CERM: Coin Emission Rate Modulation

Abstract

Bitmark v0.9.7 introduced Coin Emission Rate Modulation (CERM v0.1), a dynamic algorithm that adjusts block rewards based on network hash rate relative strength. Unlike fixed emission schedules, CERM ties rewards to the health and activity of the network, ensuring sustainable issuance over time while respecting the original total supply cap.

The CERM algorithm compares the average hash rate of the most recent day to the highest observed hash rate looking back one year. This ratio, known as the Emission Scaling Factor (ESF), determines whether blocks receive full reward or a reduced amount. Rewards may thus be smaller than the epoch's nominal reward, but never below 50% of this number , guaranteeing a minimum reward and emission.

\[ ESF = \frac{Current\_Hash{-}Rate}{Peak\_Hash{-}Rate} \]

Since Bitmark uses multiple Proof-of-Work algorithms, CERM monitors and adjusts emission rates for each algorithm independently. This means the rate at which coins are created may differ between algorithms, but the emission schedule per epoch and the overall total cap are always respected. When network hash rate is low, the emission rate slows, effectively pushing further into the future the time when the emission cap is reached.

Modulation

Overview

Bitmark’s Coin Emission Rate Modulation (CERM) algorithm dynamically adjusts block rewards based on network hash rate.

CERM v1.0 works by scaling half of the nominal epoch reward according to the Emission Scaling Factor (ESF):

Block rewards are either:

• the full nominal amount for the era, or
• reduced (modulated) in proportion to the ratio of current network hash rate to the peak hash rate observed in the previous year.

Every 720 blocks (one day), the algorithm:

1. Finds the highest daily average hash rate from the last 365 days (this becomes peak_hashrate).
2. Defines the average hash rate of the just-completed day as current_hashrate.

• If current_hashrate ≥ peak_hashrate, then ESF = 1, and the full block reward is issued.
• If current_hashrate < peak_hashrate, the reward is scaled down proportionally—but never below 50% of the nominal reward.

At least one-half of the nominal block reward is guaranteed. This design ensures that block rewards adapt to network conditions dynamically, instead of being fixed.

Multi-Algorithm Behavior

Since Bitmark uses multiple Proof-of-Work algorithms (mPoW), hash rates are tracked separately for each algorithm.

• Each PoW algorithm has independent monitoring and independent rewards.
• Emission thresholds and epoch completions can occur at different block heights for each algorithm, because their hash rates vary.

Time Intervals

Current hash rate averaging window (per algorithm):

90 blocks
(Since 720 blocks/day ÷ 8 algorithms = 90 blocks per algo/day)

Reward update interval:

Every block

Peak hash rate reference window:

1 year = 32,850 blocks
(90 blocks/day × 365 days)

Key Definitions

Block Reward

The number of new coins emitted in a block.

Nominal Block Reward

The baseline block reward for an era, before CERM adjustments.

Peak Hashrate

The highest average daily hash rate observed over the past year (365 days).

Current Hashrate

The average hash rate from the just-completed day (720 blocks).

ESF (Emission Scaling Factor)

Ensures rewards scale dynamically with network strength. (Formerly called Subsidy Scaling Factor, SSF).

ESF = current_hashrate / peak_hashrate

Epoch (Era)

A fixed period defined by the number of blocks during which a nominal block reward applies. In Bitcoin and original Bitmark, eras are fixed in length. Under CERM, however, an era may be extended if block rewards are reduced, because the total emission for that era takes longer to complete.