Unveiling the Power of CCD: Exploring Concordium’s Native Token
Concordium is revolutionising the blockchain landscape with its business-centric approach, addressing the vital needs of confidentiality and accountability in global transactions. But have you ever wondered what helps Concordium to be such a technological blockchain? Correct, the CCD token.
In this article, we’ll delve into its native token CCD, and examine the essential components of its robust blockchain infrastructure.
What Is Concordium?
Concordium is a blockchain designed specifically for businesses, addressing the critical needs of confidentiality and accountability in global transactions. It stands out as the first blockchain to offer Layer 1 identification at the protocol level, allowing for participant identity verification and regulatory compliance. Key features of Concordium include:
- Low and Stable Transaction Costs: Ensuring predictability for businesses.
- Limitless Scalability: Allowing companies to grow without constraints.
- Transaction Finality: Reducing transaction and price risk.
- Interoperability: Enhanced by built-in identification capabilities.
These features are delivered on a high-performance, enterprise-grade blockchain, overcoming significant barriers to global blockchain adoption.
What Is CCD?
CCD is the native token of the Concordium Platform. It serves as a payment token for various purposes, including executing smart contracts, facilitating payments between users, and conducting commercial transactions. A total of 10 billion CCDs were created in the genesis block, with additional CCDs only being generated through the minting process.
To submit a transaction to the blockchain, a fee must be paid in CCD. However, transaction fees are fixed in EUR rather than CCD, ensuring they are not affected by CCD’s price fluctuations. This allows businesses to plan their operational costs with greater certainty. The CCDScan is an essential tool for users, enabling them to track and sort Concordium’s blockchain data into easily navigable information. You can learn more about CCDScan here.
Key Components of Concordium’s Blockchain Infrastructure
And now, let’s take a look at the main components that make Concordium’s blockchain infrastructure robust and efficient.
Validators: To become a validator, a user must stake at least 500,000 CCD, which is then locked in their wallet. Validators run the necessary software and have a chance of creating blocks and earning rewards proportional to their staked amount. If a validator decides to shut down, their stake is unlocked after a cool-down period.
Staking Pools: Validators can open a staking pool, which includes their stake and any additional stakes from delegators. The validator can set the pool to be open to all delegators, closed to new delegators (allowing existing ones to stay), or completely closed (removing existing delegators). The validator also determines the commission rate for delegators, which can be adjusted at any time. The likelihood of a validator being selected to create the next block depends on the size of their pool. Rewards from creating blocks are shared among all pool members based on their contributions. Pool sizes are limited to 5% of the total staked CCD to encourage decentralisation and reduce risk. If the limit is exceeded, only 5% counts towards lottery power and rewards. Users wishing to stake more can run additional validators with separate pools.
Delegators: Users who prefer not to run validators can delegate their CCD to validators and earn a share of the rewards. Delegators have two options: delegating to a specific validator’s pool or opting for passive delegation. Delegating to a pool increases the validator’s chances of adding new blocks and earning rewards, which are then shared among pool members. Each delegator receives a share proportional to their stake, minus the validator’s commission. The passive delegation, unique to Concordium, distributes rewards as if the stake were split proportionally across all pools, with a fixed 25% commission shared among all pools. This approach reduces the risk of selecting an underperforming validator but comes with a higher cost since delegators can choose pools with lower commissions.
Rewards: Rewards are calculated and distributed daily, typically around 9:00 UTC. This period between payouts is known as a payday.
Concordium Tokenomics System
Now, let’s discuss the key points of Concordium’s Tokenomics.
Issuance of CCD Tokens: 90% of these tokens are allocated as rewards to validators and delegators for their block production efforts, while the remaining 10% is allocated to the Concordium Foundation.
Types of Rewards: There are two primary types of rewards distributed to staking pools and passive delegators.
- Transaction Rewards: 45% of the transaction fees from all transactions within a block are directly assigned to the pool responsible for creating that block. Another 45% are deposited into an accumulation account, gradually distributed among pools producing subsequent blocks to ensure equitable distribution of transaction rewards. The remaining 10% is allocated to the Concordium Foundation.
- Block Rewards: The 90% of minted CCD tokens allocated to pools as block rewards are distributed at the end of each payday. The available CCD amount is divided by the number of valid blocks created on that day, and each staking pool is rewarded according to their block production.
Validator and Delegator Distribution: For each reward type (transaction and block), validators can set different delegation commissions. Rewards earned by a pool are then distributed proportionally among pool members based on their stake, with a portion of the delegator rewards deducted as delegation commission and paid out to the validator.
Passive Delegation: Passive delegators receive rewards similar to pool delegators, with fixed block and transaction commissions of 25%, distributed among all pools. Rewards can be automatically re-staked, with flexibility for validators and delegators to adjust this option as needed.
Cool-down Periods: Any increase in a validator’s or delegator’s stake takes effect after the next payday, provided the transaction occurs at least one hour before the payday’s end. Decreases in stake, such as shutting down a validator, incur a three-week cool-down period for validators before the change becomes effective.
Return on Investment (ROI): ROI depends on various factors, including block production reliability and the total amount of staked CCD. Higher staked amounts may lead to decreased rewards per CCD staked if total rewards remain stable. Actual ROI values can be tracked on CCDScan, though smaller pool sizes and shorter timeframes may exhibit greater variance.
Penalties: As of now, no penalties are enforced for faulty validators. However, plans are in place to introduce penalties in 2024, starting with the removal of validators consistently failing to produce blocks when scheduled.
Download Concordium’s Tokenomics one-pager for more detailed information here.
Conclusion
Concordium emerges as a trailblazer in the blockchain industry, offering unparalleled solutions tailored to the needs of businesses worldwide. The native token CCD serves as a versatile payment token, facilitating various transactions within the Concordium platform. Moreover, Concordium’s blockchain infrastructure, characterised by validators, staking pools, and delegators, ensures decentralisation, security, and efficient transaction processing. As Concordium continues to innovate and evolve, it promises to reshape the future of global transactions and pave the way for widespread blockchain adoption.
About Concordex
Concordex is a cutting-edge Decentralised Exchange (DEX) that operates on the Concordium Blockchain. Renowned for emphasising institutional-grade security, transparency, and user-centric design, Concordex offers various services, including staking, swapping, and perpetual trading. With a mission to bridge the divide between traditional finance and decentralised systems, it offers users an unparalleled trading environment.
