Looking forward The proposed reward gives miners a 33% return on their bond. This return needs to be high in the early days as miners and signers commit to hold a potentially volatile asset for an entire year. However, as Tezos mature, this return could be gradually lowered to the prevailing interest rate. A nominal rate of inflation below 1% could safely be achieved, though it’s not clear there would be any point in doing so. 3.1.3 Lost coins In order to reduce uncertainty regarding the monetary mass, addresses showing no activity for over a year (as determined by timestamps) are destroyed along with the coins they contain. 3.1.4 Amendment rules 17 Amendments are adopted over election cycles lasting N = 2 =131072 blocks each. Given the a one minute block interval, this is about three calendar months. 15 The election cycle is itself divided in four quarters of 2 =32768 blocks. This cycle is relatively short to encourage early improvements, but it is expected that further amendments will increase the length of the cycle. Adoption requires a certain quorum to be met. This quorum starts at Q = 80% but dynamically adapts to reflect the average participation. This is necessary if only to deal with lost coins. First quarter Protocol amendments are suggested by submitting the hash of a tarball of .ml and .mli files representing a new protocol. Stakeholders may approve of any number of these protocols. This is known as “approval voting”, a particularly robust voting procedure. Second quarter The amendment receiving the most approval in the first quarter is now subject to a vote. Stakeholders may cast a vote for, against or can choose to explicitely abstain. Abstentions count towards the quorum. Third quarter If the quorum is met (including explicit abstentions), and the amendment received 80% of yays, the amendment is approved and replaces the test protocol. Otherwise, it is rejected. Assuming the quorum reached was q, the minimum quorum Q is updated as such: Q←0.8Q+0.2q. The goal of this update is to avoid lost coins causing the voting procedure to become stuck over time. The minimum quorum is an exponential moving average of the quorum reached over each previous election. 9