Seeking a valuation of $1 billion, a overview of Namada's proposed genesis process, tokenomics, and utility

Author: Anoma Foundation

Compiled by Nicky, Foresight News

Cryptocurrency infrastructure company Anoma Foundation is in talks for a new round of financing, with a valuation of $1 billion. The company currently manages the Namada blockchain, which focuses on multi-chain privacy, and the Anoma privacy protection protocol. The Namada protocol brings many innovative mechanisms, such as the Multi-Asset Shielded Pool (MASP), which is a zero-knowledge (ZK) solution that makes Namada Mainnet a center for shielded tokens on multiple chains. The protocol also innovates in many other aspects of the stack, such as Cubic Proof of Stake (CPoS), Shielded Set Rewards (SSR), and the on-chain Public Goods Fund (PGF).

Namada Genesis Process

The Anoma Foundation recently released a candidate version of the Namada protocolMainnet and will disclose the balances.toml file proposed by the Anoma Foundation. If the file is adopted by the Namada community, anyone can use it to create and propose the Genesis Block of Namada.

Namada’s community members are discussing the following topics on various forums in order to launch the Namada Mainnet:

• Namada protocol releases candidate version on Mainnet
• Initial distribution proposal (i.e. this document)
• Proposed balances.toml file
• Genesis Parameters
• Plan to create transactions.toml file and process balances.toml file
• Merge parameters, balances, and transactions into the proposal for the Genesis Block.
• A Mainnet launch date that must be agreed upon by the stake operator and active community

5-stage roadmap for Namada Mainnet launch

This article aims to provide useful information and background for discussion and decision-making processes.

The role of the native Token NAM

Namada protocol’s native Token NAM is not only used for paying Money Laundering, but also for the following aspects:

• Use the cubic Proof of Stake network to ensure network security
• Reward for participating in blocking behavior (blocking reward)
• Voting rights for on-chain governance
• Funding Public Goods Contributors

To achieve these functions, the protocol is equipped with the following on-chain mechanisms: Cubic Proof of Stake (CPoS), Shielded Staking Rewards (SSR), governance, and Public Goods Fund (PGF).

Namada Genesis Parameters

If someone decides to use the provided Open Source code and documentation, they will have to decide on the genesis parameters, which are currently being discussed in the Namada community forum (see ongoing discussion).

The following table lists key parameters and includes example values to help understand the innovative Token mechanism in the protocol and how parameter selection will affect network behavior. Please note that this is for illustrative purposes only:

In the sample_parameters.toml file of the Namada protocol, you can find a complete list of all customizable parameters.

The following sections will delve into the workings of each mechanism and how these parameters will affect network behavior.

Token economic mechanism in Namada protocol

Namada Cube Proof of Stake (CPoS)

Namada adopts Cubic Proof of Stake as its anti-Sybil Attack mechanism, and uses PBFT (especially CometBFT) as its Consensus Mechanism.

CPoS does not encourage stakers (network operators) to deviate from the protocol or consensus. In other words, CPoS encourages stakers to maintain the activity (online verification and signing of blocks) and security (not signing the same block twice or signing invalid blocks) of the Namada network.

CPoS rewards stake merchants and agents to protect the network by minting NAM, and the reward amount depends on the total amount of NAM staked and the parameter value of the highest annual inflation rate. CPoS adopts a PD controller, a protocol mechanism used to dynamically adjust the inflation rate to change the stake incentive, in order to match the ratio of target staked NAM to unstaked NAM. If the current stake ratio is lower than the target, the mechanism will increase the inflation rate of stake rewards to incentivize more stake. If the current ratio is higher than the target ratio, the inflation rate will drop.

Pledge Merchant

To be part of the Consensus set, stake vendors need to stake NAM to secure the network. The Consensus set is the maximum number of stake vendors that can participate in the Consensus at any time in the network, and its maximum quantity is a protocol parameter. The stake vendors of the Consensus set are determined by the total stake amount: that is, the NAM staked by the vendors plus the total amount of NAM they receive from Token delegators. The protocol will rank and select the stake vendors based on the total stake amount, thereby determining which stake vendors can enter the Consensus set. For example, if the Consensus set can only have 100 stake vendors, then the top 100 NAM stake vendors will become part of the Consensus set.

If the staking operator makes security mistakes (such as double signing), which puts the total amount of NAM at risk, the CPoS mechanism will cut up to 100% of the stakeToken amount.

In Namada’s Cubic Proof of Stake (Cubic Proof-of-Stake), the stake reduction rate is related to the voting power ratio.

Namada’s CPoS mechanism is unique and its mechanism for reducing violations is particularly special. Specifically, the severity of punishment for a particular violation is not considered in isolation, but will take into account the number and frequency of other violations detected during the same or neighboring period. If multiple pledgers violate the rules in the same or neighboring period, the reduction rate they each face will increase significantly, far exceeding the penalty for a single pledger during that period. This cubic reduction mechanism not only effectively suppresses collusion among pledgers, but also incentivizes pledgers operating multiple Nodes to optimize and diversify their security architecture, thereby enhancing the overall security and stability of the network.

Token Delegate

NAM holders who do not want to be their own validators can delegate their NAM holdings to validators to contribute to the security of the network and receive rewards. Since delegated NAM can also be reduced due to security and activity violations, NAM holders are encouraged to research validators themselves before delegating and to diversify their delegation among multiple validator nodes to mitigate risks.

Namada’s Shielding Collection Rewards

Another unique Token economy mechanism is the Shielded Set Reward (SSR) of Namada, which is part of the Multi-Asset Shielded Pool (MASP). As the strength of on-chain data protection increases with the increase of Tokens in the shielded set, SSR is designed to reward Namada users for transferring and storing Tokens in the shielded set.

Namada protocol rewards data protection as a public benefit

The mechanism does not depend on specific Tokens, which means that the protocol can provide SSR rewards for any native Token (such as NAM) or non-native Tokens that the governance layer deems compliant with SSR requirements. To receive rewards, users only need to transfer eligible Tokens to Namada’s shielded pool, and the protocol will automatically allocate rewards to eligible accounts. The Tokens in the shielded pool are not locked and can be used freely, which allows the mechanism to reward users who always keep their Tokens in the shielded pool (where they can send any number of shielded transactions). Once the Tokens are transferred out of the shielded pool, they will no longer qualify for SSR rewards.

In the SSR mechanism, the reward amount for each Token is independently determined by the precise PD controller according to the specific situation, which is similar to the PoS mechanism, but its goal is to optimize the specific holding amount of each Token within the shielding set. To make the SSR mechanism work effectively, the governance layer needs to clarify the following key decisions: defining which Tokens are eligible to participate in SSR, setting the target holding amount for each Token in the shielding set, and setting the maximum NAM inflation rate for each Token annually.

Namada’s on-chain governance

Namada protocol has an on-chain governance mechanism to determine the future upgrades and changes of the protocol. After depositing a certain amount of NAM, anyone can propose an upgrade for the protocol to decide the future version of Namada protocol. NAM stakers will vote on the governance proposal, and they can choose to approve, reject, or abstain. The voting power of stakers and token delegators is proportional to their staked amount. By default, stakers vote on behalf of token delegators, but any token delegator can override their staker’s vote by voting directly.

Namada on-chain Public Product Fund (PGF)

The Public Goods Fund (PGF) is another innovative mechanism in the Namada protocol, where a certain proportion of NAM is minted specifically to fund public goods that lack private profit motives and are often underfunded, such as technological research, educational products, and broader protocol improvements or Open Source products that contribute to the Namada ecosystem.

The inflation rate of PGF is determined by the governance layer, and the fund is allocated by the PGF manager (or through a separate governance proposal). Anyone can submit a PGF manager candidate proposal for election, and the voting method for this proposal is the same as other governance proposals. Candidates can become managers after receiving a majority of favorable votes, and managers can submit public product fund proposals. PGF managers can resign or be voted out by the governance layer. PGF managers are eligible to receive a certain proportion of NAM determined by the governance layer as a reward for their work in public products.

Namada Genesis Token Distribution (balances.toml)

As mentioned in the Namada genesis process, the Anoma Foundation is preparing to propose a series of initial allocation plans for the balances.toml file required for Mainnet launch.

If the Namada community decides to push forward with the Mainnet launch, they will discuss the initial allocation, initial parameters, and software readiness on various forums before the Mainnet launch.

The proposed initial total supply of NAM is 1 billion, with no lock-up period. The specific allocation is as follows:

Overview of the initial allocation plan proposed by Anoma Foundation and Namada

The initial balances.toml file is being created and will be released to the Open Source repository for community review.

The next plan of the Namada community

The Anoma Foundation will release its proposed balances.toml file in the next few weeks, and anyone can use it to create and propose the Genesis Block of Namada if the file is adopted by the Namada community.

To launch the Namada Mainnet, members of the Namada community are engaging in lively discussions on various forums:

• Namada protocol releases candidate version on Mainnet
• Initial distribution proposal (i.e. this document)
• Proposed balances.toml file
• Genesis Parameters
• Plan to create transactions.toml file and process balances.toml file
• Merge parameters, balances, and transactions into the proposal for the Genesis Block.
• Agreed Mainnet launch date with stake operators and active community members
• 5-stage roadmap for Namada Mainnet launch