Mint

What is minting and why it is required in Aura Network

What is minting?

Minting is the process of creating or producing something. In Proof-of-Stake (PoS) blockchain, minting means validating information, creating a new block and recording that information into the blockchain via the PoS consensus mechanism. For example, someone can mint NFTs , tokens, or new cryptocurrency coins.

Why it is required in Aura Network?

In Aura Network, the Mint module is required to mint new Aura coins, through which increases its total supply until maxSupply (1,000,000,000 Aura) is reached.

Aura coins are minted as a part of the block reward earned by validators through the staking process, as the staking process provides particular benefits:

• Strengthen the network security
• Validators and delegators can gain profit through block rewards from transaction fees and Aura inflation.
• Governance acts (proposal, voting) for the future of the network.

The Minting Mechanism

The minting mechanism was designed to allow for a flexible inflation rate determined by market demand targeting a particular bonded-stake ratio.

In order to determine the appropriate market rate for inflation rewards, a moving change rate is used. The moving change rate mechanism ensures that if the % bonded is either over or under the goal %-bonded, the inflation rate will change too.

• If the inflation rate is below the goal %-bonded (67% in Aura network), the inflation rate will increase until a maximum value (12%) is reached.
• If the goal % bonded is maintained, then the inflation rate will stay constant.
• If the inflation rate is above the goal %-bonded, the inflation rate will decrease until a minimum value (4%) is reached.

Begin-Block

At the begining of each block, the Mint module will handle those following process:

• Circulation supply check: Aura Coin can only be minted more if the currentSupply is lower than the pre-defined maxSupply. the amount of minted coins after that block will also be verified to comply with the maxSupply, assuring that the circulation supply will never surpasses the maximum supply.
• Inflation block reward calculation: the amount of new-minted coins as block reward of that block will be calculated through the calculation of NextInflationRate, NextAnnualProvisions, and BlockProvision.

Circulation supply checking

At the beginning of each block, if currentSupply is less than maxSupply, calculate the number of newly minted coins as BlockProvision. The total number of coins in the next block is calculated by currentSupply + BlockProvision. If supplyNext is greater than maxSupply then the number of coins equals maxSupply - currentSupply, otherwise equals BlockProvision.

BeginBlocker(ctx sdk.Context, k custommint.Keeper) {
    minter := k.GetMinter(ctx)
    params := k.GetParams(ctx)

    maxSupplyString := k.GetMaxSupply(ctx)
    maxSupply, ok := sdk.NewIntFromString(maxSupplyString)

    currentSupply := k.GetSupply(ctx, params.MintDenom)

    if currentSupply.LT(maxSupply) {
        // calculte minted coin
        mintedCoin := minter.BlockProvision(params)
        mintedCoins := sdk.NewCoins(mintedCoin)
    
        supplyNext := currentSupply.Add(mintedCoin.Amount)
        if supplyNext.GT(maxSupply) {
            mintedCoin.Amount = maxSupply.Sub(currentSupply)
            mintedCoins = sdk.NewCoins(mintedCoin)
        }
    
        err := k.MintCoins(ctx, mintedCoins)
        if err != nil {
            panic(err)
        }
    } else {
        k.Logger(ctx).Info("Over the max supply", "currentSupply", currentSupply)
}

NextInflationRate

The target annual inflation rate is recalculated each block. The inflation is also subject to a rate change (positive or negative) depending on the distance from the desired bonded ratio (67%). The maximum rate change possible is defined to be 8% per year, however the annual inflation is capped as between 4% and 12%.

NextInflationRate(params Params, bondedRatio sdk.Dec) (inflation sdk.Dec) {
    inflationRateChangePerYear = (1 - bondedRatio/params.GoalBonded) * params.InflationRateChange
    inflationRateChange = inflationRateChangePerYear/blocksPerYr

    // increase the new annual inflation for this next cycle
    inflation += inflationRateChange
    if inflation > params.InflationMax {
        inflation = params.InflationMax
    }
    if inflation < params.InflationMin {
        inflation = params.InflationMin
    }

    return inflation
}

NextAnnualProvisions

This parameter is calculated once per block, based on current total supply and inflation rate.

NextAnnualProvisions(params Params, totalSupply sdk.Dec) (provisions sdk.Dec) {
    return Inflation * totalSupply

BlockProvision

Calculate the provisions generated for each block based on current annual provisions.

BlockProvision(params Params) sdk.Coin {
    provisionAmt = AnnualProvisions/ params.BlocksPerYear
    return sdk.NewCoin(params.MintDenom, provisionAmt.Truncate())

Parameters

The minting module contains the following parameters:

Key	Type	Value	Meaning
InflationRateChange	string (dec)	"0.080000000000000000"	The moving change rate to determine the appropriate market rate for inflation rewards
InflationMax	string (dec)	"0.120000000000000000"	The maximum value of the inflation rate
InflationMin	string (dec)	"0.040000000000000000"	The minimum value of the inflation rate
GoalBonded	string (dec)	"0.670000000000000000"	The desired bonded ratio for the inflation rate to stay constant
BlocksPerYear	string (dec)	"4429213"	The number of blocks in a year
MaxSupply	string (dec)	"1000000000"	The maximum amount of Auras that will exist in the lifetime of the Aura

For more detailed information, see Module "mint" in Cosmos Network .