Over 90% of cryptocurrencies today have a system of mining in place which essentially rewards those running their graphics card or CPUs with cryptocurrency.
This functions as inflation or could even be seen as a type of “tax” on the cryptocurrency. Bitcoin alone, at a ~$100 billion+ market cap, is “burning” $5+ BILLION dollars a year on mining.
We see this as unnecessary, and believe Bitcoin could be about as secure with only a fraction of that mining reward (as seen by Bitcoin having great network security with no corresponding problems even when the market cap and mining reward was 1/10 as it is now). If Bitcoin had a similar system in place as Energi is proposing, Bitcoin would currently have BILLIONS OF DOLLARS worth per year to allocate to development and growth. This is an enormously missed value, a gap which Energi seeks to fill.
Energi will still be giving a small allocation to mining rewards, but will take a bulk of the coin issuance and give it to the treasury and masternodes. Masternodes provide security, instant transactions and private transactions to the network, while the treasury provides essential funding for development, user protections, marketing and other services for our cryptocurrency community, in perpetuity.
To incentivize on-going leadership for Energi, Energi is allocating a modest 10% on-going reward to the Energi Backbone. This is less than most ICO’s today, rewarding founders with typically between 20%-50% of tokens distributed. Furthermore, unlike most tokens today which reward the founders up-front (and because it’s given out in lump sum, would allow the founders to dump their coins and leave the project 6 months later), Energi instead gives an on-going 10% allocation through each block reward, thus for the founder to succeed.
Energi has to continue to be successful over time. We believe this model is superior and will become more common and standard in cryptocurrencies in the future as it aligns founder and investor interests.