Coin Credits

The coin credits that are received after cheating or some similar data-invalidating event has occurred can be used as collateral when staking for another dataset. Coin credits are automatically applied when staking for a dataset if there are any in the user’s account, and the credits will be used up at the end of the dataset for which they are used. The coin credits can only cover up to 50% of the stake required for a dataset, so there will always be some real collateral that a user has at stake in a dataset.

The idea behind the coin credits is to offset an opportunity cost that manifests and is borne by being unlucky enough to be in an event with such an outcome. The credits give a way to essentially “catch back up”.

For example, consider a user with 100 FTM who plans to stake for two datasets, one after the other, and suppose there are three datasets each paying out at 2%. Normally, the user would stake their 100 FTM and receive 2FTM as payment, and afterwards, they can take their 102 FTM, stake 100 FTM, and end up with 104 FTM by the end.

Instead, if after the first dataset the user ended up getting 0 FTM and 100 coin credits, then they can stake in the two remaining datasets simultaneously (provided their level is high enough) by staking 50 FTM and 50 credits in each of the two remaining datasets. At the end of the two datasets, the user would receive 2 FTM from each for a total of 104 FTM, which is the same as the normal case without the credits above. It’s not perfect, but it comes quite close.