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Pi Whitepaper

The December 2021 Whitepaper chapters “Token Model and Mining” and “Roadmap” were
released as an addendum to the original 2019 Whitepaper, with new information on Mainnet.
The original March 2019 Whitepaper may need updates to its content, so please refer to the
latest Pi Network communications for up-to-date information. Both Whitepapers are subject to
change based on data collected during the Enclosed Network period of Mainnet.

Original March 2019

December 2021

Whitepaper: March 2019 Original

Introduction

Preface

As the world becomes increasingly digital, cryptocurrency is a next natural step in the evolution
of money. Pi is the first digital currency for everyday people, representing a major step forward
in the adoption of cryptocurrency worldwide.
Our Mission: Build a cryptocurrency and smart contracts platform secured and operated by
everyday people.

Our Vision: Build the world’s most inclusive peer-to-peer ecosystem and online experience,
fueled by Pi, the world’s most widely used cryptocurrency.

DISCLAIMER for more advanced readers: Because Pi’s mission is to be inclusive as possible,
we’re going to take this opportunity to introduce our blockchain newbies to the rabbit hole 🙂

Introduction: Why cryptocurrencies matter

Currently, our everyday financial transactions rely upon a trusted third party to maintain a
record of transactions. For example, when you do a bank transaction, the banking system keeps
a record & guarantees that the transaction is safe & reliable. Likewise, when Cindy transfers $5
to Steve using PayPal, PayPal maintains a central record of $5 dollars debited from Cindy’s
account and $5 credited to Steve’s. Intermediaries like banks, PayPal, and other members of
the current economic system play an important role in regulating the world’s financial
transactions.

However, the role of these trusted intermediaries also has limitations:

Unfair value capture. These intermediaries amass billions of dollars in wealth creation (PayPal
market cap is ~$130B), but pass virtually nothing onto their customers – the everyday people
on the ground, whose money drives a meaningful proportion of the global economy. More and
more people are falling behind.
Fees. Banks and companies charge large fees for facilitating transactions. These fees often
disproportionately impact lower-income populations who have the fewest alternatives.

Censorship. If a particularly trusted intermediary decides that you should not be able to move
your money, it can place restrictions on the movement of your money.

Permissioned. The trusted intermediary serves as a gatekeeper who can arbitrarily prevent
anybody from being part of the network.

Pseudonymous. At a time when the issue of privacy is gaining greater urgency, these powerful
gatekeepers can accidentally disclose — or force you to disclose — more financial information
about yourself than you may want.

Bitcoin’s “peer-to-peer electronic cash system,” launched in 2009 by an anonymous

programmer (or group) Satoshi Nakamoto, was a watershed moment for the freedom of
money. For the first time in history, people could securely exchange value, without requiring a
third party or trusted intermediary. Paying in Bitcoin meant that people like Steve and Cindy
could pay each other directly, bypassing institutional fees, obstructions, and intrusions. Bitcoin
was truly a currency without boundaries, powering and connecting a new global economy.

Introduction To Distributed Ledgers

Bitcoin achieved this historical feat by using a distributed record. While the current financial
system relies on the traditional central record of truth, the Bitcoin record is maintained by a
distributed community of “validators,” who access and update this public ledger. Imagine the
Bitcoin protocol as a globally shared “Google Sheet” that contains a record of transactions,
validated and maintained by this distributed community.

The breakthrough of Bitcoin (and general blockchain technology) is that, even though the
record is maintained by a community, the technology enables them to always reach consensus
on truthful transactions, insuring that cheaters cannot record false transactions or overtake the
system. This technological advancement allows for the removal of the centralized intermediary,
without compromising transactional financial security.

Benefits Of Distributed Ledgers

In addition to decentralization, bitcoin, or cryptocurrencies in general, share a few nice

properties that make money smarter and safer, although different cryptocurrencies may be
stronger in some properties and weaker in others, based on different implementations of their
protocols. Cryptocurrencies are held in cryptographic wallets identified by a publicly accessible
address, and is secured by a very strong privately held password, called the private key. This
private key cryptographically signs transactions and is virtually impossible to create fraudulent
signatures. This provides security and unseizability. Unlike traditional bank accounts that can be
seized by government authorities, the cryptocurrency in your wallet can never be taken away
by anyone without your private key. Cryptocurrencies are censorship-resistant due to the
decentralized nature because anyone can submit transactions to any computer in the network
to get recorded and validated. Cryptocurrency transactions are immutable because each block
of transactions represents a cryptographic proof (a hash) of all the previous blocks that existed
before that. Once someone sends you money, they cannot steal back their payment to you (i.e.,
no bouncing checks in blockchain). Some of the cryptocurrencies can even support atomic
transactions. “Smart contracts” built atop these cryptocurrencies do not merely rely on law for
enforcement, but directly enforced through publicly auditable code, which make them trustless
and can potentially get rid of middlemen in many businesses, e.g. Escrow for real estate.

Securing Distributed Ledgers (Mining)

One of the challenges of maintaining a distributed record of transactions is security —

specifically, how to have an open and editable ledger while preventing fraudulent activity. To
address this challenge, Bitcoin introduced a novel process called Mining (using the consensus
algorithm “Proof of Work”) to determine who is “trusted” to make updates to the shared
record of transactions.

You can think of the mining as a type of economic game that forces “Validators” to prove their
merit when trying to add transactions to the record. To qualify, Validators must solve a series of
complex computational puzzles. The Validator who solves the puzzle first is rewarded by being
allowed to post the latest block of transactions. Posting the latest block of transactions allows
Validators to “mine” a Block Reward – currently 12.5 bitcoin (or ~$40,000 at the time of
writing).

This process is very secure, but it demands enormous computing power and energy
consumption as users essentially “burn money” to solve the computational puzzle that earns
them more Bitcoin. The burn-to-reward ratio is so punitive that it is always in Validators’ self-
interest to post honest transactions to the Bitcoin record.

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Problem

Problem: Centralization of power and money put 1st Generation Cryptocurrencies out of reach

In the early days of Bitcoin, when only a few people were working to validate transactions and
mining the first blocks, anyone could earn 50 BTC by simply running Bitcoin mining software on
their personal computer. As the currency began to gain in popularity, clever miners realized
that they could earn more if they had more than one computer working to mine.
As Bitcoin continued to increase in value, entire companies began to spring up to mine. These
companies developed specialized chips (“ASICs”) and constructed huge farms of servers using
these ASIC chips to mine Bitcoin. The emergence of these enormous mining corporations,
known drove the Bitcoin Gold Rush, making it very difficult for everyday people to contribute to
the network and get rewarded. Their efforts also began consuming increasingly large amounts
of computing energy, contributing to mounting environmental issues around the world.

The ease of mining Bitcoin and the subsequent rise of Bitcoin mining farms quickly produced a
massive centralization of production power and wealth in Bitcoin’s network. To provide some
context, 87% of all Bitcoins are now owned by 1% of their network, many of these coins were
mined virtually free in their early days. As another example, Bitmain, one of Bitcoin’s biggest
mining operations has earned billions in revenue and profits.

The centralization of power in Bitcoin’s network makes it very difficult and expensive for the
average person. If you want to acquire Bitcoin, your easiest options are to:

Mine It Yourself. Just hook up the specialized hardware (here’s a rig on Amazon, if you’re
interested!) and go to town. Just know that since you’ll be competing against massive server
farms from across the world, consuming as much energy as the country of Switzerland, you
won’t be able to mine much

Buy Bitcoin on an exchange. Today, you can buy Bitcoin at a unit price of $3,500 / coin at the
time of writing (note: you can buy the fractional amount of Bitcoin!) Of course, you would also
be taking on substantial risk in doing so as the price of Bitcoin is quite volatile.

Bitcoin was the first to show how cryptocurrency could disrupt the current financial model,
giving people the ability to make transactions without having a third party in the way. The
increase in freedom, flexibility, and privacy continues to drive the inevitable march toward
digital currencies as a new norm. Despite its benefits, Bitcoin’s (likely unintended)
concentration of money and power present a meaningful barrier to mainstream adoption. As
Pi’s core team has conducted research to try to understand why people are reluctant to enter
the cryptocurrency space. People consistently cited the risk of investing/mining as a key barrier
to entry.

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Solution

Solution: Pi - Enabling mining on mobile phones

After identifying these key barriers to adoption, the Pi Core Team set out to find a way that
would allow everyday people to mine (or earn cryptocurrency rewards for validating
transactions on a distributed record of transactions). As a refresher, one of the major
challenges that arises with maintaining a distributed record of transactions is ensuring that
updates to this open record are not fraudulent. While Bitcoin’s process for updating its record is
proven (burning energy / money to prove trustworthiness), it is not very user (or planet!)
friendly. For Pi, we introduced the additional design requirement of employing a consensus
algorithm that would also be extremely user friendly and ideally enable mining on personal
computers and mobile phones.

In comparing existing consensus algorithms (the process that records transactions into a
distributed ledger), the Stellar Consensus Protocol emerges as the leading candidate to enable
user-friendly, mobile-first mining. Stellar Consensus Protocol(SCP) was architected by David
Mazières a professor of Computer Science at Stanford who also serves as Chief Scientist at the
Stellar Development Foundation. SCP uses a novel mechanism called Federated Byzantine
Agreements to ensure that updates to a distributed ledger are accurate and trustworthy. SCP is
also deployed in practice through the Stellar blockchain that has been operating since 2015.

A Simplified Introduction To Consensus Algorithms

Before jumping to introducing the Pi consensus algorithm, it helps to have a simple explanation
on what a consensus algorithm does for a blockchain and the types of consensus algorithms
that today’s blockchain protocols generally use, e.g. Bitcoin and SCP. This section is explicitly
written in a oversimplified manner for the sake of clarity, and is not complete. For higher
accuracy, see the section Adaptations to SCP below and read the stellar consensus protocol
paper.

A blockchain is a fault-tolerant distributed system that aims to totally order a list of blocks of
transactions. Fault-tolerant distributed systems is an area of computer science that has been
studied for many decades. They are called distributed systems because they do not have a
centralized server but instead they are composed of a decentralized list of computers (called
nodes or peers) that need to come to a consensus as to what is the content and total ordering
of blocks. They are also called fault-tolerant because they can tolerate a certain degree of faulty
nodes into the system (e.g. up to 33% of nodes can be faulty and the overall system continues
to operate normally).

There are two broad categories of consensus algorithms: The ones that elect a node as the
leader who produces the next block, and the ones where there is no explicit leader but all
nodes come to a consensus of what the next block is after exchanging votes by sending
computer messages to each other. (Strictly speaking the last sentence contains multiple
inaccuracies, but it helps us explain the broad strokes.)
Bitcoin uses the first type of consensus algorithm: All bitcoin nodes are competing against each
other in solving a cryptographic puzzle. Because the solution is found randomly, essentially the
node that finds the solution first, by chance, is elected the leader of the round who produces
the next block. This algorithm is called “Proof of work” and results in a lot of energy
consumption.

A Simplified Introduction To Stellar Consensus Protocol

Pi uses the other type of consensus algorithms and is based on the Stellar Consensus Protocol
(SCP) and an algorithm called Federated Byzantine Agreement (FBA). Such algorithms don’t
have energy waste but they require exchanging many network messages in order for the nodes
to come to “consensus” on what the next block should be. Each node can independently
determine if a transaction is valid or not, e.g. authority of making the transition and double
spending, based on the cryptographic signature and the transaction history. However, for a
network of computers to agree on which transactions to record in a block and the order of
these transactions and blocks, they need to message each other and have multiple rounds of
voting to come to consensus. Intuitively, such messages from different computers in the
network about which block is the next would look like the following: “I propose we all vote for
block A to be next”; “I vote for block A to be the next block”; “I confirm that the majority of the
nodes I trust also voted for block A”, from which the consensus algorithm enables this node to
conclude that “A is the next block; and there could be no block other than A as the next block”;
Even though the above voting steps seem a lot, the internet is adequately fast and these
messages are lightweight, thus such consensus algorithms are more lightweight than Bitcoin’s
proof of work. One major representative of such algorithms is called Byzantine Fault Tolerance
(BFT). Several of the top blockchains today are based on variants of BFT, such as NEO and
Ripple.
One major criticism of BFT is that it has a centralization point: because voting is involved, the
set of nodes participating in the voting “quorum” are centrally determined by the creator of the
system in its beginning. The contribution of FBA is that, instead of having one centrally
determined quorum, each node sets their own “quorum slices”, which will in turn form
different quorums. New nodes can join the network in a decentralized way: they declare the
nodes that they trust and convince other nodes to trust them, but they don’t have to convince
any central authority.

SCP is one instantiation of FBA. Instead of burning energy like in Bitcoin’s proof of work
consensus algorithm, SCP nodes secure the shared record by vouching for other nodes in the
network as trustworthy. Each node in the network builds a quorum slice, consisting of other
nodes in the network that they deem to be trustworthy. Quorums are formed based on its
members quorum slices, and a validator will only accept new transactions if and only if a
proportion of nodes in their quorums will also accept the transaction. As validators across the
network construct their quorums, these quorums help nodes to reach consensus about
transactions with guarantee on security. You can learn more about the Stellar Consensus
Protocol by checking out this technical summary of SCP.

Pi’s Adaptations to Stellar Consensus Protocol (SCP)

Pi’s consensus algorithm builds atop SCP. SCP has been formally proven and is currently
implemented within the Stellar Network. Unlike Stellar Network consisting mostly of companies
and institutions (e.g., IBM) as nodes, Pi intends to allow devices of individuals to contribute on
the protocol level and get rewarded, including mobile phones, laptops and computers. Below is
an introduction on how Pi applies SCP to enabling mining by individuals.

There are four roles Pi users can play, as Pi miners. Namely:

Pioneer. A user of the Pi mobile app who is simply confirming that they are not a “robot” on a
daily basis. This user validates their presence every time they sign in to the app. They can also
open the app to request transactions (e.g. make a payment in Pi to another Pioneer)

Contributor. A user of the Pi mobile app who is contributing by providing a list of pioneers he or
she knows and trusts. In aggregate, Pi contributors will build a global trust graph.

Ambassador. A user of the Pi mobile app who is introducing other users into Pi network.

Node. A user who is a pioneer, a contributor using the Pi mobile app, and is also running the Pi
node software on their desktop or laptop computer. The Pi node software is the software that
runs the core SCP algorithm, taking into account the trust graph information provided by the
Contributors.

A user can play more than one of the above roles. All roles are necessary, thus all roles are
rewarded with newly minted Pi on a daily basis as long as they participated and contributed
during that given day. In the loose definition of a “miner” being a user who receives newly
minted currency as a reward for contributions, all four roles are considered to be Pi miners. We
define“mining” more broadly than its traditional meaning equated to executing proof of work
consensus algorithm as in Bitcoin or Ethereum.

First of all, we need to emphasize that the Pi Node software has not been released yet. So this
section is offered more as an architectural design and as a request to solicit comments from the
technical community. This software will be fully open source and it will also heavily depend on
stellar-core which is also open source software, available here. This means that anyone in the
community will be able to read, comment and propose improvements on it. Below are the Pi
proposed changes to SCP to enable mining by individual devices.
Nodes

For readability, we define as a correctly connected node to be what the SCP paper refers to as
an intact node. Also, for readability, we define as the main Pi network to be the set of all intact
nodes in the Pi network. The main task of each Node is to be configured to be correctly
connected to the main Pi network. Intuitively, a node being incorrectly connected to the main
network is similar to a Bitcoin node not being connected to the main bitcoin network.

In SCP’s terms, for a node to get correctly connected means that this node must chose a
“quorum slice” such that all resulting quorums that include this node intersect with the existing
network’s quorums. More precisely, a node vn+1 is correctly connected to a main network N of
n already correctly connected nodes (v1, v2, …, vn) if the resulting system N’ of n+1 nodes (v1,
v2, …, vn+1) enjoys quorum intersection. In other words, N’ enjoys quorum intersection iff any
two of its quorums share a node. — i.e., for all quorums U1 and U2, U1∩U2 ≠ ∅.

The main contribution of Pi over the existing Stellar consensus deployment is that it introduces
the concept of a trust graph provided by the Pi Contributors as information that can be used by
the Pi nodes when they are setting up their configurations to connect to the main Pi network.

When picking their quorum slices, these Nodes must take into consideration the trust graph
provided by the Contributors, including their own security circle. To assist in this decision, we
intend to provide auxiliary graph analysis software to assist users running Nodes to make as
informed decisions as possible. This software’s daily output will include:
a ranked list of nodes ordered by their distance from the current node in the trust graph; a
ranked list of nodes based a pagerank analysis of nodes in the trust graph

a list of nodes reported by the community as faulty in any way a list of new nodes seeking to
join the network

a list of most recent articles from the web on the keyword “misbehaving Pi nodes” and other
related keywords; a visual representation of Nodes comprising the Pi network similar to what is
shown in StellarBeat Quorum monitor

a quorum explorer similar to QuorumExplorer.com

a simulation tool like the one in StellarBeat Quorum monitor that shows the expected resulting
impacts to this nodes’ connectivity to the Pi network when the current node’s configuration
changes.

An interesting research problem for future work is to develop algorithms that can take into
consideration the trust graph and suggest each node an optimal configuration, or even set that
configuration automatically. On the first deployment of the Pi Network, while users running
Nodes can update their Node configuration at any time, they will be prompted to confirm their
configurations daily and asked to update them if they see fit.

Mobile app users

When a Pioneer needs to confirm that a given transaction has been executed (e.g. that they
have received Pi) they open the mobile app. At that point, the mobile app connects to one or
more Nodes to inquire if the transaction has been recorded on the ledger and also to get the
most recent block number and hash value of that block. If that Pioneer is also running a Node
the mobile app connects to that Pioneer’s own node. If the Pioneer is not running a node, then
the app connects to multiple nodes and to cross check this information. Pioneers will have the
ability select which nodes they want their apps to connect to. But to make it simple for most
users, the app should have a reasonable default set of nodes, e.g. a number of nodes closest to
the user based on the trust graph, along with a random selection of nodes high in pagerank. We
ask for your feedback on how the default set of nodes for mobile Pioneers should be selected.

Mining rewards

A beautiful property of the SCP algorithm is that it is more generic than a blockchain. It
coordinates consensus across a distributed system of Nodes. This means that the same core
algorithm is not only used every few seconds to record new transactions in new blocks, but also
it can be used to periodically run more complex computations. For example, once a week, the
stellar network is using it to compute inflation on the stellar network and allocate the newly
minted tokens proportionally to all stellar coin holders (Stellar’s coin is called lumens). In a
similar manner, the Pi network employs SCP once a day to compute the network-wide new Pi
distribution across all Pi miners (pioneers, contributors, ambassadors, nodes) who actively
participated in any given day. In other words, Pi mining rewards are computed only once daily
and not on every block of the blockchain.

For comparison Bitcoin allocates mining rewards on every block and it give all of the reward to
the miner who was lucky enough to be able to solve a computationally intensive randomized
task. This reward in Bitcoin currently 12.5 Bitcoin (~$40K) is given to only one miner every 10
minutes. This makes it extremely unlikely for any given miner to ever get rewards. As a solution
to that, bitcoin miners are getting organized in centralized mining pools, which all contribute
processing power, increasing the likelihood of getting rewards, and eventually sharing
proportionally those rewards. Mining pools are not only points of centralization, but also their
operators get cuts reducing the amount going to individual miners. In Pi, there is no need for
mining pools, since once a day everyone who contributed get a meritocratic distribution of new
Pi.

Transaction fees

Similar to Bitcoin transactions, fees are optional in the Pi network. Each block has a certain limit
of how many transactions can be included in it. When there is no backlog of transactions,
transactions tend to be free. But if there are more transactions, nodes order them by fee, with
highest-fee-transactions at the top and pick only the top transactions to be included in the
produced blocks. This makes it an open market. Implementation: Fees are proportionally split
among Nodes once a day. On every block, the fee of each transaction is transferred into a
temporary wallet from where in the end of the day it is distributed to the active miners of the
day. This wallet has an unknown private key. Transactions in and out of that wallet are forced
by the protocol itself under the consensus of all nodes in the same way the consensus also
mints new Pi every day.

Limitations and future work

SCP has been extensively tested for several years as part of the Stellar Network, which at the
time of this writing is the ninth largest cryptocurrency in the world. This gives us a quite large
degree of confidence in it. One ambition of the Pi project is to scale the number of nodes in the
Pi network to be larger than the number of nodes in the Stellar network to allow more
everyday users to participate in the core consensus algorithm. Increasing the number of nodes,
will inevitably increase the number of network messages that must be exchanged between
them. Even though these messages are much smaller than an image or a youtube video, and
the Internet today can reliably transfer videos quickly, the number of messages necessary
increases with the number of participating nodes, which can become bottleneck to the speed of
reaching consensus. This will ultimately slow down the rate, at which new blocks and new
transactions are recorded in the network. Thankfully, Stellar is currently much faster than
Bitcoin. At the moment, Stellar is calibrated to produce a new block every 3 to 5 seconds, being
able to support thousands of transactions per second. By comparison, Bitcoin produces a new
block every 10 minutes. Moreover, due to Bitcoin’s lack in the safety guarantee, Bitcoin’s
blockchain in rare occasions can be overwritten within the first hour. This means that a user of
Bitcoin must wait about 1 hour before they can be sure that a transaction is considered final.
SCP guarantees safety, which means after 3-5 seconds one is certain about a transaction. So
even with the potential scalability bottleneck, Pi expects to achieve transaction finality faster
than Bitcoin and possibly slower than Stellar, and process more transactions per second than
Bitcoin and possibly fewer than Stellar.

While scalability of SCP is still an open research problem. There are multiple promising ways
one could speed things up. One possible scalability solution is bloXroute. BloXroute proposes a
blockchain distribution network (BDN) that utilizes a global network of servers optimized for
network performance. While each BDN is centrally controlled by one organization, they offer a
provably neutral message passing acceleration. I.e. BDNs can only serve all nodes fairly without
discrimination as messages are encrypted. This means the BDN does not know where messages
come from, where they go, or what is inside. This way Pi nodes can have two message passing
routes: A fast one through BDN, which is expected to be reliable most of the time, and its
original peer-to-peer message passing interface that is fully decentralized and reliable but is
slower. The intuition of this idea is vaguely similar to caching: The cache is place where a
computer can access data very quickly, speeding the average computation, but it is not
guaranteed to always have every needed piece of information. When the cache misses, the
computer is slowed down but nothing catastrophic happens. Another solution can be using
secure acknowledgment of multicast messages in open Peer-to-Peer networks to speed up
message propagation among peers.
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Pi Economic Model

Pi Economic Model: Balancing Scarcity and Access

One of Bitcoin’s most impressive innovations is its marriage of distributed systems with
economic game theory.

Pros

Fixed Supply

Bitcoin’s economic model is simple. There will only ever be 21 million Bitcoin in existence. This
number is set in code. With only 21M to circulate among 7.5B people around the world, there is
not enough Bitcoin to go around. This scarcity is one of most important drivers of Bitcoin’s
value.

Decreasing Block Reward

Bitcoin’ distribution scheme, pictured below, further enforces this sense of scarcity. The Bitcoin
block mining reward halves every 210,000 blocks (approximately every ~4 years.) In its early
days, the Bitcoin block reward was 50 coins. Now, the reward is 12.5, and will further decrease
to 6.25 coins in May 2020. Bitcoin’s decreasing rate of distribution means that, even as
awareness of the currency grows, there is less to actually mine.

Cons
Inverted Means Uneven

Bitcoin’s inverted distribution model (less people mining more in the beginning, and more
people mine less today) is one of the primary contributors to its uneven distribution. With so
much Bitcoin in the hands of a few early adopters, new miners are “burning” more energy for
less bitcoin.

Hoarding Inhibits Use As A Medium Of Exchange

Although Bitcoin was released as a “peer to peer electronic cash” system, the relative scarcity
of Bitcoin has impeded Bitcoin’s goal of serving as a medium exchange. Bitcoin’s scarcity has led
to its perception as a form of “digital gold” or a digital store of value. The result of this
perception is that many Bitcoin holders are unwilling to spend Bitcoin on day-to-day expenses.

The Pi Economic Model

Pi, on the other hand, seeks to strike a balance between creating a sense of scarcity for Pi, while
still ensuring that a large amount does not accumulate into a very small number of hands. We
want to make sure our users mine more Pi as they make contributions to the network. Pi’s goal
is to build an economic model that is sophisticated enough to achieve and balance these
priorities while remaining intuitive enough for people to use.

Pi’s economic model design requirements:

Simple: Build an intuitive and transparent model

Fair distribution: Give a critical mass of the world’s population access to Pi

Scarcity: Create a sense of scarcity to sustain Pi’s price over time

Meritocratic mining: Reward contributions to build and sustain the network

Pi – Token Supply

Token Emission Policy

Total Max Supply = M + R + D

M = total mining rewards

R = total referral rewards

D = total developer rewards

M = ∫ f(P) dx where f is a logarithmically declining function

P = Population number (e.g., 1st person to join, 2nd person to join, etc.)

R=r*M

r = referral rate (50% total or 25% for both referrer and referee)

D = t * (M + R)

t = developer reward rate (25%)

M – Mining Supply (Based on fixed mining supply minted per person)

In contrast to Bitcoin which created a fixed supply of coins for the entire global population, Pi
creates a fixed supply of Pi for each person that joins the network up to the first 100 Million
participants. In other words, for each person that joins the Pi Network, a fixed amount of Pi is
pre-minted. This supply is then released over the lifetime of that member based on their level
of engagement and contribution to network security. The supply is released using an
exponentially decreasing function similar to Bitcoin’s over the member’s lifetime.
R – Referral Supply (Based on fixed referral reward minted per person and shared b/w referrer
and referee)

In order for a currency to have value, it must be widely distributed. To incentivize this goal, the
protocol also generates a fixed amount of Pi that serves as a referral bonus for both the referrer
and the referee (or both parent and offspring 🙂 This shared pool can be mined by both parties
over their lifetime – when both parties are actively mining. Both referrer and referee are able to
draw upon this pool in order to avoid exploitative models where referrers are able to “prey” on
their referees. The referral bonus serves as a network-level incentive to grow the Pi Network
while also incentivizing engagement among members in actively securing the network.

D – Developer Reward Supply (Additional Pi minted to support ongoing development)

Pi will fund its ongoing development with a “Developer Reward” that is minted alongside each
Pi coin that is minted for mining and referrals. Traditionally, cryptocurrency protocols have
minted a fixed amount of supply that is immediately placed into treasury. Because Pi’s total
supply is dependent on the number of members in the network, Pi progressively mints its
developer reward as the network scales. The progressive minting of Pi’s developer reward is
meant to align the incentives of Pi’s contributors with the overall health of the network.

f is a logarithmically decreasing function – early members mine more

While Pi seeks to avoid extreme concentrations of wealth, the network also seeks to reward
earlier members and their contributions with a relatively larger share of Pi. When networks
such as Pi are in their early days, they tend to provide a lower utility to participants. For
example, imagine having the very first telephone in the world. It would be a great technological
innovation but not extremely useful. However, as more people acquire telephones, each
telephone holder gets more utility out of the network. In order to reward people that come to
the network early, Pi’s individual mining reward and referral rewards decrease as a function of
the number of people in the network. In other words, there is a certain amount of Pi that is
reserved for each “slot” in the Pi Network.

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Utility

Utility: Pooling and monetizing our time online

Today, everyone is sitting on a veritable treasure trove of untapped resources. Each of us spend
hours day on our phones. While on our phones, each of our views, posts or clicks creates
extraordinary profits for large corporations. At Pi, we believe that people have the right to
capture value created from their resources.

We all know that we can do more together than we can alone. On today’s web, massive
corporations like Google, Amazon, Facebook have immense leverage against individual
consumers. As a result, they are able to capture the lionshare of value created by individual
consumers on the web. Pi levels the playing field by allowing its members to pool their
collective resources so they can get a share of the value that they create.

The graphic below is the Pi Stack, where we see particularly promising opportunities for helping
our members capture value. Below, we go into each of these areas in more detail.

Introducing the Pi Stack – Unleashing underutilized resources

Pi Ledger And Shared Trust Graph – Scaling Trust Across The Web

One of the biggest challenges on the internet is knowing who to trust. Today, we rely on the
rating systems of providers such as Amazon, eBay, Yelp, to know who we can transact with on
the internet. Despite the fact that we, customers, do the hard work of rating and reviewing our
peers, these internet intermediaries capture the lionshare of the value created this work.

Pi’s consensus algorithm, described above, creates a native trust layer that scales trust on the
web without intermediaries. While the value of just one individual’s Security Circle is small, the
aggregate of our individual security circles build a global “trust graph” that help people
understand who on the Pi Network can be trusted. The Pi Network’s global trust graph will
facilitate transactions between strangers that would not have otherwise been possible. Pi’s
native currency, in turn, allows everyone who contributes to the security of the network to
capture a share of the value they have helped create.

Pi’s Attention Marketplace – Bartering Unutilized Attention And Time

Pi allows its members to pool their collective attention to create an attention market much
more valuable than any individual’s attention alone. The first application built on this layer will
be a scarce social media channel currently hosted on the home screen of the application. You
can think of the scarce social media channel as Instagram with one global post at a time.
Pioneers can wager Pi to engage the attention of other members of the network, by sharing
content (e.g., text, images, videos) or asking questions that seek to tap into the collective
wisdom of the community. On the Pi Network, everyone has the opportunity to be an
influencer or to tap into the wisdom of the crowd. To date, Pi’s Core Team has been using this
channel to poll the community’s opinion on design choices for Pi (e.g. the community voted on
the design and colors of the Pi logo.) We have received many valuable responses and feedback
from the community on the project. One possible future direction is to open the attention
market for any Pioneer to use Pi to post their content, while expanding the number of channels
hosted on the Pi Network.

In addition to bartering attention with their peers, Pioneers may also opt into bartering with
companies that are seeking their attention. The average American sees between 4,000 and
10,000 ads a day. Companies fight for our attention and pay tremendous amounts of money for
it. But we, the customers, receive no value from these transactions. In Pi’s attention
marketplace, companies seeking to reach Pioneers will have to compensate their audience in Pi.
Pi’s advertising marketplace will be strictly opt-in only and will provide an opportunity for
Pioneers to monetize one of their greatest untapped resources: their attention.

Pi’s Barter Marketplace – Build Your Personal Virtual Storefront

In addition to contributing trust and attention to the Pi Network, we expect Pioneers to be able
to contribute their unique skills and services in the future. Pi’s mobile application will also serve
as a Point of Sales where Pi’s members can offer their untapped goods and services via a
“virtual storefront” to other members of the Pi Network. For example, a member offer up an
underutilized room in their apartment for rent to other members on the Pi Network. In addition
to real assets, members of the Pi Network will also be able to offer skills and services via their
virtual storefronts. For example, a member of the Pi Network could offer their programming or
design skills on the Pi marketplace. Overtime, the value of Pi will be supported by a growing
basket of goods and services.

Pi’s Decentralized App Store – Lowering The Barrier Of Entry For Creators

The Pi Network’s shared currency, trust graph, and marketplace will be the soil for a broader
ecosystem of decentralized applications. Today, anyone that wants to start an application
needs to bootstrap its technical infrastructure and community from scratch. Pi’s decentralized
applications store will allow Dapp developers to leverage Pi’s existing infrastructure as well as
the shared resources of the community and users. Entrepreneurs and developers can propose
new Dapps to the community with requests for access to the network’s shared resources. Pi will
also build its Dapps with some degree of interoperability so that Dapps are able to reference
data, assets, and processes in other decentralized applications.

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Governance

Governance - Cryptocurrency for and by the people

Challenges w/ 1st Generation Governance models

Trust is the foundation of any successful monetary system. One of the most important factors
engendering trust is governance or the process by which changes are implemented to the
protocol over time. Despite its importance, governance is often one of the most overlooked
aspects of cryptoeconomic systems.

First generation networks such as Bitcoin largely avoided formal (or “on-chain”) governance
mechanisms in favor of informal (or “off-chain”) mechanisms arising from a combination of role
and incentive design. By most measures, Bitcoin’s governance mechanisms has been quite
successful, allowing the protocol to grow dramatically in scale and value since its inception.
However, there have also been some challenges. The economic concentration of Bitcoin has led
to a concentration of political power. The result is that everyday people can get caught in the
middle of destructive battles between massive holders of Bitcoin. One of the most recent
examples of this challenge has been the ongoing battle between Bitcoin and Bitcoin Cash. These
civil wars can end in a fork where or where the blockchain. For token holders, hard forks are
inflationary and can threaten the value of their holdings.

Pi’s Governance Model – a two-phase plan

In an article challenging the merits of on-chain governance, Vlad Zamfir, one of Ethereum’s core
developers, argues that blockchain governance “is not an abstract design problem. It’s an
applied social problem.” One of Vlad’s key points is that it is very difficult to design governance
systems “a priori” or before observations of the particular challenges arising from a specific
political system. One historical example is in the founding of the United States. The first
experiment with democracy in the United States, the Articles of Confederation, failed after an
eight-year experiment. The Founding Fathers of the United States were then able to draw upon
the lessons of the Article of Confederation to craft the the Constitution – a much more
successful experiment.

To build an enduring governance model, Pi will pursue a two-phase plan.

Provisional Governance Model (< 5M Members)

Until the network hits a critical mass of 5M members, Pi will operate under a provisional
governance model. This model will most closely resemble “off-chain” governance models
currently employed by protocols like Bitcoin and Ethereum, with Pi’s Core Team playing an
important role in guiding the development of the protocol. However,, Pi’s Core Team will still
rely heavily on the input of the community. The Pi mobile application itself is where Pi’s core
team has been soliciting community input and engaging with Pioneers. Pi embraces community
critiques and suggestions, which is implemented by the open-for-comments features of Pi’s
landing page, FAQs and Whitepaper. Whenever people browse these materials on Pi’s
websites, they can submit comment on a specific section right there to ask for questions and
make suggestions. Offline Pioneer meetups that Pi’s core team have been organizing will also
be an important channel for community input.

Additionally, Pi’s Core Team will develop more formal governance mechanics. One potential
governance system is liquid democracy. In liquid democracy, every Pioneer will have the ability
to either vote on an issue directly or to delegate their vote to another member of the network.
Liquid democracy would allow for both broad and efficient membership from Pi’s community.

Pi’s “Constitutional Convention” (> 5M Members)

Upon hitting 5M members, a provisional committee will be formed based on previous

contributions to the Pi Network. This committee will be responsible for soliciting and proposing
suggestions from and to the wider community. It will also organize a series of on- and offline
conversations where Pi’s members will be able to weigh on Pi’s long-term constitution. Given
Pi’s global user base, the Pi Network will conduct these conventions at multiple locations across
the world to ensure accessibility. In addition to hosting in-person conventions, Pi will also use
its mobile application as a platform for allowing Pi’s member to participate in the process
remotely. Whether in-person or online, Pi’s community members will have the ability to
participate in the crafting Pi’s long-term governance structure.

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Roadmap

Roadmap/Deployment Plan

Phase 1 – Design, Distribution, Trust Graph Bootstrap.

The Pi server is operating as a faucet emulating the behavior of the decentralized system as it
will function once its live. During this phase improvements in the user experience and behavior
are possible and relatively easy to make compared to the stable phase of the main net. All
minting of coins to users will be migrated to the live net once it launches. In other words, the
livenet will pre-mint in its genesis block all account holder balances generated during Phase 1,
and continue operating just like the current system but fully decentralized. Pi is not listed on
exchanges during this phase and it is impossible to “buy” Pi with any other currency.

Phase 2 – Testnet

Before we launch the main net, the Node software will be deployed on a test net. The test net
will use the same exact trust graph as the main net but on a testing Pi coin. Pi core team will
host several nodes on the test net, but will encourage more Pioneers to start their own nodes
on the testnet. In fact, in order for any node to join the main net, they are advised to begin on
the testnet. The test net will be run in parallel to the Pi emulator in phase one, and periodically,
e.g. daily, the results from both systems will be compared to catch the gaps and misses of the
test net, which will allow Pi developers to propose and implement fixes. After a thorough
concurrent run of both systems, testnet will reach a state where its results consistently match
the emulator’s. At that time when the community feels its ready, Pi will migrate to the next
phase.

Phase 3 – Mainnet

When the community feels the software is ready for production, and it has been thoroughly
tested on the testnet, the official mainnet of the Pi network will be launched. An important
detail is that, in the transition into the mainnet, only accounts validated to belong to distinct
real individuals will be honored. After this point, the faucet and Pi network emulator of Phase 1
will be shut down and the system will continue on its own forever. Future updates to the
protocol will be contributed by the Pi developer community and Pi’s core team, and will be
proposed by the committee. Their implementation and deployment will depend on nodes
updating the mining software just like any other blockchains. No central authority will be
controlling the currency and it will be fully decentralized. Balances of fake users or duplicate
users will be discarded. This is the phase when Pi can be connected to exchanges and be
exchanged for other currencies.

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Whitepaper: December 2021 Chapters with March 2022 Rewards Issuance Formula

Token Model and Mining

Note: These 2021 Whitepaper chapters are an addendum to the original 2019 Whitepaper, with
additional information on Pi Network’s Mainnet launch.

Token Model and Mining

A well thought-out, sound token design is critical to the success of a cryptocurrency network. It
has the potential to create incentives to bootstrap network formation and growth, build a
utilities-driven ecosystem, and thereby support the cryptocurrency underpinning such a
system. What a network incentivizes says a lot about what a network needs—for example,
network growth or fundamentals-driven utility creation, a mere store of value or a medium of
exchange for the cryptonative ecosystem. This chapter covers the supply of Pi and how
Pioneers can mine Pi in different phases of the network, and the underlying design rationale for
different mining mechanisms including to build and grow the network and to incentivize the
creation of a utilities-based ecosystem. Note that Pi is a layer one cryptocurrency running on its
own blockchain, which “token” here refers to.
Pi Supply

Pi Supply

Pi Network’s vision is to build the world’s most inclusive peer-to-peer ecosystem and online
experience, fueled by Pi, the world’s most widely used cryptocurrency. To deliver on this vision,
it is important to grow the network and make Pi widely accessible while maintaining the
security of the blockchain and long-term network incentives. While these goals have always
guided the token supply model and mining design, the key distinction is: the pre-Mainnet
phases focused on driving network growth and widely distributing Pi and the Mainnet phase
will focus on rewarding more diverse forms of Pioneer contributions necessary for ecosystem
building and utilities creation.

Pre-Mainnet Supply

In the early stages, the focus of Pi Network was on growing and securing the network.
Bootstrapping to build a critical mass of participants is paramount to any network and
ecosystem. Driven by the vision to make Pi the world’s most widely used cryptocurrency,
distributing Pi and making it accessible globally further added to the focus on growth. Pi’s
consensus algorithm relies on a global trust graph, which is aggregated from the Security Circles
of individual Pioneers. It was, therefore, critical to incentivize Pioneers to form individual
Security Circles. This meant a supply of tokens available as mining rewards that was not
explicitly capped before Mainnet.

At the same time, maintaining long-term network incentives is important. As explained under
the Mining section, the network adopted a mining mechanism where the network mining rate
halves every time the network size increases by 10 times, resulting in a series of halving events
when it reaches various milestones of engaged Pioneers. The next halving event based on this
model would be when the network reaches 100 million engaged Pioneers. Currently, we have
over 45 million Engaged Pioneers. The network also retained an option to stop all mining
altogether in the event that the network reached a certain size, which was, however, yet to be
determined. The option to cap the supply of Pi was not exercised before Mainnet, therefore
leaving the total supply undefined.

The pre-Mainnet supply model with a mining mechanism tailored to accessibility, growth and
security has bootstrapped a community of over 30 million engaged Pioneers with millions of
intertwined Security Circles. A simple, accessible means to mine Pi on a mobile phone helped
distribute the tokens widely throughout the world, including among populations that have been
left out of the crypto revolution because of a lack of capital, knowledge or technology. In doing
so, the network avoided the extreme token concentration evident in Bitcoin and other
cryptocurrencies, preparing itself to become a true peer-to-peer decentralized ecosystem with
a large enough volume of participants and transactions for utility creation.

Mainnet Supply

Supply fuels growth and incentivizes necessary contributions to the network to achieve an
organically viable ecosystem. To that end, mining rewards will continue after Mainnet but will
take diverse forms to incentivize different types of contributions, which will be explained in the
Mining section below. In regard to supply, the undetermined supply due to the pre-Mainnet
mining mechanism that optimizes for accessibility and growth of the network presents a few
problems for the Mainnet phase, including unpredictability in planning, over-rewarding and
under-rewarding of different types of necessary contributions in the new phase, and challenges
to maintaining long-term network incentives. To address these issues, the network will shift
from its pre-Mainnet supply model that is completely dependent on network behavior to the
Mainnet supply model where there is a clear maximum supply.
The issue of unpredictability for planning in the pre-Mainnet supply model surfaced in Pi
Network’s first COiNVENTION in September-October 2020 where the community panel and
community submissions discussed whether mining should be halved or stopped at the network
size of 10 million at the time. The diverse voices of community members presented the
following dilemma for the network. If mining continued based on the ongoing (pre-Mainnet)
mining mechanism, then it raised concerns with respect to Pi’s ability to provide long-term
network incentives. However, if mining stopped, it would hurt the growth of the network and
prevent new Pioneers joining the network as miners, thereby undermining the accessibility of
Pi. Even though the network moved on from that decision and halved the mining rate at its 10
Million size, this dilemma still remains and needs to be resolved.

How the community can achieve continued growth and accessibility while addressing concerns
about supply is one of the main factors considered in the design of the Mainnet token model. In
addition, the undefined and unpredictable total supply makes it hard to have overall network
token planning because the community as a collective and the ecosystem itself have needs to
use some Pi for purposes that benefit the community and ecosystem as a whole, other than
only mining rewards for individuals, as evidenced by almost every other blockchain network.
Clear allocations for such collective community purposes need to be defined. Hence, given the
current network size of over 30 million Pioneers and the expected volume of transactions and
activities in the future, the Mainnet supply model has a clear maximum total supply of 100
billion Pi allowing incentivizations of continued growth and new contributions while removing
the concerns about the unpredictability of the supply.

The supply distribution will honor the original distribution principle in the March 14, 2019
Whitepaper—the Pi community has 80% and the Pi Core Team has 20% of the total circulating
supply of Pi, regardless of how much circulating supply there is in the Pi Network at any given
point in time. Thus, given a total max supply of 100 billion Pi, the community will eventually
receive 80 billion Pi and the Core Team will eventually receive 20 billion Pi. The following pie
chart depicts the overall distribution. The Core Team’s allocation gets unlocked at the same
pace as the community progressively mines more and more Pi and may be subject to additional
lockup through a self-imposed mandate. This means that if the community has a portion of its
allocation in circulation (for example, 25%), only the proportional amount in Core Team’s
allocation (in this example, 25%) can get unlocked at most.

This distribution above shows that Pi Network does not have any allocation for ICO and is NOT
running any type of crowdfunding sales of Pi. Thus, any impersonation of Pi Network or its
founders to conduct a sale or listing is illegal, unauthorized and fake. These impersonators have
no affiliation with Pi Core Team. Pioneers should beware of any scams and not participate. Pi
can be mined freely by contributing to the ecosystem. Further, all mined Pi can only be claimed
from inside the Pi App through the Mainnet dashboard and then transferred into your Pi wallet.
Any website asking Pioneers to claim Pi in other means is fake.

The 80% of the community supply is further divided into: 65% allocated for all past and future
Pioneer mining rewards, at address
GBQQRIQKS7XLMWTTRM2EPMTRLPUGQJDLEKCGNDIFGTBZG4GL5CHHJI25 on the Mainnet,
10% reserved for supporting community organization and ecosystem building that will
eventually be managed by a Pi Foundation, a non-profit organization in the future, at address
GDPDSLFVGEPX6FJKGZXSTJCPTSKKAI4KBHBAQCCKQDXISW3S5SJ6MGMS, and 5% reserved for
the liquidity pool to provide liquidity for Pioneers and developers in the Pi ecosystem at address
GB7HLN74IIY6PENSHHBBJJXWV6IZQDELTBZNXXORDGTL75O4KC5CUXEV. The following table
depicts the community supply distribution:
65 Billion Pi will be allocated for all mining rewards—both past and future mining. For past
mining rewards, the rough sum of all Pi mined by all Pioneers so far (before Mainnet) is about
30 Billion Pi. However, after prohibiting the migration of the Pi in fake accounts (as discussed in
the subsections “The Effect of KYC on Mainnet rewards” and “KYC Verification and Mainnet
Balance Transfer” below) and depending on the speed and participation of KYC, the pre-
Mainnet mined Pi at the beginning of the Open Network can be estimated to range from 10 to
20 Billion. The remaining amount in the 65 billion Pi supply for mining rewards will be
distributed to Pioneers through the new Mainnet mining mechanism with conceptual yearly
supply limits.

Such yearly supply limits will be determined based on a declining formula. The yearly limit may
be computed on a more granular basis such as by the day or by an even smaller time epoch
dynamically, depending on factors such as the lockup ratio and the remaining supply of the
network at the time. Such calculation of supply limits based on granular time epochs helps
achieve a better and more smooth allocation curve through time. For the sake of simplicity
here, let’s suppose that the time epoch is yearly. The declining formula would mean that the
yearly supply limit for the first year of new Mainnet mining will be higher than for the second
year, the second year’s higher than the third year’s, and so on. The yearly declining formula and
these numbers will need to be finalized closer to the launch of the Open Network period of
Mainnet once we will have seen how many Pioneers have KYC’ed and how much of their mined
Pi they have transferred into Mainnet.

At Mainnet, Pioneers will be rewarded for their continued contributions to the growth and
security of the network. As explained in the Mining section, Pioneer rewards will be further
diversified because the network needs more diverse and in-depth contributions related to app
usage, node operation, and Pi lockup. Pre-Mainnet Pioneers will continue to contribute to Pi
and mine from the Mainnet mining rewards, along with any new members joining the network,
to ensure growth and longevity of the network.
10 Billion Pi will be reserved for community organization and ecosystem building that will be, in
the future, managed by a non-profit foundation. Most decentralized networks or
cryptocurrencies, even though they are decentralized, still need an organization to organize the
community and set the future direction of the ecosystem, e.g., Ethereum and Stellar. The future
Pi foundation will (1) organize and sponsor community events, such as developer conventions,
global online events and local community meetings, (2) organize volunteers and committee
members, and pay full-time employees who are dedicated to building the community and
ecosystem, (3) gather opinions and feedback from the community, (4) organize future
community votings, (5) build branding and protect the reputation of the network, (6) represent
the network to interact with other business entities including governments, traditional banks,
and traditional enterprises, or (7) fulfill any number of responsibilities for the betterness of the
Pi community and ecosystem. Further, in order to build a utilities-based Pi ecosystem, various
community developer programs will be designed, created and carried out by the foundation to
support community developers in the forms of grants, incubations, partnerships, etc.

5 billion Pi will be reserved for liquidity pools to provide liquidity for any ecosystem
participants, including Pioneers and Pi apps developers. Liquidity is key for an ecosystem to be
viable, active, and healthy. If businesses or individuals want to participate in ecosystem
activities (e.g., by selling and buying goods and services in Pi), they must have timely access to
Pi. Without liquidity, the ecosystem will not have a healthy flow of Pi, hence harming the
creation of utilities.

As discussed in the Roadmap chapter, one benefit of the Enclosed Network period of the
Mainnet is to allow calibrations on the token model, if any, based on the early Mainnet results.
Therefore, the token model is subject to tweaking before the Open Network period starts. Also,
in the future, for the health of the network and ecosystem, the network may face questions
such as whether there needs to be any inflation after the completion of the distribution of the
100 Billion Pi. The inflation may be necessary to further incentivize contributions through more
mining rewards, make up for any loss of Pi from circulation due to accidents or death, provide
for more liquidity, mitigate hoarding that inhibits usage and utility creation, etc. At that time,
the foundation and its committees specialized in these matters will organize and guide the
community to reach a conclusion on the matter in a decentralized way.

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Mining Mechanism

Mining Mechanism

Pi Network’s mining mechanism has been allowing Pioneers to contribute to the growth,
distribution and security of the network and be rewarded in Pi meritocratically. The pre-
Mainnet mining mechanism has helped the network achieve an impressive growth of over 35
million engaged members, a widely distributed currency and Testnet, and a trust graph of
Security Circle aggregates that will feed the consensus algorithm of the Pi blockchain.

Looking ahead into the Mainnet phase, Pi Network needs further contributions, as well as more
diverse types of contributions from all its members, to become a true ecosystem while
continuing its growth and inclusion. In the Mainnet phase, we want to further achieve
decentralization, utilities, stability and longevity, in addition to growth, inclusion, and security.
These goals can only be achieved if all Pioneers in the network work together. Hence, the new
Pi mining mechanism is designed to achieve these goals by incentivizing all Pioneers to
contribute diversely to the network based on the same meritocratic principle. Below, we first
describe the pre-Mainnet mining formula, followed by the changes in the Mainnet formula. The
Mainnet mining formula went into effect in March, 2022 – during the Enclosed Mainnet period
of the Roadmap that started on December 28, 2021.

Pre-Mainnet Formula

The pre-Mainnet mining formula demonstrates a meritocratic determination of a Pioneer’s

hourly mining rate. Actively mining Pioneers received at least a minimum rate and were further
rewarded for their contributions to security and growth of the network. The following formula
determined the rate at which Pioneers mined Pi per hour:

M = I(B,S) + E(I), where

M is the total Pioneer mining rate,

I is the Individual Pioneer base mining rate,

B is the systemwide base mining rate,

S is the Security Circle reward, which is a component of the individual Pioneer base mining rate
from valid Security Circle connections, and

E is the Referral Team reward from active Referral Team members.

The systemwide base mining rate B started as 3.1415926 Pi/h and halved every time the
network of Engaged Pioneers increased in size by a factor of 10x, starting at 1000 Pioneers. As
listed below, there have been five halving events thus far:

Here,
I(B,S) = B + S(B)

S(B) = 0.2 • min(Sc,5) • B, where

Sc is the count of valid Security Circle connections.

E(I) = Ec • I(B,S) • 0.25, where

Ec is the count of active Referral Team members who mine concurrently.

The mining formula can also be written as a multiple of B:

M = I(B,S) + E(I)

M = + , or

M = + , or

M = B • , or

M=B•

Pre-Mainnet Systemwide Base Mining Rate

Every active Pioneer received at least the systemwide base mining rate (B). That is, if Sc = 0 and
Ec = 0 in the mining formula above, then M = B. In any case, the total Pioneer mining rate was a
multiple of the systemwide base mining rate. The value of B was pre-determined before the
Mainnet, and as shown in the table above, it changed only five times. The max supply was
undetermined due to the dynamic progress of the pre-Mainnet mining mechanism, e.g. how
large the network is and how fast the network reaches the next halving event. It would only be
determined when B dropped to 0. However, as explained in the next section, the value of B at
Mainnet is calculated in real time, dynamically adjusting based on the total annual Pi supply and
the total mining coefficient across all the Pioneers. The supply of Pi is finite at Mainnet.
Security Circle Reward

Pi’s consensus algorithm relies on a global trust graph, which is aggregated from the millions of
intertwining Security Circles of individual Pioneers. Thus, a Pioneer was rewarded with
additional Pi per hour for each new valid Security Circle connection, up to 5 such connections.
The Security Circles are so central to the security of the Pi blockchain that the Security Circle
reward raised the total Pioneer mining rate in two ways:

by directly adding to the individual Pioneer base mining rate (I), and

by boosting the Referral Team reward, if any.

In fact, a full Security Circle—that is, having at least five valid connections—doubled both the
individual Pioneer base mining rate and the Referral Team reward.

Referral Team Reward

Pioneers can also invite others to join Pi Network and form their Referral Team. The inviter and
invitee share an equal split of the Referral Team bonus rewards, that is a 25% boost to their
respective individual Pioneer base mining rates, whenever both are mining concurrently.
Pioneers mined more Pi per hour with each concurrently mining Referral Team member. This
Referral Team reward recognized the Pioneers’ contribution to the growth of the network and
the distribution of the Pi token.

Mainnet Mining Formula

The goals of the Mainnet phase are to make further progress in decentralization and utilities,
ensure stability and longevity, and retain growth and security. The new formula, as written
below, incentivizes more diverse contributions of Pioneers to support these Mainnet goals
while retaining the incentives to secure and grow the network. As before, it is meritocratic and
expressed as the rate at which Pioneers mine Pi per hour.

M = I(B,L,S) + E(I) + N(I) + A(I) + X(B), where

M is the total Pioneer mining rate,

I is the individual Pioneer base mining rate,

B is the systemwide base mining rate (adjusted based on the available pool of Pi to distribute
for a given time period),

L is the lockup reward, which is a new component of the individual Pioneer base mining rate,

S is the the Security Circle reward, which is a component of the individual Pioneer base mining
rate from valid Security Circle connections the same way as in the pre-Mainnet mining formula,

E is the Referral Team reward from active Referral Team members the same way as in the pre-
Mainnet mining formula,

N is the Node reward,

A is the Pi apps usage reward, and

X are new types of contributions necessary for the network ecosystem in the future, which will
be determined later, but will also be designed as a multiple of B.

In short, S and E remain the same as in the pre-Mainnet mining formula, while new rewards
such as L, N and A have been added to the current formula. L is added as part of I; N and A are
added as additional rewards calculated based on I. In other words, the network still rewards
growth through E and security through S, while incentivizing Pioneers’ contributions to running
nodes for decentralization through N, using apps for utilities creation through A, and locking up
for stability especially during the initial years through L. Further, new types of rewards to
Pioneers through X in the future may be added for building a fully functioning ecosystem, such
as rewards for Pioneer developers creating successful Pi apps. B continues to exist over a long
period of time while having a yearly cap to ensure longevity of network growth bywhile
maintaining long-term network incentives. In fact, all the rewards can be expressed in B as
follows.

Here,

I(B,L,S) = B + S(B) + L(B)

S(B) = 0.2 • min(Sc,5) • B, where

Sc is the count of valid Security Circle connections.

E(I) = Ec • 0.25 • I(B,L,S), where

Ec is the count of active Referral Team members.

L(B) = Lt • Lp • log(N) • B, where

Lt is a multiplier corresponding to the duration of a lockup,

Lp is the proportion of Pioneer’s mined Pi on the Mainnet that is locked up with the maximum
being 200%, and
N is the total number of Pioneer’s mining sessions preceding the current mining session.

N(I) = node_factor • tuning_factor • I, where

Node_factor = Percent_uptime_last_1_days • (Uptime_factor + Port_open_factor +

CPU_factor), where

Uptime_factor = (Percent_uptime_last_90_days + 1.5*Percent_uptime_last_360_days(360-90)

+ 2* Percent_uptime_last_2_years + 3*Percent_uptime_last_10_years),

Port_open_factor = 1 + percent_ports_open_last_90_days +
1.5*percent_ports_open_last_360_days + 2* percent_ports_open_last_2_years +
3*percent_ports_open_last_10_years,

CPU_factor = (1 + avg_CPU_count_last_90_days + 1.5*avg_CPU_count_last_360_days + 2*

avg_CPU_count_last_2_years + 3*avg_CPU_count_last_10_years)/4.

and

Percent_uptime_last_*_days/years is the percentage of the last * time period when the

individual Node was live and accessible by the network.

percent_ports_open_last_*_days/years is the percentage of the last * time period when the

ports of the individual Node were open for connectivity to the network.

avg_CPU_count_last_*_days/years is the average CPU that the individual Node provided to the
network during the last * time period.

tuning_factor is a statistical factor that normalizes the node_factor to a number between 0 and
10.
time_spent_per_app_yesterday_in_seconds is, for each Pi app, the total amount of time in
seconds that the Pioneer spends using the app on the prior day.

Σ_across_apps sums up the logarithmic value of the Pioneer’s

time_spent_per_app_yesterday_in_seconds across all the Pi apps.

avg_daily_time_spent_across_apps_last_*_days/years is the average daily time in seconds the

Pioneer spends across all the Pi apps in the aggregate during the last * time period.

* Note that when any of the logarithmic functions returns an undefined value or a value below
0 (that is, when, the input to the logarithmic function is below 1), the formula resets the value
of the logarithmic function to be 0 in order to avoid negative mining rewards or an error in the
function.

X(B) is to be determined in the future based on the new types of contributions, but will be a
multiple of B and kept within the yearly supply limit along with other rewards.

As shown above, the expressions of S and E remain the same as in the pre-Mainnet mining
formula, and will not be explained further here. Next, we will focus on explaining the changes
to B, changes to I through L, and the additions of N and A.

Systemwide Base Mining Rate

Like in Pre-Mainnet mining, all of the terms in the Mainnet mining formula above can be
expressed in Pi per hour and are designed to be a multiple of B. Hence, the equation can also be
re-written as below. Every Pioneer can mine at least the Systemwide Base Mining Rate
everyday, and will be able to mine at a higher rate if they also have other types of contributions
that are calculated as multiples of B.

M = B • (1 + S + L) • (1 + N + E + A + X)

Unlike in the pre-Mainnet mining, B in Mainnet mining as in the formula above is no longer a
constant across all Pioneers at a given point in time, but is calculated in real time and
dynamically adjusted based on a yearly supply cap.

Given a yearly supply limit, it is impossible to keep a constant B like in the pre-Mainnet period
because it’s unpredictable how much each Pioneer mines and how many Pioneers are actively
mining during a period of time. The pre-Mainnet model was designed to incentivize growth
during the beginning years to bootstrap the network. As the network achieves a certain scale, it
also needs to ensure the overall health of the ecosystem. Therefore, an exponential issuance of
the tokens through exponential network growth and a constant mining rate does not make
sense any longer. The shift of B from being a constant to being dynamically adjusted for a
certain period of time throughout the year results from the need to incentivize Pioneers’
contributions meritocratically but also to keep the total rewards within a limit.

The time period for adjusting B could be yearly, monthly, daily, hourly, or even more granular.
Pi Network will iterate on this time period over time based on careful monitoring and review.

The first version of the Rewards Issuance Formula was announced March 1st 2022—the
declining exponential function described below—whereby in combination with mining
activities, the systemwide base mining rate (B) is adjusted based on a monthly supply limit
determined by the formula.

Please note that the declining exponential formula below is the first version of the Rewards
Issuance Formula, as it is impossible to precisely predict the future data on Mainnet and from
new mining. This first version was designed based on past data, simulations and best
assumptions, such as the 35 billion remaining supply for future mining rewards, Pioneer lockups
and overall ecosystem factors. For example, the 35 billion remaining Pi is estimated based on
the currently available data about real Pioneers’ mobile balances. A more accurate figure will
be determined by the speed of network KYC and how much Pi is migrated to the Mainnet in the
future. Further data and continual simulations will help assess such underlying assumptions in
the rewards issuance formula, and thus may lead to the formula’s adjustment in line with the
network’s objectives.

supply_limits (expressed in Pi/day) = exp (–last_day_total_mining_rewards / 1220) •

35,000,000,000, where

supply_limits are the output of this formula that allocates a specific amount of Pi to each day
for the indefinite time while making sure the total future issuance will not exceed the remaining
available supply,

last_day_total_mining_rewards is equal to the total Pi mining rewards issued on the previous

day,

1220 is a tuning factor to be further tuned over the coming months, and

35 billion is the estimated number of Pi available for Pioneers to mine going forward.
This monthly B means that that B will stay constant for a month and will be adjusted based on
the rewards issuance formula and the network’s mining activities at the end of each month.
Starting with a B that stays constant for a month helps Pioneers understand the implications of
1) new supply limits, 2) the new mining mechanism with new rewards, and 3) a more dynamic
nature of B (potentially in the future) one at a time, given that these concepts are complex and
all have an effect on Pioneers’ mining rewards. At the same time, a monthly period is short
enough to correct any potential over- or under-issuance of Pi deviating from the rewards
issuance formula while B is stable long enough for Pioneers to follow along and adjust their
contributions to the network to mine for rewards.

Each month’s B is calculated based on the supply limit for the month based on this formula and
the sum of all reward coefficients of all active Pioneers from the last day of the previous month.
This B updates again on the first day of every month.

More specifically, the value of B for a given month is calculated by:

Summing up the daily supply_limits for the month from the above rewards issuance formula

Dividing it by the number of days in the month for even daily allocation within the month

Dividing it again by the sum of coefficients (sum_of_B_multiples) of mining rewards of all active
Pioneers of the last day of the previous month—including their multiples of Referral Team,
Security Circle, Pi Lockup, App usage, and Node Operation rewards

Similar iterations occur each month.

When B stays constant in a month, the total number of Pi actually mined every month varies
with the total number of actively mining Pioneers and the contributions they make in that
month. At the end of the month, the total number of Pi actually mined will be compared with
the number initially projected by the formula. Any deviation between the two numbers each
month will lead to a further adjustment on the remaining Pi supply, across the remaining
indefinite mining period, along with any other types of adjustments explained above, e.g. the
assumed 35 billion remaining mining rewards supply.

As such, the monthly B can potentially cause an overissuance of Pi when there is an unexpected
increase in the number of Pioneers and their mining rates, leading to a deviation from the
rewards issuance formula. If such deviation on a monthly basis is constantly large, the network
can move to a more dynamic version of the B model where the monthly issuance of Pi remains
constant but B gets adjusted on a more granular time epoch basis. The shorter the time period
for adjusting B to follow the formula, the less is the potential for over- or under-issuance
against the targeted supply limits, and the less is the chance for deviation from the formula
over that period. More data on Mainnet and the new mining mechanism will help examine the
efficacy of the current monthly dynamic B and determine if a more dynamic version B is
necessary.

For example, if the B is calculated daily, instead of the current monthly version, for a given day
of the year,

B = day_supply / (sum_of_B_multiples • 24h)

Divide the remaining total Pi supply of the year by the number of days left in the year to get
day_supply based on the remaining yearly supply,
Add the multiples of B from all Pioneers actively mining within the last 24 hours, which
represents a diverse set of Pioneers’ contributions, in the Mainnet mining formula above to get
the sum_of_B_multiples of the whole network for that 24-hour window, and

Further divide day_supply by sum_of_B_multiples and 24 hours to get B of that specific mining
session.

Under this potential framework with a day as the unit of time for adjustment, B on different
days of the year will be different depending on how many Pioneers mined in the last 24 hours
as well as what and how much contributions they made to receive the extra multiples of B by
running nodes, using utilities apps or lockups, etc. Each Pioneer’s B of their day stays constant
through their mining session, that is, over the next 24 hours from the moment they start their
mining session.

This model, whether it is monthly, daily or by more granular time periods, also addresses any
uncertainty with having X(B)—future types of contribution rewards for Pioneers—in the
formula. Regardless of how much X is going to be, it will be kept within the same yearly supply
limit without increasing the total supply and will only affect the division of rewards among
different types of contributions. This dynamic mechanism allows Pioneers themselves, in a
decentralized way, to make sure that (1) the rewards do not exceed the yearly supply limit, (2)
the distribution of the yearly supply does not end early in the year, and (3) the rewards are
divided meritocratically.

For purposes of illustration, let’s suppose there are only two Pioneers on a given day and B is
the daily mining rate (expressed in Pi/day for this illustration)—a constant during a specific
Pioneer mining session, but dynamically adjusted across different days:
Pioneer 1 has no app engagement (A=0), is not operating a Node (N=0), has no security
connections (S=0), and has no active Referral Team members (E=0). They are in their 11th
mining session (N=10) and are locking up 100% of their mined Pi (Lp=1) for 3 years (Lt=2).
Pioneer 1’s mining rate on this day is:

M1 = I(B,L,S) + 0 + 0 + 0, or

M1 = B + {2 • 1 • log(10)} • B + 0, or

M1 = 3B

Pioneer 2 has no app engagement (A=0), is not operating a Node (N=0), has no lockup (L=0),
and has no active Referral Team members (E=0). They have a full Security Circle. Pioneer 2’s
mining rate on this day is:

M2 = I(B,L,S) + 0 + 0 + 0, or

M2 = B + 0 + {0.2 • min(Sc,5) • B}, or

M2 = B + {0.2 • 5 • B}, or

M2 = 2B

Here, Total Pi to be mined in the whole network on this day = M1 + M2 = 5B

Let’s assume there are 500 Pi and 50 days left in the year.

Therefore, Total Pi available to be mined for this day = 500 Pi / 50 days = 10 Pi/day

Solving B based on the two equations above,

5B=10 Pi ⇒ B = 2 Pi/day (or 0.083 Pi/hour)

Accordingly, Pioneers 1 and 2 will have their actual mining rates as follows:

M1 = 3 • 2 Pi/day = 6 Pi/day (or 0.25 Pi/hour)

M2 = 2 • 2 Pi/day = 4 Pi/day (or 0.17 Pi/hour)

Pioneer Base Mining rate

By comparison, the individual Pioneer base mining rate in the pre-Mainnet mining formula
includes only system-wide base mining rate and Security Circle rewards. At Mainnet, a new
component, lockup reward, is added to individual Pioneer base mining rate I. Lockup rewards L,
along with the system-wide base mining rate B and Security Circle reward S, constitute the
individual Pioneer base mining rate I. Since I is used as an input to calculate all the other
rewards, as a result, the Security Circle and lockup rewards enhance the total Pioneer mining
rate by: (1) by directly adding to the individual Pioneer base mining rate and (2) by boosting the
any Referral Team reward E, nodes reward N, and app usage reward A.

Lockup Reward

At Mainnet, the lockup reward is meant to support a healthy and smooth ecosystem and
incentivize long-term engagement with the network, while the network is bootstrapping and
creating utilities. It is an important decentralized macroeconomic mechanism to moderate
circulating supply in the market, especially in the early years of the open market when utilities
are being created. One important goal of the Pi Network is to create a utility-based ecosystem
of apps. Transactions for real goods and services in the ecosystem, rather than just speculative
trading, are intended to determine the utility of Pi. As we launch the Enclosed Network phase
of the Mainnet, one of the main areas of focus will be to support and grow the Pi app developer
community and nurture more Pi apps to grow. In the meantime, Pioneers can choose to lock up
their Pi to help create a stable market environment for the ecosystem to mature and for more
Pi apps to emerge and provide compelling use cases for spending Pi – to ultimately create
organic demands through utilities.

The lockup reward formula is reprinted here:

L(B) = Lt • Lp • log(N) • B, where

Lt is the Lockup Time period multiplier of B.

0 → Lt = 0

2 weeks → Lt = 0.1

6 months → Lt = 0.5

1 year → Lt = 1
 3 years → Lt = 2

Lp is the Lockup Percentage multiplier of B, where

the Lockup Percentage is the lockup amount over the Mainnet Balance transferred from one’s
previous mining rewards (Lb), and the Lockup Percentage multiplier is as follows.

0% → Lp = 0

25% → Lp = 0.25

50% → Lp = 0.5

90% → Lp = 0.9

100% → Lp = 1.0

150% → Lp = 1.5

200% → Lp = 2

log(N) is the logarithmic value of the total number of previous mining sessions (N).
Pioneers will have the opportunity to voluntarily lock up their Pi to earn the right to mine at a
higher rate. First of all, the prerequisite of the lockup reward is that the Pioneer must be
actively mining. Without mining in the first place, there will be no lockup rewards for any
inactive mining sessions, even if Pi is locked up. As expressed in the formula above, all that the
lockup does is to provide multipliers to B, so there will be no lockup rewards if B is 0 (which
means the Pioneers is not mining).

Secondly, the lockup reward is positively associated with the contribution to the lockup, i.e. the
duration of the lockup time period (Lt) and the amount locked up. However the lockup amount
is accounted for by the percentage of a Pioneer’s total Pi mined (Lp). The maximum Pi that a
Pioneer can lock up is twice as much as their Mainnet Balance that got transferred from their
prior mining in the mobile app (Lb), i.e. 200% Lb. The reasons for having a 2X maximum lockup
amount of one’s transferred Mainnet Balance (Lb) are to 1) prevent exploitation of the lockup
reward and 2) further encourage other contributions to the Pi ecosystem, such as further
boosting their mining, running nodes and using apps. This, in a sense, favors Pioneers who mine
and make other types of contributions to the network.

Thirdly, Log(N) offers a higher lockup incentive to Pioneers who have a long mining history and
presumably a large transferable balance to lock up. While the lockup reward formula generally
favors equality by accounting for not the absolute amount but the percentage of their
transferred balance (Lp) — which allows smaller accounts with a short mining history to lock up
small amounts and yet receive the same lockup reward multiplier as big accounts — we need to
add a Log(N) factor that accounts for miners with a long mining history, to counterbalance the
bias in favor of Pioneers with small balances and provide enough incentive for long-history
Pioneers with bigger balances. However, the effect of mining history on lockup rewards also
needs to be capped. Thus, the formula applies a logarithm to the number of previous mining
sessions N. For example, if a Pioneer mined almost everyday for the last 3 years, their total
previous mining sessions (N) will be about 1,000. In this scenario, Log(1,000) equals 3, adding
another multiplier to B in their lockup rewards. Keep in mind that to achieve meaningful lockup
rewards for long-mining-history Pioneers, the amount of Pi they have to lock up is much more
than smaller accounts. Fourthly, one Pioneer can voluntarily have multiple lockups at different
times with different amounts and durations. The calculation of the total lockup rewards for this
Pioneer with i number of different lockups is to find the total lockcup reward multiplier of B, as
expressed in the formula below. The formula below is the equivalent to the lockup reward
formula above, with the only difference being that it accounts for multiple lockups of the same
Pioneer to calculate their total lockup rewards, e.g. different durations (Lti) and different
amounts (Lci) of each lockup at different time:

The purpose of this formula is to calculate the total lockup rewards based proportionally on
each lockup’s amount (Lc) over the total Mainnet Balance from previous mining (Lb) as a
weight, multiplied by their respective lockup time period (Lt) and Log(N). So that, even though
there are multiple lockups of the same Pioneer, more lockups with different settings will
proportionally add to their total lockup rewards. The values of Lt, Lc, and log(N) are calculated
and multiplied for each lockup i and then summed across various i’s, which is then divided by
the value of Lb at a given mining session, to arrive at the value of L(B) for that mining session.
This formula ensures that regardless of the Lb, as long as the Pioneer maintains the same
percentage of their lockup amount over their Lb, the total lockup rewards multiplier will remain
the same.

Lastly, when can a Pioneer lock up Pi? Pioneers can decide their lockup duration and lockup
percentage of their transferable balance anytime they want as an overall account setting in the
Pi app. They can even preselect these settings before they’re KYC’ed or ready to migrate to the
Mainnet. As they and their Referral Team/Security Circle pass KYC, more of their Mobile
Balance will become transferable. At the moment of the migration of their Transferable Balance
to Mainnet, their preselected setting of lockup duration and percentage will automatically apply
to the amount of balance transferred, resulting in two types of balances on the Mainnet: lockup
balance and free balance, both of which will be recorded on the Mainnet blockchain and reside
in the Pioneer’s non-custodial Pi wallet. Thus, lockups cannot be reversed once confirmed and
must remain locked up for the entirety of the chosen duration due to the nature of blockchain.
Any changes to this Pioneer’s lockup setting will take effect in their next balance transfer to the
Mainnet.

This account-wide lockup setting allows Pioneers to lock up a maximum of 100% of their
transferable balance from mobile to Mainnet. After Mainnet launches and Pioneers transfer
their balances, Pioneers can also lock up more Pi directly on the Mainnet through a slightly
different lockup interface later on. At that time, Pioneers can lock up as much as 200% of their
already-transferred Mainnet balance acquired from their previous mining. The additional
lockup allowance for more Pi than individually mined by the Pioneer can come from utility-
based Pi apps transactions, i.e., making Pi from selling goods and services.

App Usage Reward

An overarching goal of Pi Network is to build an inclusive peer-to-peer ecosystem and online

experience fueled by the Pi cryptocurrency through our app ecosystem. Therefore, Pioneers will
have additional mining rewards for using Pi apps on the Pi apps platform through the Pi
Browser, including ecosystem apps and third-party apps in the Pi Directory. The app usage
reward for Pioneers helps the ecosystem in two ways.

First, it will give Pi app developers market access and increased impressions of their apps. Pi
app developers will gain usage and product iteration opportunities from Pioneers, which has
been one of the biggest barriers to creating viable decentralized applications in the blockchain
industry. Decentralized application (dApp) developers do not yet have a plentiful, stable, and
utility-seeking consumer market environment to test and hone their consumer products to
create consumer utilities. Pi Network’s apps platform and the app usage reward are meant to
provide that environment for dApp developers.

Second, the increased impressions and usage will potentially lead to increased spending of Pi by
Pioneers in the Pi apps. Even though the impressions are incentivized through the app usage
reward, the spending of Pi is not. This means that the Pi app usage reward to Pioneers helps the
Pi app developers to the extent that Pioneers are at their door. Now what determines whether
Pioneers will actually stay and spend Pi in their apps is how useful and engaging their products
and apps are. This framework ensures that these apps are able to compete on the basis of
product quality and utility, ultimately allowing the best apps to emerge and stay in the
ecosystem.

Through the above two mechanisms, the app usage reward aims to achieve the gradual
transition from extrinsic incentives to intrinsic motivations among Pioneers visiting Pi apps, and
thus the transition from incentivized to organic usage of Pi apps in order to ultimately bootstrap
a utility-based ecosystem of apps using Pi.

The app usage reward formula is reprinted here:

time_spent_per_app_yesterday_in_seconds is, for each Pi app, the total amount of time in

seconds that the Pioneer spends using the app on the prior day.
Σ_across_apps sums up the logarithmic value of the Pioneer’s
time_spent_per_app_yesterday_in_seconds across all the Pi apps.

avg_daily_time_spent_across_apps_last_*_days/years is the average daily time in seconds the

Pioneer spends across all the Pi apps in the aggregate during the last * time period.

* Note that when any of the logarithmic functions returns an undefined value or a value below
0 (that is, when, the input to the logarithmic function is below 1), the formula resets the value
of the logarithmic function to be 0 in order to avoid negative mining rewards or an error in the
function.

Generally, the app usage reward formula takes into account two factors: time spent in apps and
the number of apps used while crediting the history of app usage in the long term and capping
the rewards to avoid exploitation. There are two main parts to the formula. The first part
aggregates a Pioneer’s time spent across each app in the last mining session (i.e., in the
previous day). The logarithmic function provides a positive function with diminishing rewards,
meaning that an increase in time spent on any one app will generally increase the rewards, but
the positive effect of time spent on rewards decreases as more time is spent. This setup
encourages Pioneers to generally spend more time on multiple diverse apps, helping the
network to bootstrap the creation of diverse utilities. At the same time, it caps the rewards to
prevent users from exploiting this reward by artificially keeping the apps open all day, which
would not meaningfully contribute to utilities creation.

The second part of the app usage reward formula looks at a Pioneer’s rolling average of daily
time spent across all apps in various time periods. The further back the time period goes, the
less it is weighted. In other words, a Pioneer mines more Pi the longer they have been using the
Pi apps, but their recent time spent on the apps counts more toward mining than their previous
time spent further back in the past. In addition, as a matter of fact, the app usage history takes
effect on the current mining reward only if the Pioneer also used Pi apps during their last
mining session. This means that there is no passive reward for only the past usage. Once again,
the use of logarithmic functions helps moderate the mining boost from app usage to avoid
exploitation of the app usage reward. A noteworthy implication here is that Pi chat moderators
who have been helping to guide Pioneers and monitor undesirable activities on Pi chats over
the last two years will mine the app usage reward at a higher rate when the Mainnet launches.

Node Reward

Like on any blockchain, Nodes are at the heart of the decentralization of Pi. In Pi, instead of
relying on centralized institutional nodes, we decided to open up the Nodes to any Pioneer with
a computer connected to the internet. Aided by the global trust graph aggregated from
individual Pioneer’s Security Circles from the mobile app, these Nodes will run the consensus
algorithm to validate transactions and process blocks. Because the Nodes are critical to the
decentralization, security, and longevity of the Pi blockchain, Node-operating Pioneers will
receive additional mining rewards.

The node reward formula is reprinted here:

N(I) = node_factor • tuning_factor • I, where

Node_factor = Percent_uptime_last_1_days • (Uptime_factor + Port_open_factor +

CPU_factor), where

Uptime_factor = (Percent_uptime_last_90_days + 1.5*Percent_uptime_last_360_days(360-90)

+ 2* Percent_uptime_last_2_years + 3*Percent_uptime_last_10_years),
Port_open_factor = 1 + percent_ports_open_last_90_days +
1.5*percent_ports_open_last_360_days + 2* percent_ports_open_last_2_years +
3*percent_ports_open_last_10_years,

CPU_factor = (1 + avg_CPU_count_last_90_days + 1.5*avg_CPU_count_last_360_days + 2*

avg_CPU_count_last_2_years + 3*avg_CPU_count_last_10_years)/4.

and

Percent_uptime_last_*_days/years is the percentage of the last * time period when the

individual Node was live and accessible by the network.

percent_ports_open_last_*_days/years is the percentage of the last * time period when the

ports of the individual Node were open for connectivity to the network.

avg_CPU_count_last_*_days/years is the average CPU that the individual Node provided to the
network during the last * time period.

tuning_factor is a statistical factor that normalizes the node_factor to a number between 0 and
10.

The node reward depends on the uptime factor, port open factor, CPU factor, and the tuning
factor. The uptime factor of a Node for a given period of time is the proportion of time the
Node is active during that period. For example, a 25% uptime factor yesterday means that the
Node was live and accessible for a total of 6 out of 24 hours yesterday. The Pi Node software
tracks the time a particular Node is active. Starting in the Open Network phase, only a Node
running functionally at a given point in time is considered active. This is a proxy for the
reliability of the Node. However, for the historical data relevant to the mining reward, a Node is
considered active if the Node app is open and connected to the internet even if it is not running
functionally. This exemption for the past performance recognizes that the Community Node
operators running the Testnet provided the network with important data and infrastructure to
enable multiple iterations of the Node software and Testnet, and that it was not always the
fault of the Node operator that their Nodes were inoperative.

The port open factor of a Node for a given period of time is the proportion of time the Node’s
specific ports are detected to be accessible from the Internet during that period. Pi Nodes use
ports 31400 through 31409, enabling other nodes to reach them through these ports and the
network IP address. An open-port Node is able to respond to communications initiated by other
Nodes, while closed-port Nodes are not able to receive such communications from other Nodes
and can only initiate communications. Pi’s consensus protocol relies on Nodes sending a series
of messages among each other. Therefore, open-port Nodes are critical to the operation of the
Pi blockchain, and thus, worthy of a mining reward boost. In fact, the network aims to have at
least 1/8th of the Nodes with open ports, and having an open port is one of the prerequisites
for being a Super Node.

The CPU factor of a Node for a given period of time is the average number of CPU cores/threads
available on the computer during that period. A higher CPU factor prepares the blockchain for
future scalability, for example, the ability to process more transactions per block or more
transactions per second. The Pi blockchain is not an energy and resource-intensive blockchain.
The network is initially set to operate at one new block of up to 1,000 transactions (T) about
every 5 seconds. Thus the network is effectively capable of processing up to about 200
transactions per second (TPS) or ~17M T/day. Should the blockchain get congested in the
future, this limit can be increased to 2,000 TPS (~170M T/day) by increasing the block size from
1000 to 10,000 transactions per block. The higher the CPU contributed by Pi Nodes, the more
room the network will have to grow and scale further in the future. Furthermore, higher
collective CPU from Pi Nodes will allow novel peer-to-peer node-based applications to be built
on Pi Network, such as decentralized CPU sharing applications that let computing power-
intensive applications run or provide distributed cloud services. Such services will be further
rewarding contributing nodes with additional Pi paid by the clients of those services.
Finally, a tuning factor normalizes the Node reward to a number between 0 and 10. This is
meant to make Node rewards comparable to other types of mining rewards that recognize
other contributions to Pi Network. During the Enclosed Mainnet phase (as explained in the
Roadmap section), the Node reward formula is expected to iterate. For example, the use of
logarithmic or root functions may potentially obviate the need for a tuning factor.

Having reliable Nodes running predictably over a long stretch of time is critical to the health of
the blockchain. It is not a one and done contribution. Therefore, the uptime factor, port open
factor, and the CPU factor are all calculated over varying time periods, where the value from
more recent time periods are more heavily weighted than the time periods of equal lengths
from a more distant past. Note, however, that the Node reward is a multiple of the uptime
factor of the previous mining session. Hence, a Pioneer will not receive any Node reward in a
given mining session if their Node was inactive for the entirety of the immediately preceding
calendar day. Similar to the app usage reward, there is no passive reward for only the past
contribution as a Node operator. This also means that a low uptime factor in the previous
calendar day (even if the Node is active for a part of the day) will substantially reduce the Node
reward in a given day despite high past Node contributions.

The Effect of KYC on Mainnet rewards

There will be a rolling grace period of six calendar months for a Pioneer to complete KYC.
Thereafter, the Pi mined outside of the rolling 6-month window will not be transferable to the
Mainnet, and will instead be reallocated to Pioneer mining rewards, as discussed below. The
retention of the mined Pi in the 6-month window continues indefinitely until they pass KYC or
the KYC policy changes. Note that this KYC-window mining framework will only begin when the
KYC solution is generally available to all eligible Pioneers in the future, and will be announced to
the community beforehand. The six-month restriction will not be immediately in place yet
when we launch the Mainnet.

Because of the importance of true humanness in our social network-based mining, only the
Pioneers who pass KYC will be able to transfer their Phone balance to the blockchain. Our
objective is to have as many true Pioneers as possible pass KYC. As explained further below, the
rolling six-month window serves the following important purposes:

strike a balance between giving Pioneers adequate time to pass KYC and creating enough
urgency to pass KYC,

prevent unverified Pi beyond the rolling six-month KYC grace period from migrating to the
Mainnet, instead freeing it up for mining by other KYC’ed Pioneers within the allocated Pi
overall supply limit for Pioneer mining, and

limit KYC spam and abuse (see 30-day delay in KYCing new members below)

If Pioneers do not pass KYC in time, it delays the Mainnet transfer of their balances and the
balances of other Pioneers who have them on their Security Circles and Referral Teams.
Without balances on the Mainnet, Pioneers are not able to use payments in Pi apps, thereby
undermining the growth of our utility-based ecosystem. A six-month window creates a sense of
urgency for Pioneers while giving them adequate time to retrieve their mined Pi. The KYC
verification process will generally take into account Pioneers’ likelihood of being real human
beings based on Pi’s machine-automated prediction mechanisms run over the last three years.
Newly created accounts will not be able to immediately apply for KYC verification, until after 30
days. This helps the network limit the ability of bots and fake accounts to spam and abuse our
KYC process and prioritize KYC validation resources for real human Pioneers.
Finally, the Pi of the Pioneers who delay KYC verification beyond six months will not be
transferred to the Mainnet and will not be accounted for in the calculation of the systemwide
base mining rate (B) beyond the rolling six-month KYC grace period. Pioneers will, therefore,
need to claim their Pi in time, or their Pi will be reallocated to B for mining in the same year by
other verified Pioneers who can make full contributions to the network.

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Roadmap

Roadmap

Pi Network is unique in our technological and ecosystem design as well as the significance of
our community input in development. This uniqueness is best served by a thoughtful and
iterative approach that allows for community feedback, testing of products, features, and user
experience, and phases defined by milestones. There are three main phases to our
development: (1) Beta, (2) Testnet, and (3) Mainnet.

Phase 1: Beta

In December 2018, we publicly launched our mobile app on the iOS App store as an alpha
prototype that onboarded the initial Pioneers. On Pi Day, March 14, 2019, the original Pi
whitepaper was published, marking the official launch of the Pi Network. At this stage, our app
allowed Pioneers to mine Pi by contributing to the growth and security of the future Pi
blockchain. As the eventual goal was to launch the Mainnet and build an ecosystem around the
Pi platform, the Pi app running on the centralized Pi server enabled mobile phone users
(Pioneers) to contribute their Security Circles that, in aggregate, built the trust graph required
by the consensus algorithm of the Pi Blockchain, and in return, the Pioneers received mining
rewards. Furthermore, the centralized phase allowed the network to grow, the community to
form, and the Pi token to be accessible and widely distributed. This phase also allowed for the
iteration of many technical features and Pioneer experience by leveraging community input
throughout the development process.

The following major accomplishments were made during the Beta phase:

The Pi Network mobile app was listed and accessible through the iOS App Store and Google
Playstore.

Pi Network grew from 0 to over 3.5 million engaged Pioneers.

The Pi Network community actively engaged with the project through the app home screen
interactions and chat app.

Pi Network reached 233 countries and regions around the world.

Phase 2: Testnet

This phase started on March 14, 2020, marking another critical preparation to the transition to
a decentralized blockchain—a live Testnet with distributed Nodes from all over the world. Pi
Network’s Node software enabled individual computers to support running the Pi Testnet using
Test-Pi. Test-Pi was available only for the purpose of testing and has no relation to Pioneers’
account balances on the Pi app. The Pi Testnet has reached over 10,000 fully functional
community Nodes and over 100,000 daily active Nodes on the waiting list, and as explained in a
later section, will continue to exist for testing purposes in the Mainnet phase.

Pi Testnet allows for the testing of connectivity, performance, security, and scalability of the
blockchain, and allows Pi apps developers to develop the Pi apps before they can deploy their
app on the Mainnet. During the Testnet phase, 3 major strategies were adopted: (1)
decentralization through Testnet Nodes, (2) growth through the main Pi app for mobile mining,
and (3) utility creation through the Pi apps platform on the Pi Browser. The Testnet ran in
parallel with the Pi mobile mining app from Phase 1 and enabled decentralized community
Nodes to get online and ready for the Mainnet. Specifically, the Testnet Nodes helped with the
assessment of the blockchain’s performance, security, and scalability. It also helped Pi App
developers test their apps against the Pi Blockchain. At the same time, the Pi mobile mining app
continued to onboard millions of Pioneers, building the community and contributing to the
security of the blockchain. The Pi Browser, along with the Pi SDK, enabled the community to
create utilities and develop the Pi ecosystem.

The following major accomplishments were made during the Testnet phase:

Many versions of the Node software were released.

The Pi Platform was released along with key ingredients of our ecosystem infrastructure:
Wallet, Browser, Brainstorm and developer tools.

Pilot version of the KYC app was introduced on the Pi Browser.

The project ran its first ever worldwide online Hackathon with thousands of participants from
within the Pioneer Community.

Pi Network grew to over 30 million engaged Pioneers, and from 0 to over 10,000 fully functional
community Nodes and over 100,000 daily active Nodes on the waiting list.

Pi Network reached almost all countries and regions in the world.

Phase 3: Mainnet
In December 2021, the Mainnet of the Pi blockchain will go live. The migration of Pioneer
balances from their phone account to the Mainnet starts during this period. KYC authentication
of a Pioneer precedes their balance migration to the Mainnet. In order to allow for sufficient
time for millions of Pioneers to successfully complete their KYC verification, create utilities in
the Pi ecosystem, and continue to iterate on our technology and ecosystem design, the
Mainnet will have two periods:

at first, firewalled Mainnet (i.e., the Enclosed Network),

and then, open Mainnet (i.e., the Open Network).

The Enclosed Network Period

This period will begin in December 2021. The Enclosed Network period means that the Mainnet
is live but with a firewall that prevents any unwanted external connectivity. Pioneers will be
able to take time to KYC and migrate their Pi to the live Mainnet blockchain. Any balance
migrated to the Mainnet can be used, by the choice of the Pioneer, to purchase goods and
services in Pi apps, transfer to other Pioneers, or get locked up for a duration of time for a
higher mining rate. KYC’ed Pioneers will be able to use their Pi on the Mainnet freely in an
enclosed environment within Pi Network. However, this period will not allow connectivity
between the Pi blockchain and other blockchains.

Advantages of the Two-Period Approach to Mainnet

There are multiple advantages to having an intermediate enclosed period to ramp up to the
fully open Mainnet. This approach allows time for:

millions of Pioneers worldwide to pass KYC,

building and deploying more Pi Apps and allowing more utilities to be created and used,

transitioning Pi Apps deployed on the Testnet to the Mainnet, and

iterating on any modifications and adjustments to the Mainnet and the ecosystem before the
Open Network.

The Enclosed Network period allows time for millions of Pioneers to KYC and migrate their Pi to
the Mainnet. Only a small fraction of Pioneers have been able to complete their KYC around the
launch of the Mainnet. Over the coming months, we will continue to roll out the KYC solution to
more Pioneers and help them complete their KYC. If we moved directly from Testnet to Open
Network, this would mean that the Pioneers who were able to KYC before others would have Pi
available for use outside of the Pi platform while the Pioneers still waiting to complete their KYC
would not yet have this privilege. The speed at which Pioneers all over the world are able to
complete their KYC will depend on the speed at which each local community provides the KYC
validator crowd work force as well as the speed at which individual Pioneers participate in the
KYC.

Having the Enclosed Network period gives time for millions of Pioneers to complete their KYC
and transfer their Pi to the Mainnet. This way, all the Pioneers who are willing and able to
complete their KYC in a reasonable period of time get to use their Pi outside of the Pi platform
at once. Given that external connectivity between the Pi Blockchain and other blockchains or
systems is not allowed during the Enclosed Network period, this further helps Pioneers focus on
transitioning into Mainnet without any influences external to the Pi Blockchain.

This period will also help the community focus on creating utilities and bootstrapping the
ecosystem without any external distractions. Consistent with the vision of the Pi network to
enable a utility-based ecosystem, this allows apps to deploy on Mainnet and create utilities for
Pioneers. Pi apps will be able to switch from Testnet to Mainnet—to production mode for real
Pi transactions. At this time, KYC’ed Pioneers will be able to spend their Pi on Pi apps, boosting
utilities creation and bootstrapping the Pi ecosystem before the Open Network. This gradual
and deliberate ramp to Open Network will help the apps, as well as the Pi Network, to uncover
and resolve any glitches in the market and the technology. Thus, the Enclosed Network period
is in line with Pi’s vision of a utility-based ecosystem and its iterative philosophy.

Moreover, the Enclosed Network will allow the Mainnet to run with production data and real
Pi, which differs from Testnet. Data gathered during the Enclosed Network will help calibrate
and tweak any configurations and formulae, if necessary, to ensure a stable and successful
Open Network.

KYC Verification and Mainnet Balance Transfer

“Know Your Customer/Client” (KYC) is a process that verifies identification to distinguish

genuine accounts from fake ones. The vision of Pi Network is to build an inclusive and the most
widely distributed token and ecosystem for all Pioneers. The mining mechanism of Pi Network
is social network-based, and the mining rate has halved 5 times so far as the social network size
grew to over 1K, 10K, 100K, 1M, and 10M engaged members. Therefore, Pi has a strict policy of
one account per person. This requires a high degree of accuracy to establish that members in
the network are genuine human beings, preventing individuals from being able to unfairly
hoard Pi by creating fake accounts. Pioneers’ KYC results will depend on not only identity
verification, but also their name matching with the Pi account and screening against
government sanction list. KYC, thus, helps ensure the true humanness of the network and
compliance with the Anti-Money Laundering (AML) and anti-terrorism regulations.

As communicated at the founding of the network, to ensure true humanness, fake Pi accounts
and scripted mining are strictly prohibited. These accounts will be disabled, and will not be able
to migrate to Mainnet. Over the past three years, multiple technical mechanisms have been
implemented to identify bots and fake accounts. For the accounts identified as highly likely to
be fake by Pi’s algorithm, the weight is on these accounts to prove otherwise. These identified
fake accounts will either be disabled or go through a much more rigorous review and appeal
process. The allocation of KYC slots will be prioritized for accounts with a high likelihood of
being true human holders.

Only the accounts with verified identities will be allowed to transition to Mainnet, and only the
Pi balances attributable to identity-verified accounts will be allowed to transfer to the Mainnet
balance. When a Pioneer and their Referral Team and Security Circle members pass the KYC
determines if and when, and to what extent, a Pioneer can transfer their balances. Below is a
hypothetical example to illustrate how the KYC verification of Pioneers affects their balances in
migration to the Mainnet.

For simplicity, we define different concepts of Pi balances as follows:

Mobile Balance: The Pi balance currently shown in a Pioneer’s account in the Pi mobile app

Transferable Balance: The balance that has been allowed to be transferred to the Mainnet
because the Pioneer and their specific associated individuals in the Referral Teams and Security
Circles have passed KYC

Mainnet balance: The balance that has been migrated and transferred by the Pioneer to the
Mainnet

Suppose individual A is the owner of a Pi account who wants to transfer their Mobile Balance.
Pioneer A will only be allowed to transfer any of the Mobile Balance to the Mainnet when their
identity is verified, i.e., when they pass the KYC. Let’s say this individual has Individuals B, C, D,
and E on their Referral Team and Individuals D, E, F, and G in their Security Circle. So far, only
individuals A, B, D, and F have completed their KYC verification.

In this example setup:

A is a mining Pioneer who has passed KYC.

B, C, D, E are in the Referral Team of A.

D, E, F, G are in the Security Circle of A.

A, B, D, and F have passed KYC.

Here, A’s Transferable Balance is the sum of the following three components:

Pioneer Rewards: Pi mined based on A’s Pioneer status across all mining sessions

Contributor Rewards: D and F’s contribution to A’s mining rate as Contributors in all mining
sessions

Ambassador Rewards: Mining bonuses from all mining sessions when B and D as Referral Team
members mined during the same session as A mined

As more of Pioneer A’s Referral Team and Security Circle members (i.e., C, E, and G) pass KYC,
more portions of A’s Mobile Balance will become Transferable Balance—ready for A to migrate
to the Mainnet, and ultimately become A’s Mainnet Balance.

During the Enclosed Mainnet period, any Mobile Balance that has not become Transferable
Balance will remain in the Mobile mining app until the associated Pioneers in the Referral Team
and Security Circles pass KYC and the corresponding amount becomes transferable to Mainnet.
In the case of the above example of Pioneer A, the balance contribution by C, E, and G will
remain as Mobile Balance for A in the mining app waiting for them to pass KYC in order for such
balance to become transferable. If such associated accounts never pass KYC, the balance
attributed to these non-KYC’ed accounts will expire at a certain date which will have allowed
enough time for the whole network to KYC. The unclaimed balances due to lack of KYC will be
discarded by not being transferred to the Mainnet at all, instead freeing it up for mining by
other KYC’ed Pioneers within the allocated Pi overall supply limit for Pioneer mining as
explained in the Pi Supply section.

Restrictions in the Enclosed Network

While transactions between Pi apps and Pioneers and Pioneer-to-Pioneer transactions are
allowed within Pi Network, the Enclosed Network will have in place the restrictions as listed
below. These restrictions at this stage help enforce the enclosed nature of the network:

There will be no connectivity between Pi and other blockchains or crypto exchanges.

Mainnet can only be accessed through the Pi Wallet and Pi apps on the Pi Browser.

The Mainnet blockchain will be accessible to any computer on the internet but only through a
firewall to enforce the above rules.

There will only be Core Team Nodes on the Mainnet to ensure that the firewall is in place at all
times.

The Enclosed Network will support the economic activities and growth of the Pi ecosystem.
Thus, Pioneer-to-Pioneer transactions are possible through the Pi Wallet as KYC’ed Pioneers will
be able to use the Pi Wallet to transact in Pi. Pioneers can also spend Pi in Pi apps on the Pi
Browser, which can access the Mainnet through the Pi Apps SDK and the Pi Blockchain API.
During the Enclosed Network period, an app on the Pi Browser can only use the Pi blockchain
APIs whitelisted by the firewall to interact with the Mainnet.

The following uses of Pioneer-to-Pioneer, Pioneer-to-App, and App-to-Pioneer transactions will

be allowed:

Exchange of Pi for goods and services through Pi Apps

Transfer of Pi between Pioneers for goods and services

The following uses will be prohibited:

Exchange of Pi for fiat currency

Exchange of Pi for other cryptocurrencies

Transfer for Pi for a future promise of fiat or other cryptocurrencies

We will enforce the above restrictions by adding a firewall to the Mainnet and by exclusively
running the Mainnet Nodes for this interim period. Community Nodes will continue to run on
the Testnet in the Enclosed Network period. We will continue to implement interface and other
changes to the Nodes in preparation for the Open Network period where the Community
Nodes will be able to run on the Mainnet. The restrictions of the Network to keep it enclosed
will be relaxed as it reaches the next period—Open Network.

The Open Network Period

Depending on the maturity of the Enclosed Network ecosystem and the progress of the KYC,
this period may begin on Pi Day (March 14, 2022), Pi2 Day (June 28, 2022), or later. The Open
Network period means that the firewall in the Enclosed Network period will be removed,
allowing any external connectivity, e.g., to other networks, wallets, and anyone who wants to
connect to Pi Mainnet. API calls will not be firewalled, and Pioneers will be able to run their
own Pi Nodes and API services. Pioneers will have connectivity with other blockchains.
Community Nodes can also run the Mainnet.

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