//Halo T2 Masternode Profitability Over Time—JUST Fees

Halo T2 Masternode Profitability Over Time—JUST Fees

I realized, shortly after posting my Halo article, that I missed something glaringly obvious: the number of Masternodes on the Halo network is not merely limited by the “cap” as laid out in the whitepaper. It’s limited by two additional things: 1) the current Halo supply; 2) a second artificial limit put there by the developers that I only discovered while perusing through the Halo slack. This has obvious implications for the short-term and long-term profitability of a Halo Masternode—specifically, I’ll be looking at profits for a Tier 2. This brief will be very technical, so if you like, skip down to the last section for my estimates.

What we know:

  1. The maximum possible coin supply for the Halo network at every month.
  2. The maximum number of Masternodes = 10,500.
  3. The tier caps are as follows: Tier 1=5000; Tier 2=4000; Tier 3=1000; Tier 4=500.
  4. 100% of the ICO coins can be held in Masternodes, but only 40% of coins added to the network after the ICO can be held in Masternodes.[1]
  5. 7.5% of all service fees get distributed to all Tier 2 MNs (they all split that percentage).

What I assume so I can run some calculations:

  1. The ratio of Masternodes will stay consistent over the lifetime of the Halo network.
      Tier 1 = 5k/10.5k = 47.6%.
      Tier 2 = 4k/10.5k = 38.1%.
      Tier 3 = 1k/10.5k = 9.5%.
      Tier 4 = 500/10.5k = 4.8%.

Time for a table! (NOTE: I’ve rounded everything to 1 decimal point.)

Month H Supply H Eligible MN Possible t1 t2 t3 t4
0 1000000 1000000 823.5 392 313.8 78.2 39.5
1 1410400 1164160 958.7 456.4 365.3 91.1 46
2 1820800 1328320 1093.9 520.7 416.8 103.9 52.5
3 2231200 1492480 1229.1 585.1 468.3 116.8 59
4 2641600 1656640 1364.3 649.4 519.8 129.6 65.5
5 3052000 1820800 1499.5 713.8 571.3 142.5 72
6 3462400 1984960 1634.7 778.1 622.8 155.3 78.5
7 3872800 2149120 1769.9 842.5 674.3 168.1 85
8 4283200 2313280 1905.1 906.8 725.8 181 91.4
9 4693600 2477440 2040.2 971.2 777.3 193.8 97.9
10 5104000 2641600 2175.4 1035.5 828.8 206.7 104.4
11 5514400 2805760 2310.6 1099.9 880.3 219.5 110.9
12 5924800 2969920 2445.8 1164.2 931.9 232.4 117.4

As you can see, at Month 0, assuming the ICO sells out, there will be 1 million Halo available, and 100% of those coins are eligible to be held in Masternodes (“H Eligible”). Since only 40% are eligible after that, and 410,400 H are mined every month (reduced by 25% every 24 months), the number of MN Eligible coins doesn’t match the Halo supply. So at Month 12, even though there are 5.9 million Halo, <3 million are eligible for use in MNs. Further to the right we have calculations based on Assumption #1: consistent ratio of MNs based on MN Tier caps. Armed with this assumption, can run the numbers out till we break something:

Month H Supply H Eligible MN Possible t1 t2 t3 t4
114 30269856 12707943 10465.4 4981.5 3987.3 994.2 502.3
115 30399709 12759884 10508.1 5001.9 4003.6 998.3 504.4

As you can see, at some point during Month 115 (9 years and 7 months after mining starts), the MN cap will be reached (10,500). But this is only the number of Masternodes possible. It doesn’t tell us how many MNs there will actually be. I doubt 100% of the eligible coins will be held at any given time. I think it’ll be much, much less than that. This necessitates:

Another Assumption:

  1. Only 5% of the total H Supply will be held in a MN of any kind. (This works out to 12.5% of the eligible H supply.)

New table! (Month 0-12, & 114-115.)

Month MN Possible Assume 5% H Supply t1 t2 t3 t4
0 823.5 102.9 49 39.2 9.8 4.9
1 958.7 119.8 57 45.7 11.4 5.8
2 1093.9 136.7 65.1 52.1 13 6.6
3 1229.1 153.6 73.1 58.5 14.6 7.4
4 1364.3 170.5 81.2 65 16.2 8.2
5 1499.5 187.4 89.2 71.4 17.8 9
6 1634.7 204.3 97.3 77.9 19.4 9.8
7 1769.9 221.2 105.3 84.3 21 10.6
8 1905.1 238.1 113.4 90.7 22.6 11.4
9 2040.2 255 121.4 97.2 24.2 12.2
10 2175.4 271.9 129.4 103.6 25.8 13.1
11 2310.6 288.8 137.5 110 27.4 13.9
12 2445.8 305.7 145.5 116.5 29 14.7
114 10465.4 1308.2 622.7 498.4 124.3 62.8
115 10508.1 1313.5 625.2 500.5 124.8 63

This matters because the services fees Masternodes collect is partly based on the number of MNs in the same tier. So on Month 12, if there are 117 Tier 2 Masternodes, then that 7.5% service fee reward gets divided 117 ways, becoming 0.0641%. Hold on! That’s okay. That percentage is very low, but that doesn’t mean anything yet. We also need to look at the fees! That leads us to:

The Last Assumption:

  1. Service fees will begin at ~264 H on Day 1 and increase by 1% to =10,000 H/day after 1 year (fees=10k H on Day 366).

This is wildly speculative, of course. And if anyone else has a better estimate, let me know. I have an enormous Excel sheet just waiting to be updated with more accurate data.

Last table! (This table goes by day, so I cherry-picked a few to show progress over time.)

Day # Tier 2 MNs Fees (H/day) Fees per T2 MN per day
1 39.221 264.666 0.506
2 39.433 267.313 0.508
3 39.645 269.986 0.511
4 39.857 272.686 0.513
5 40.07 275.413 0.516
10 41.131 289.462 0.528
20 43.253 319.746 0.554
30 45.376 353.198 0.584
40 47.499 390.15 0.616
50 49.621 430.969 0.651
100 60.234 708.785 0.883
150 70.847 1165.691 1.234
200 81.46 1917.132 1.765
250 92.072 3152.976 2.568
300 102.685 5185.484 3.787
350 113.298 8528.213 5.645
365 116.482 9900.99 6.375
366 116.694 10000 6.427

This is, of course, only looking at Tier 2 MNs, assuming only 5% of coins are held as MNs, and assuming that MNs are bought according to their cap percentage (so 38.1% of MNs are Tier 2). The total Fees per T2 MN after 365 days = 782.2 H, an average of 2.1 H/day. (Though, 2.1 H isn’t hit till about Day 227, 7-8 months in.)

 

[1] Halo Platform Slack channel, 9/29/17