The details of these calculations were taken from here.

Thus, when voting for P-Reps, it is very important to ensure that they are judicious with their expenses to the community in order to keep i_rep values reasonable.

This writer personally wants the P-Reps to be properly compensated for their efforts. This would generate a win-win situation in which rewarded P-Reps in turn reward the community with strong nodes and efforts to improve the network and its ecosystem.

We should also be aware, however, that some P-Rep candidates could abuse this compensation. It is our duty therefore to ensure that the P-Reps are delivering on their efforts.

The total annual reward for all P-Reps would be [(37,500 ICX * 0.5 * 22 + 37,500 * 0.5 * 100 ) * 12 = 27,450,000 representative reward + 18,750 * 12 * 22]. However, delegation rate is based on how much ICX is delegated in the network. For example, if only 10,000,000 ICX is delegated in the network and P-Rep Bob delegated 1,000,000 ICX, than P-Rep Bob’s delegated rate would be 10%.

TL;DR: Based on ICON guidance and estimates, total annual rewards for P-Reps will be 27,450,000 ICX, or roughly 3.4% of the total ICX supply.

The EEP and DApp reward system, DApp Booster Program (DBP), will not launch until the end of the year. Each reward system operates individually and until these systems are developed and go live, there will be no rewards for these systems.

The current estimate for EEP and DBP rewards (called i_eep and i_dapp, respectively) are 25% of the monthly reward for P-Reps (called i_rep). Based on the above i_rep calculations, and assuming EEPs and DApps delegate 1% of the total delegated amount, 25% of 37,500 monthly would be 9,375 ICX a month for these types of rewards. This will also be dependent on how many votes there are delegated. Thus, the calculation works out to 9,375 * 100 * 12 months = 11,250,000 ICX. The variable of 100 is based on an arbitrary number of 100 EEPs and DApps; this number could change based on implementation and governance voting.

TL;DR: EEP and DApp rewards are scheduled to go live at the end of 2019. They will account for an estimated 22,500,000 ICX annually, or roughly 2.8% of total ICX supply.

What this means for inflation

Based on the initial staking phase, we are looking at 37,965,818 ICX for the annual staking rewards and 27,450,000 for annual P-Rep rewards. This comes out to 65,415,818 ICX in rewards, or about 8.17% of the total supply of ICX. Once EEP and DApps are added, we are looking at 27,450,000 ICX in annual staking rewards, 27,450,000 ICX for annual P-Rep rewards and an estimated 22,500,000 ICX for EEP and DApp rewards (we do not include this in our final calculation, since these are not scheduled to take effect until the end of 2019 and many of the details are unknown).

In total, there will be 65,415,818 ICX annually, which is roughly 8.17%% of the total supply. Once EEP and DBP open, that number will increase.,ICX.

The question remains: where do these rewards come from? The rewards will be drawn from ICX fees, and if additional ICX is needed, it will be minted into a new supply.

As ICON fees are variable, we will go with 0.01 ICX per transaction for the purposes of calculation. Using these transaction fees, we would need a total of 6,541,581,800 transactions annually to pay out the total ICX reward. This would be 17,912,142 daily transactions. The transaction count has recently been on the rise, and the transaction count for June 14, 2019 was up to 5,652,861.

The recent spike in transactions can be attributed to the development foundation of ICON being set and new DApps being launched, as well as the ICON TX Challenge. With major companies, governments and other organizations showing interest in ICON, it is not out of the realm of possibility that ICON achieves close to or exceeds this number of transactions.

Taking all of this into account, let us use the record number of transactions on June 14 as an example. This would generate 20,632,943 ICX, lowering the newly minted ICX to 44,782,875. This is roughly 5.6% of the total supply: a reasonable number, in this writer’s opinion, considering the net rewards from delegation total approximately 15.81%, resulting in an 10.21% net positive after any devaluation from inflation.

TL;DR: Inflation rates are variable, but are estimated to average around 5.6%, which is arguably not too bad when compared with other platforms and the fact that delegates will receive 15.81% in rewards, a net positive.

The article above is based on public information as well as conversations with ICON team members regarding inflation. This writer put this article together using not only facts but also assumptions, because the ICON network is so new and things are still being developed. We do not have a crystal ball to tell us what future uses of ICON network will be. All-in-all, this writer is confident in the ICON network and thinks that transactions can easily provide necessary rewards in the future. This is the same basis that many other cryptocurrencies operate under — minting new tokens now with the expectation that fees will replace new minting of tokens in the future.

This writer thinks the ICON team is doing a fantastic job in developing the ecosystem. They planted the roots this past year and the tree is starting to grow as the community and others begin to develop their new branches to connect the ICON network. This writer’s team, Ubik Capital, is excited to serve the ICON community as a potential P-Rep. Thank you!

NOTE: If you enjoyed this article, please check out Russell’s second post on the topic over on his blog for Ubik Capital: “ICON Inflation Simplified”.