--- +title: XDC Network Protocol Upgrade Proposal - Reward Mechanism & Node Tiers +description: Proposal for XDC 2.0 Network Reward Mechanism Upgrade including Protector & Observer nodes, unlimited staking, and fee burning +--- + +# XDC Network Protocol Upgrade Proposal + +## Reward Mechanism Upgrade & Node Tier System + +**Author:** Community Proposal +**Date:** February 2026 +**Status:** Draft + +--- + +## Executive Summary + +This proposal outlines a comprehensive upgrade to the XDC Network's reward mechanism, introducing a multi-tiered node system and enhanced economic model. The upgrade includes: + +- **Three-tier node system**: Master Nodes, Protector Nodes, and Observer Nodes +- **Unlimited staking** with fixed per-node rewards +- **Enhanced fee burning mechanism** +- **Gas fee redistribution** + +--- + +## 1. Background: How Rewards Work Today + +In the current XDC Network's consensus model: + +- Rewards are distributed every epoch (900 blocks) +- Total reward per epoch: 5000 XDC (defined by `XDPoSConfig.Reward`) +- 90% to block signers (Master Nodes) +- 10% to Foundation Wallet (`xdc92a289fe95a85c53b8d0d113cbaef0c1ec98ac65`) + +### Current Reward Flow (3 Steps) + +1. **Count Contributions**: Only block signers who were Master Nodes are counted +2. **Calculate Reward**: Fixed reward per epoch (5000 XDC) +3. **Distribute Rewards**: + - 90% to the owner of each contributing signer + - 10% to the Foundation Wallet + +--- + +## 2. Proposed Changes + +### 2.1 Three-Tier Node System + +| Role | Rank | Total Nodes | Min Stake | +|------|------|-------------|-----------| +| Master Nodes | 1 – 108 | 108 | 10,000,000 XDC | +| Protector Nodes | 109 – 324 | 216 | 10,000,000 XDC | +| Observer Nodes | 325 – 1324 | 1000 | 10,000,000 XDC | + +### 2.2 Proposed Per-Epoch Rewards + +| Role | XDC Contribution | Annual Rewards | Per Epoch Reward | +|------|------------------|----------------|------------------| +| Master Node | 10,000,000 XDC | 1,000,000 XDC | ≈ 57 XDC | +| Protector Node | 10,000,000 XDC | 800,000 XDC | ≈ 45 XDC | +| Observer Node | 10,000,000 XDC | 400,000 XDC | ≈ 23 XDC | + +> **Note:** Higher stake increases probability of being selected as Master Node. New selection criteria includes: +> - XDC Contribution amount +> - Node longevity (timestamp) +> - Hardware/Network resources allocated + +### 2.3 Unlimited Staking + +- No maximum stake limit +- Per-epoch rewards remain fixed regardless of stake amount +- Higher stake = higher probability of being selected as validator +- Voting mechanism allows community delegation + +### 2.4 Fee Burning & Gas Enhancement + +#### Base Fee Burning (EIP-1559 Style) + +- A portion of gas fees is burned from each transaction +- Base fee varies based on network congestion +- Burn rate: 30% of base fee + +#### Priority Fee Redistribution + +- 70% of priority fees go to the block proposer +- 30% distributed to Protector and Observer nodes + +--- + +## 3. Technical Implementation + +### 3.1 V2Config Structure + +```go +type V2Config struct { + MasternodeReward float64 `json:"masternodeReward"` + ProtectorReward float64 `json:"protectorReward"` + ObserverReward float64 `json:"observerReward"` + MaxProtectorNodes int `json:"maxProtectorNodes"` + MaxObserverNodes int `json:"maxObserverNodes"` + FeeBurnRate float64 `json:"feeBurnRate"` + MinStakeAmount uint64 `json:"minStakeAmount"` +} +``` + +### 3.2 Implementation Steps + +1. Pull candidates from parent state of epoch switch block +2. Rank by Candidate Cap (stake from owner + voters) +3. Assign roles (Master, Protector, Observer) +4. Calculate fixed rewards per contributing node +5. Distribute rewards to node owners +6. Apply 90/10 split with Foundation Wallet + +### 3.3 Penalty & Inactivity + +- Inactive nodes (no contribution during epoch) receive no rewards +- Penalty provision: Serve few epochs before starting rewards +- Slashing mechanism for malicious behavior + +--- + +## 4. Gas Fee Structure + +### 4.1 New Fee Model + +| Component | Description | +|-----------|-------------| +| Base Fee | Dynamic, burned (30%) | +| Priority Fee | Goes to validator (70%) | +| Network Fee | Distributed to Protector/Observer nodes (30%) | + +### 4.2 Gas Limit Changes + +- Current gas limit: Dynamic +- Proposed increase: 2x for smart contract execution +- Special provisions for XDPoS system transactions (free) + +--- + +## 5. Security & Activation + +### Requirements + +- Full security audit +- Rigorous testnet simulations +- Clearly defined activation block (`TIPUpgradeReward = big.NewInt(XXXX)`) +- Community approval via governance process + +### Risk Assessment + +| Risk | Mitigation | +|------|------------| +| Unprecedented model | Extensive testing | +| Edge case behaviors | Monitoring & emergency response | +| Network congestion | Dynamic fee mechanism | + +--- + +## 6. Timeline + +| Phase | Timeline | Milestone | +|-------|----------|-----------| +| Testnet | Month 1-2 | Protocol simulation | +| Security Audit | Month 3 | Audit completion | +| Community Vote | Month 4 | Governance approval | +| Mainnet Upgrade | Month 5 | Hard fork activation | + +--- + +## 7. Conclusion + +This proposal represents a major step forward for the XDC Network: + +- ✅ Recognizes contribution from all node tiers +- ✅ Encourages decentralization +- ✅ Provides sustainable reward model +- ✅ Implements fee burning for deflationary mechanics +- ✅ Positions XDC for long-term growth + +--- + +## References + +- [Original Proposal](https://www.xdc.dev/gary/proposal-xdc-network-reward-mechanism-upgrade-3kkc) +- [XDC Whitepaper](../whitepaper.md) +- [XDPoS Documentation](xdpos.md) +- [XDC Architecture](../learn/xdc-architecture.md) + +--- + +*This is a community-driven proposal. Questions and feedback are welcome.* From 5c502cac2f2ac9468746fc0570b7ca23004d6d8b Mon Sep 17 00:00:00 2001 From: anilchinchawale Date: Fri, 20 Feb 2026 00:01:40 +0530 Subject: [PATCH 2/3] feat: Add reward mechanism upgrade proposal to navigation - Add proposal to Governance nav section - Update proposal with proper metadata PR: https://github.com/XinFinOrg/Docs/pull/36 --- mkdocs.yml | 1 + 1 file changed, 1 insertion(+) diff --git a/mkdocs.yml b/mkdocs.yml index b60e042..d3deb44 100644 --- a/mkdocs.yml +++ b/mkdocs.yml @@ -112,6 +112,7 @@ nav: - Governance: - Overview of XDCDAO: ./xdcchain/governance/overview.md + - Proposal: Reward Mechanism Upgrade (XDC 2.0): ./xdcchain/governance/proposal-reward-mechanism-upgrade.md - User Guide: https://www.xdc.dev/0xbeny/xdcdao-understanding-the-proposal-window-39f8 - FAQ: From 9859fc289d596d3b5db3a6ca60183c6afbd729ec Mon Sep 17 00:00:00 2001 From: anilchinchawale Date: Fri, 20 Feb 2026 00:02:24 +0530 Subject: [PATCH 3/3] docs: Add proposal reference to governance overview - Add upcoming protocol upgrades section - Link to new reward mechanism proposal --- docs/xdcchain/governance/overview.md | 10 ++++++++++ 1 file changed, 10 insertions(+) diff --git a/docs/xdcchain/governance/overview.md b/docs/xdcchain/governance/overview.md index 73328f2..f8e5c04 100644 --- a/docs/xdcchain/governance/overview.md +++ b/docs/xdcchain/governance/overview.md @@ -8,6 +8,16 @@ title: Overview - XDCDAO The DAO Treasury within the [XDCDAO](https://www.xdcdao.org/) framework plays a critical role in the XDC Network's decentralized governance system. It is meticulously designed to manage the community's collective resources efficiently, securely, and transparently. This section provides a structured overview of the DAO Treasury, highlighting its purpose, operation, funding sources, and significance within the DAOFIN ecosystem. +## Upcoming Protocol Upgrades + +> 🔔 **New Proposal**: [XDC Network Reward Mechanism Upgrade (XDC 2.0)](./proposal-reward-mechanism-upgrade.md) +> +> This proposal introduces: +> - Three-tier node system (Master, Protector, Observer) +> - Unlimited staking with fixed rewards +> - Fee burning mechanism +> - Enhanced gas model + ## Purpose of the DAO Treasury The DAO Treasury's primary objective is to support the sustainable growth and development of the XDC Network by financing projects and initiatives that align with the community's goals. It acts as the financial hub for: