Möbby’s treasury incentives / block rewards distribution can be at a high level described with BlockDist (Fig. 15).A graphical representation can be found in Fig. 16. Informally, BlockDist works as follows: It takes as input the validator and proposer committees BA and BC, the block B, and the endorsement graph E, and outputs reward such that reward[P] is the total treasury incentives distributed to party P from the creation of block B. A fixed number of tokens vbreward as treasury incentive is offered to each validator, and another fixed number pbreward is offered to each proposer. If a validator (resp. proposer) participates correctly in the creation of the block—for example, signs the block as a validator—then the validator (resp. proposer) receives the offered treasury incentives. In other words, the amount of reward a committee member receives only depends on their action (whether they participate correctly or not). If a validator or proposer has endorsers, then the rewards they receive will be shared automatically with those endorsers by a fair distribution function sharerewards. If some committee member does not participate, then their fraction of the treasury incentives is returned to the Treasury.

Timing of rewards: Rewards on Block i are posted as coinbase transactions (token minting) at Block i + k for a constant parameter k (In the above figure, k = 1 and the k - 1 blocks following Block i are gathering signatures by the BA and BC committees corresponding to Block i). Rewards are issued in a time-lock manner and can only be spent after ~ 3 days (129,600 blocks). This will ensure that at least a whole epoch has passed on the secondary chain and therefore, the relevant block has had a chance to be confirmed (finalized) also there.

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Further Additions to Reward Distribution A number of novel additions to the above reward distribution mechanism will be included to boost participation and trustworthiness. In particular:

• A number of new blockchain systems offer passive reward as a form of dividends to incentivize adoption. By design Möbby does not have an exogenous mechanism to horizontally reward parties in the system. However, the same effect (in terms of incentives) as passive dividends is achieved in Möbby by allowing parties to receive dividends through their ability to endorse Möbby servers. In particular, any new account in the system is randomly assigned a small number of servers to endorse. Using the redistribution mechanisms for rewards discussed above, this ensures that each account receives part of the rewards whenever its (automatically assigned) server is selected in CBA. Importantly, by the users getting informed about the servers reputation and (truthfully) reporting their opinion, they can increase (in fact, maximize) their reward using the Möbby endorsement mechanism.
• Parties proven to have participated incorrectly or maliciously, permanently lose their cut of treasury incentives/transaction fees—as well as their reputation, which makes them unlikely to be selected as a validator/proposer in the future.

Token Infusion as Rewards An active debate in the blockchain literature is whether systems should be inflationary or not. In fact, even the term inflationary is overloaded and has received two interpretations: one is that new (non-anticipated) coins are minted as needed—this is the classical notion of inflationary economies in which central banks might print money; the second one is that there is a fixed amount of tokens to be minted and they are gradually released in the economy as treasury incentives (e.g., blockrewards, governance tokens, etc.), research and/or development grants, employee incentives etc. To avoid confusion, we will use the terms infusion and infusionary (rather than inflation and inflationary) to refer to the latter model where a max supply is fixed at the beginning. This is the model adopted by Möbby.

Although a rigorous and robust distribution plan has been laid out by out team, the Möbby team recognizes that the question of whether or not, and when inflation should be included in the lifetime of the system is an open question that depends on the (still underexplored) dynamics of the emerging crypto market. Our strategy above is designed so that we are guaranteed to not need to address this issue for the next 7-10 years. In addition, transaction fees which will be added once the system transitions from federated to decentralized and will be informed by a governance mechanism are expected to further increase the above non-inflationary period by taking over the role of treasury incentives. We believe that this is a sufficiently long maturity period for the crypto market to test and converge to best practices and evaluate the effects of each strategy. Should our open-ended non-inflationary period appear to fade out, i.e., if reserves fade out and fees do not take over the incentives, the system will employ a governance mechanism (to be deployed by then) to decide on whether creation of new Möbby is desired by the vast majority of its users.