## Economic Design Overview

Solana’s crypto-economic system is designed to promote a healthy, long term self-sustaining economy with participant incentives aligned to the security and decentralization of the network. The main participants in this economy are validation-clients and replication-clients. Their contributions to the network, state validation and data storage respectively, and their requisite remittance mechanisms are discussed below.

The main channels of participant remittances are referred to as protocol-based rewards and transaction fees. Protocol-based rewards are protocol-derived issuances from a protocol-defined, global inflation rate. These rewards will constitute the total reward delivered to replication clients and a portion of the total rewards for validation clients, the remaining sourced from transaction fees. In the early days of the network, it is likely that protocol-based rewards, deployed based on predefined issuance schedule, will drive the majority of participant incentives to join the network.

These protocol-based rewards, to be distributed to participating validation and replication clients, are to be a result of a global supply inflation rate, calculated per Solana epoch and distributed amongst the active validator set. As discussed further below, the per annum inflation rate is based on a pre-determined disinflationary schedule. This provides the network with monetary supply predictability which supports long term economic stability and security. 

Transaction fees are market-based participant-to-participant transfers, attached to network interactions as a necessary motivation and compensation for the inclusion and execution of a proposed transaction (be it a state execution or proof-of-replication verification). A mechanism for continuous and long-term economic stability through partial burning of each transaction fee is also discussed below.

A high-level schematic of Solana’s crypto-economic design is shown below in **Figure 1**. The specifics of validation-client economics are described in sections: [Validation-client Economics](ed_validation_client_economics.md), [State-validation Protocol-based Rewards](ed_vce_state_validation_protocol_based_rewards.md), [State-validation Transaction Fees](ed_vce_state_validation_transaction_fees.md) and [Replication-validation Transaction Fees](ed_vce_replication_validation_transaction_fees.md). Also, the chapter titled [Validation Stake Delegation](ed_vce_validation_stake_delegation.md) closes with a discussion of validator delegation opportunties and marketplace. Additionally, in [Storage Rent Economics](ed_storage_rend_economics.md), we describe an implementation of storage rent to account for the externality costs of maintaining the active state of the ledger. The [Replication-client Economics](ed_replication_client_economics.md) chapter will review the Solana network design for global ledger storage/redundancy and replicator-client economics ([Storage-replication rewards](ed_rce_storage_replication_rewards.md)) along with a replicator-to-validator delegation mechanism designed to aide participant on-boarding into the Solana economy discussed in [Replication-client Reward Auto-delegation](ed_rce_replication_client_reward_auto_delegation.md). The [Economic Sustainability](ed_economic_sustainability.md) section dives deeper into Solana’s design for long-term economic sustainability and outlines the constraints and conditions for a self-sustaining economy. An outline of features for an MVP economic design is discussed in the [Economic Design MVP](ed_mvp.md) section. Finally, in chapter [Attack Vectors](ed_attack_vectors.md), various attack vectors will be described and potential vulnerabilities explored and parameterized.

<!-- ![img alt text](solana_economic_design.png) -->
<p style="text-align:center;"><img src="img/economic_design_infl_230719.png" alt="== Solana Economic Design Diagram ==" width="800"/></p>

**Figure 1**: Schematic overview of Solana economic incentive design.
