HDDcoin Compensation Model


In our previous Blog Post, we described how our update roll-out resulted in instability in the HDDcoin network, and a situation where many farmers ended up creating blocks on orphaned chains, such that the blocks were not incorporated in the HDDcoin blockchain.

This present Post describes the compensation model that has been adopted by HDDcoin for all farmers due to the inconvenience caused by the update.

Algorithm for compensation

The first task was to collect data of all HDDcoin farmers in the 2.5 days prior to the update roll out in order to map out their farming capacity. (The instability period itself was 2.5 days, and occurred between 17th and 20th Jul, 2021).

A total of 2,234 farmers participated in the HDDcoin network during this time, and have been included in the compensation package of 14,646.51 HDD.

With this available data, a formula was created as follows:

  • We took the farming trend in the 2.5 days prior to the certificate change, and extrapolated forward 2.5 days to see where the wallet address “should” have been.
  • In addition we added in a “santa-claus bonus” of 10%, as we recognize the inconvenience was caused by our update and we appreciate the HDDcoin farmers.
  • Finally we applied a baseline of 1 HDD for those farmers that didn’t have enough data points in the prior 2.5 days to make a determination on where they should land at the end of the 2.5 days. We applied this to all farmers.

We applied one limit to the above formula: Farmers should not be compensated with more than 110% of the total HDD farmed in the 2.5 days prior to the certificate switch. This restraint was required in order to limit extrapolation anomalies caused when a farmer only won a small number of blocks in a short duration. Such conditions caused irrationally high slope calculations, and unfair/excess calculated compensation. The limit fixes this, while not limiting compensation for farmers with consistent winnings.

The equations below provide more details of the model:

  1. uncapped_compensation = (pre_change_slope * 1.1 * 2.5 days) – (winnings_within_instability_period)
  2. actual_compensation = max(1.1 * pre_change_winnings, uncapped_compensation)


Visual implementation of the compensation formula

The following series of screenshots will illustrate the formula, and how it was applied in different scenarios.

Figure 1: This image shows the data modeling spreadsheet that captures both the data from the farmers and the model for compensation.

Figure 2: This is an animated GIF to show you how the spreadsheet allowed us to cycle past all 2,234 farmer wallets, and visually see the outputs.

Figure 3: This image shows a random farmer and will be used to clarify the inputs and outputs of the formula.

regionB is the 2.5 days prior to the update roll out, where we can accurately determine blocks farmed by inspecting the HDDcoin blockchain. We map the blocks visually with the red squares.

regionC is the 2.5 days of network instability, some blocks ended up on orphaned chains and are not recorded on the blockchain. We map these as gray triangles.

The forward projection maps the blocks that this particular farmer “should” have farmed without the instability and we end up at the Projected HDD (no bonus) mark.

We then raise this to include the baseline and santa-claus bonus to the Projected HDD (with 10% bonus) mark.

The HDD after stabilization is the mark the farmer ended up at, and we take the difference between the Projected HDD (with 10% bonus) mark and HDD after stabilization as the compensation for this particular farmer (green striped line with arrow).

Figure 4: This image shows that some farmers were impacted much more than others as most of their blocks were orphaned.

Figure 5: This image shows others tracked pretty well during the instability period.

Examples of small datasets

Figure 6: This image shows how the formula performs with just a few data points available.

Figure 7: This image also shows how the formula performs with just a few data points available.


We believe that we demonstrated a fair compensation mechanism to the HDDcoin farmers and our commitment to them now and in the future.

Our gratitude goes out to @russ who spent way too much time on this, he is truly a rock-star!

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