Configure Lockup Settings

09/22/2023

How Lockups work

After you pass identity verification (KYC), you can voluntarily lock up a portion of your Transferable Balance to earn a right to mine at a higher rate.

The mining boost is calculated based on the amount of locked up π and lockup duration. For details, read the economic model section below.

If you have verified your identity (KYC), the first Mainnet transfer will occur upon Mainnet launch. Thereafter, transfers will occur periodically. Any updates made to your lockup configuration will take effect in your next Mainnet balance transfer.

You can decide to change your lockup configuration anytime you want as an overall account-wide setting in the Pi app. You can even preselect these settings before you are KYC'ed or ready to migrate to the Mainnet. As you and your referral team/security circle pass KYC and new mining occurs, more of your Mobile Balance will become transferable. At each transfer to Mainnet, these preselected settings of lockup duration and percentage will automatically apply to the amount of balance transferred, resulting in two types of balances on the Mainnet: lockup balance and free balance, both of which will be recorded on the Mainnet blockchain and reside in your non-custodial Pi wallet. Lockups cannot be reversed once confirmed and must remain locked up for the entirety of the chosen duration due to the nature of blockchain.

As the lockup amount is accounted for by the percentage of your transferred balance, you will have to lock up the same percentage of the new transferred balance to maintain the same lockup mining boost. This is done easily by keeping your lockup configuration setting consistent for every recurring transfer to Mainnet. On the other hand, if you do not lock up the same percentage of π in your later transfers as your initial Mainnet transfer, your lockup mining boost will decrease. If you make any changes to your account-wide lockup setting, the change will take effect on the next transfer of your balance to the Mainnet.

This account-wide lockup setting allows you to lock up a maximum of 100% of your transferable balance. After Mainnet launches and you can transfer your balances, you can also lock up more Pi directly on the Mainnet through a slightly different lockup interface later on. At that time, you can lock up as much as 200% of their already-transferred Mainnet balance acquired from their previous mining. The additional lockup allowance for more Pi than individually mined by the Pioneer can come from utility-based Pi apps transactions, i.e. making Pi from selling goods and services.

Lockup Economic Model

At Mainnet, the lockup reward is meant to support a healthy and smooth ecosystem and incentivize long-term engagement with the network, while the network is bootstrapping the economy and creating demands. It is an important decentralized macroeconomic mechanism to moderate circulating supply in the market, especially in the early years of the open market when utilities are being created. One important goal of the Pi Network is to create a utility-based ecosystem of apps. Transactions for real goods and services in the ecosystem, rather than just speculative trading, are intended to determine the utility of Pi. As we launch the Enclosed Network phase of the Mainnet, one of the main areas of focus will be to support and grow the Pi app developer community and nurture more Pi apps to grow. In the meantime, Pioneers can choose to lock up their Pi to help create a stable market environment for the ecosystem to mature and for more Pi apps to emerge and provide compelling use cases for spending Pi – to ultimately create organic demands through utilities.

Pioneers will have the opportunity to voluntarily lock up their Pi to earn the right to mine at a higher rate. First of all, the prerequisite of the lockup reward is that the Pioneer must be actively mining. Without mining in the first place, there will be no lockup rewards for any inactive mining sessions, even if Pi is locked up. As expressed in the formula above, all that the lockup does is to provide multipliers to B, so there will be no lockup rewards if B is 0 (which means the Pioneers is not mining).

Secondly, the lockup reward is positively associated with the contribution to the lockup, i.e. the duration of the lockup time period (Lt) and the amount locked up. However the lockup amount is accounted for by the percentage of a Pioneer's total Pi mined (Lp). The maximum Pi that a Pioneer can lock up is twice as much as their Mainnet Balance that got transferred from their prior mining in the mobile app (Lb), i.e. 200% Lb. The reasons for having a 2X maximum lockup amount of one's transferred Mainnet Balance (Lb) are to 1) prevent exploitation of the lockup reward and 2) encourage other contributions to the Pi ecosystem, such as further boosting their mining, running nodes and using apps. This, in a sense, favors Pioneers who mine and make other types of contributions to the network.

Thirdly, Log(N) offers a higher lockup incentive to Pioneers who have a long mining history and presumably a large transferable balance to lock up. While the lockup reward formula generally favors equality by accounting for not the absolute amount but the percentage of their transferred balance (Lp) — which allows smaller accounts with a short mining history to lock up small amounts and yet receive the same lockup reward multiplier as big accounts — we need to add a Log(N) factor that accounts for miners with a long mining history, to counterbalance the bias in favor of Pioneers with small balances and provide enough incentive for long-history Pioneers with bigger balances. However, the effect of mining history on lockup rewards also needs to be capped. Thus, the formula applies a logarithm to the number of previous mining sessions N. For example, if a Pioneer mined almost everyday for the last 3 years, their total previous mining sessions (N) will be about 1,000. In this scenario, Log(1,000) equals 3, adding another multiplier to B in their lockup rewards. Keep in mind that to achieve meaningful lockup rewards for long-mining-history Pioneers, the amount of Pi you have to lock up is much more than smaller accounts.

Fourthly, one Pioneer can voluntarily have multiple lockups at different times with different amounts and durations. The calculation of the total lockup rewards for this Pioneer with i number of different lockups is to find the total lockup reward multiplier of B, as expressed in the formula below. The formula below is the equivalent to the lockup reward formula above, with the only difference being that it accounts for multiple lockups of the same Pioneer to calculate their total lockup rewards, e.g. different durations (Lti) and different amounts (Lci) of each lockup at different time:

The purpose of this formula is to calculate the total lockup rewards based proportionally on each lockup's amount (Lc) over the total Mainnet Balance from previous mining (Lb) as a weight, multiplied by their respective lockup time period (Lt) and Log(n). So that, even though there are multiple lockups of the same Pioneer, more lockups with different settings will proportionally add to their total lockup rewards. The values of Lt, Lc, and log(N) are calculated and multiplied for each lockup i and then summed across various i's, which is then divided by the value of Lb at a given mining session, to arrive at the value of L(B) for that mining session. This formula ensures that regardless of the Lb, as long as the Pioneer maintains the same percentage of their lockup amount over their Lb, the total lockup rewards multiplier will remain the same.

Lastly, when can a Pioneer lock up Pi? Pioneers can decide their lockup duration and lockup percentage of their transferable balance anytime they want as an overall account setting in the Pi app. You can even preselect these settings before you're KYC'ed or ready to migrate to the Mainnet. As you and your earning team/security circle pass KYC, more of their Mobile Balance will become transferable. At the moment of the migration of their Transferable Balance to Mainnet, their preselected setting of lockup duration and percentage will automatically apply to the amount of balance transferred, resulting in two types of balances on the Mainnet: lockup balance and free balance, both of which will be recorded on the Mainnet blockchain and reside in the Pioneer's non-custodial Pi wallet. Thus, lockups cannot be reversed once confirmed and must remain locked up for the entirety of the chosen duration due to the nature of blockchain. Any changes to this Pioneer's lockup setting will take effect in their next balance transfer to the Mainnet.

This account-wide lockup setting allows Pioneers to lock up a maximum of 100% of their transferable balance. After Mainnet launches and Pioneers transfer their balances, Pioneers can also lock up more Pi directly on the Mainnet through a slightly different lockup interface later on. At that time, Pioneers can lock up as much as 200% of their already-transferred Mainnet balance acquired from their previous mining.

@Pi Network