Profit Calcuation and Distribution

Module goals and functions

This module is designed to automatically settlement and distribution of Gas fee income. It ensures transparency and fairness in the network's finances by tracking every transaction and fee in detail.

Function introduction

• Automatic Income and Expenditure Settlement: This module can automatically track and calculate all income and expenses within the network. Revenue mainly comes from Gas fees paid by users, while expenditures include the purchase of computing resources, etc.

• Detailed Information Tracking: In order to ensure the transparency of financial management, this module provides an interface for querying the detailed information of each computing resource purchase, such as buyer, cost, etc.

• Profit Calculation and Distribution: Based on the total income and total expenditure in each period (Era), the net profit is calculated and distributed to the system reserves, relay chain treasury, operating reserves and network maintainers according to established rules ( Collators).

Operation flow

1. Income Calculation: The system will count the Gas fees generated by each block as income.

2. Expenditure Calculation: At the same time, the system will calculate all expenses incurred when purchasing computing resources as expenses.

3. Profit Settlement: At the end of each Era, the system will automatically calculate the total income of the period minus the total expenses to obtain the net profit.

4. Profit Distribution: If the net profit is positive, it will be distributed to the system reserve, relay chain treasury, operating reserve and Collators according to the predetermined proportion. If the net profit is negative, the corresponding amount is deducted from the system reserve.

Income and expenditure calculation formula

1. Total income calculation:

   Total revenue is made up of the sum of gas fees for all blocks in the network. If we express the Gas fee generated by each block as (Gas_{block}), then the total income (Total_Income) within a period of time (one Era) can be expressed as: $TotalIncome = \sum_{i=1}^{N} GasBlock_i$ Among them, (N) represents the total number of blocks in the period.

2. Total expenditure calculation:

   The total expenditure mainly includes the purchase cost of computing resources (Coretime). If the cost of each purchase of computing resources is expressed as (Coretime_Cost), then the total expenditure (Total_Cost) in the period can be expressed as $TotalCost = \sum_{j=1}^{M} CoretimeCost_j$ Among them, (M) represents the number of computing resource purchases during this period.

3. Total profit calculation:

   Total profit (Total_Profit) for the period is total revenue minus total expenses:

   $TotalProfit = TotalIncome - TotalCost$

Profit distribution strategy

When the calculated total profit (Total_Profit) is greater than 0, it will be distributed to the following parties according to a predetermined proportion:

1. System Reserve: As a guarantee for network operation, it is used to cover unforeseen expenditures or negative profit situations.

2. Relaychain_Treasury: Supports the development of the entire network ecosystem and funds important public projects and proposals.

3. Operation Reserve: Ensure the daily operation and maintenance of the network.

4. Collators Incentive: Corresponding rewards will be given to Collators based on their contribution in maintaining network stability and processing transactions.

   The specific distribution ratio of profits can be adjusted according to network governance decisions.

If (Total_Profit) is less than or equal to 0, that is, the network operation is in a loss state, and the corresponding amount will be deducted from the system reserve to cover the loss.

Cost return mechanism

For users who participate in the purchase of computing resources (Coretime_Buyer), if there is residual profit, a portion of the fee will be returned in proportion to the purchase cost.

Advantages and Value

• Transparency: Through open calculation formulas and automated processes, all participants can clearly understand the specific situation of income and expenditure settlement and profit distribution.

• Efficiency: Automated processing reduces the need for manual operations and improves the efficiency of financial management.

• Fairness: Profit distribution is based on open and transparent rules and calculation formulas, ensuring that participants receive fair returns based on their contributions.

By introducing this module, the network is not only able to effectively manage its financial status, but also motivates network participants to actively contribute and jointly promote the healthy development of the blockchain network.