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# System prepended metadata

title: 'Exploring Baseline Crossings: What Does it Mean for Incentives?'
tags: [educational calculator]

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# Exploring Baseline Crossings: What Does it Mean for Incentives?

###### tags: `educational calculator`

Subtitle: *[A cadCAD Interactive Calculator](https://github.com/BlockScience/filecoin-baseline-incentives) for exploring scenarios in Filecoin*

In this post, we tell the story of how Baseline Crossing and Network Growth have behaved this past year, then use the [open-source Filecoin Baseline Minting Educational Calculator](https://share.streamlit.io/blockscience/filecoin-baseline-incentives/main/app/main.py) to explore hypothetical scenarios of baseline crossing down and up to illustrate how Baseline Minting works.

## Baseline Crossing Retrospective

It is almost one year since [Baseline Crossing](https://medium.com/block-science/sustainability-goal-achieved-filecoin-network-crosses-baseline-target-cec13a3ed8f), a milestone for Filecoin sustainability. Since then, several things have happened: focus has shifted from generating raw storage power to having meaningful storage capacity in the Deal Marketplace and programs like Filecoin Plus.

This is reflected in the Raw Bytes Network Power growth, which has shifted from an accelerating exponential form last year, to a more sustainable linear form this year.

![Baseline Power vs RB Network Power](https://hackmd.io/_uploads/HJAqp9Rec.png)

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So far, all predictions that we made in our [deep dive into the incentives](https://medium.com/block-science/baseline-minting-incentives-743b229b9b80) are consistent with the data that is being collected daily. **The key to understanding Baseline Minting is the Effective Network Time metric**, an innovative concept that **makes time "go slower" when the RB Network Power is below the baseline function, and "go faster" when it's catching up**. This has several non-trivial implications for the mining economic incentive.

![ENT lag](https://hackmd.io/_uploads/ByTjacCe5.png)

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## The Filecoin Baseline Minting Incentives Calculator


To better understand those implications, we've developed an **Interactive Educational Calculator** which lets you select a variety of different scenarios then see what happens for yourself! 

![Calculator GIF](https://hackmd.io/_uploads/r1isEs0xc.gif)

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You will be able to **tweak custom Raw Bytes Network Power scenarios into the future** and observe their (hypothetical) behaviors. Or, what would happen if there's a shock and the RB Network Power goes down. 

For instance, let's use the following figure as our **reference case**. For some reason, **the network begins to shrink, crosses the baseline down, holds steady for some time, then has explosive growth 5 years from now until it gets close to the baseline**. What are the mining incentives in this hypothetical future?

![Network Power vs Time](https://hackmd.io/_uploads/HJt629Cx5.png)

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**The simple answer is provided by the Mining Utility metric**—an indicator of how profitable mining is when compared to a "baseline scenario" (an alternate reality where the RB Network Power is equal to the baseline function since Mainnet). 

In the beginning, the utility is around 0.5. **If the network starts shrinking, the utility will increase** quickly, which means that the **existing miners will receive disproportionate rewards**.

**The role of Baseline Minting is to generate the difference** between the `user` and the `user-baseline-deactivated` scenarios **by smoothing those early disproportionate rewards**, then **distributing them when the network gets close to the baseline in the future**. 

In that sense, **Baseline Minting is really about having a savings account for the tough moments such that the future remains highly rewarding!**

![Mining Utility vs Time](https://hackmd.io/_uploads/rJFT3c0g9.png)

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Another approach is to simply estimate the **total rewards due to Baseline Minting** to be distributed per month given our alternate scenario. It **goes down when baseline is crossed down**, and **goes way up just before crossing up again - far more than if we didn't have a baseline**!

This has implications for **Network Security**: suppose that **for some reason the entire Filecoin Network is attacked**, numerous sectors are shut off suddenly, and onboarding new sectors is blocked - causing the RB Network Power to drop suddenly. **Baseline Minting is a mechanism that will avoid disproportionaly distributing the rewards to those that are still left**. 

**Remaining miners will still be highly incentivized** through both Simple and Baseline Minting. But **not in such a way that threatens future token allocation**.

![Baseline Reward vs Time](https://hackmd.io/_uploads/SyK635Clc.png)

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## Conclusions

There are many other things to be learned through alternate scenarios. How will the Effective Network Time behave? What happens if we never cross baseline again? What other interesting metrics can be retrieved from those scenarios? [The interactive calculator is available for anyone to use](https://share.streamlit.io/blockscience/filecoin-baseline-incentives/main/app/main.py), with the option of downloading the raw simulation results as .csv once finished. 

![Download CSV](https://hackmd.io/_uploads/Bkr-diCeq.png)

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And of course, it's all [open source](https://github.com/BlockScience/filecoin-baseline-incentives)! Which means that you can modify the underlying cadCAD model and generate even more complex simulations for yourself.

![Github repo](https://hackmd.io/_uploads/Hk4XFi0x5.png)

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There's a world of science to be done at Filecoin. At BlockScience, we've spent the last two years exploring the economic, operational, and security consequences of all pieces of this holistic complex system—offering the world a more trustworthy decentralized economy and utility provider.

After using the calculator and the open source repo, please don't hesitate to share results! Use the **#FilecoinBaselineCalculator** tag, and let's build community ownership of the knowledge around the incentives algorithms!

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*This article was written by Danilo Lessa Bernardineli and Will Wolf with edits and suggestions by Jeff Emmett, Jamsheed Shorish and ZX Zhang.*