Deciding the Fate of HNT Rewards: Helium’s Economics and the Competing HIP-80 and HIP-81 Proposals

The Economics of Helium

With the upcoming MOBILE network integration, the Helium community has an important vote to determine how to distribute HNT rewards between the networks. This article discusses Helium’s upcoming economics structure and compares the two proposals, HIP-80 and HIP-81, to help the average user understand their differences.

How Helium Distributes HNT Now

Currently, the Helium Network mints 82 thousand HNT tokens daily. Of that, roughly 50,000 HNT is distributed to hotspot owners for their participation in Proof of Coverage on the IOT network. But changes are on the horizon. Helium’s long-term vision is to become a “Network of Networks,” which requires establishing a fair way to allocate HNT rewards among the subDAOs (IoT or MOBILE currently).

Helium Solana Meme

HIP-80 and HIP-81 are two competing HIPs that address this issue. Both proposals aim to determine how the HNT rewards will be split between the original IOT subDAO and future ones like $MOBILE.

How Helium Will Distribute HNT in the Future

Central to both HIP-80 and HIP-81 is how these rewards are divided between the networks. Both proposals use an algorithm called the DAO Utility Score. The score is calculated for each subDAO to determine its utility. The higher the score, the more significant their portion of the rewards pie. The rewards are then distributed into each subDAOs algorithmic treasury, setting a floor price for the subDAO’s token. This “price” can be used by token holders to exchange their subDAO tokens for HNT.

The DAO Utility Equation, As Designed by HIP 51 And Currently Approved for Implementation


Let’s discuss in detail the variables used for this equation:

The V (also known as Vestment)

V is the amount of veHNT staked for a particular subDAO (IoT or MOBILE). veHNT is a specific token that HNT holders can receive if they stake their holdings for a set amount of time. The longer you stake, the more veHNT you receive. The Vestment equation allows Helium’s emissions to be steered toward investor (or market) sentiment towards a particular network. For example, let’s say news was released that a large technology company (like Google) decided to partner and offload part of its data requirements to the LoRa network for an IoT tracker. That would signal to the market that growth in the IoT network was needed. More people would stake veHNT towards the IoT subDAO, which would algorithmically delegate a larger share of emissions to facilitate investment and the buildout of LoRa hotspots.

The D (Also Known as DC)

The D equation represents the amount of DCs (data credits) burned by a particular network (subDAO). It’s square-rooted to reduce the chance of gaming and exploitation during the initial phases when DC burn will be low. Ultimately, this is an excellent way to determine the “value” of a network because this DC usage is directly tied to HNT value. It’s important to note that DCs are not “data” per se – each network has its own formula to determine bytes/DC. So a bit on the LoRa network burns more DC than on the MOBILE network.

The A (Also known as Activations)

The A equation is the number of devices on a network multiplied by its activation fee. The activation fee is important to a network’s DAO score because it represents its installed hardware value. For example, a hotspot for the IOT network initially costs 500 dollars, and the activation fee for this device is 50 USD. That 50-dollar fee is roughly 10% of the total, representing the cost of the installed hardware base.

The A equation of the DAO score is perhaps the most contentious. It does help to protect the emissions used for the IOT network because it has so many devices on the network. There are concerns about this metric being too easy to game by exploiters. For example, what’s to stop a nefarious group from artificially pumping 500,000 devices on a future network (like VPNs) and then stealing the emissions? That is why the 4th root was initially used, which normalizes the device count of each network.

In simpler terms, HIP-81 aims to allocate HNT rewards based on the actual size, usage, and investment in the $MOBILE network, making it more dynamic and directly tied to the network’s performance and adoption.

The DAO Equation Walkthru Example

Sometimes doing an example is better than talking about it, so I want to go through the process of a DAO score calculation. I am going to use an example future WiFi network and create some numbers to calculate its DAO score and then determine its share of emissions:

WiFi Network Specs
  • 250,000 Hotspots
  • 20-dollar Activation Fee
  • 10,000 USD of DC burned
  • 1,000,000 veHNT staked

WiFi DAO Score Calculation

HIP-81: Minimum Onboarding Fee – A Tweak to the DAO Utility Score

HIP-81 wants to keep the model proposed by HIP 51 (see above) and address an issue that came up last year when MOBILproblemspots were being sold. The issue was that no activation fee was collected when these hotspots were sold. This was an oversight that needs to be rectified. With that issue resolved, the model referenced above would be left unchanged. Also, HIP-81 wants to set minimum onboarding fees to eliminate exploiters gaming the system by inflating the number of devices onboarded onto their network.

HIP-80: Simplifying DAO Utility Score – A Complete Revision to the DAO Utility Score

HIP-80 proposes a new algorithm that sets a price floor of HNT rewards to the incumbent IoT network. This approach would ensure a steady stream of HNT for the IoT network participants, providing them with more stability and predictability in the long term. Let’s go over the algorithm proposed by Hip 80:

The D equation is the point of contention amongst some Helium users. This floor value will ensure a ~50 thousand-dollar DC burn rate per day for the IoT Network – ensuring that it receives emissions regardless of its actual utility. The rationale behind this, as stated by the HIP proposal, is:

Calculations show that the IOT subDAO risks being marginalized by the MOBILE subDAO in the medium term under the existing Score, if current trends continue. This could cause nearly all HNT to be distributed to the subDAO treasury of the MOBILE subDAO, which would run counter to the intent of HIP-51 and could limit the further development of IOT. This threatens the health of the Helium DAO as a whole, as IOT is expected to deliver a significant contribution to the Helium DAO over the longer term.

-HIP-80 Official GitHub documentation

HIP-80 Walkthru Example

Because HIP-80 uses floor prices, I want to illustrate how that may play out in the future. Let’s say that Helium Mobile is wildly successful, and 50,000 subscribers will subscribe to the network by 2024. Roughly speaking, the MOBILE network may be able to offload about 100,000GB of data based on a 20% offload figure of 10GB usage/month. That would give us about 50K USD DC burn per month. Let’s assume that the staking figures would stay roughly the same between the networks of 1,000,000 veHNT delegated.

Frequently Asked Questions

I Own a Helium Hotspot; I don’t think it’s fair that the MOBILE Network is taking my rewards. How can I stop this?

It’s true that as new networks are onboarded into the Helium ecosystem, fewer Helium emissions will be had for existing networks. However, these new networks all burn DCs and create value for the Helium token. As they create value, the Helium ecosystem becomes more valuable. It’s genuinely an everyone-wins situation.


The Helium Network is at a crossroads, with the integration of the $MOBILE network raising critical questions about the fair allocation of HNT rewards. While HIP-81 focuses on a more dynamic, performance-based reward system, HIP-80 aims to provide more stability and predictability for the IoT network. It’s essential for the community to carefully consider each proposal and choose the one that best aligns with the sustainability of the Helium Network.

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