Reward and profitability discussion and figures added to CIP (#319)

* Added reward and profitability figures to CIP
* Updated logbook

Author: bwbush

Logbook.md

@@ -2,6 +2,14 @@
 
 ## 2025-05-06
 
+### Revisions to draft CIP
+
+The discussion and figures were added to the draft CIP:
+
+1. Diminishing future rewards due to dwindling of the Reserve.
+2. Unprofitability of Praos SPOs in the absense of reward contributions from the Reserve.
+3. Profitability of Leios SPOs, even without contribution of the Reserve, once 50 transactions per second is sustained.
+
 ### Computation of Leios profitability
 
 Using previously computed infrastructure expenses and "business as usual" assumptions, we have estimated the profitiability of Leios SPOs (hosted either on premium or value cloud providers) as a function of transaction throughput. See [analysis/profitability-leios.ipynb](analysis/profitability-leios.ipynb) for details.

docs/cip/README.md

@@ -45,7 +45,14 @@ However, the dynamic growth of the Cardano ecosystem is increasingly revealing t
 
 The semi-sequential nature of block propagation in Ouroboros Praos, where blocks are relayed from one block producer to the next across potentially geographically distant nodes, is a key factor contributing to these limitations. The necessity of completing this global dissemination within the few-second period places a fundamental constraint on the rate at which new blocks, and consequently the transactions they contain, can be added to the blockchain. This architectural characteristic stands in contrast to the largely untapped potential of the network's underlying infrastructure, where the computational and bandwidth resources of individual nodes often remain significantly underutilized. To transcend these inherent scaling barriers and unlock the latent capacity of the Cardano network, a fundamental evolution of the core consensus algorithm is imperative. Ouroboros Leios represents a departure from the sequential processing model of Praos, aiming to introduce mechanisms for parallel transaction processing and more efficient aggregation of transaction data. By reorganizing how transactions are proposed, validated, and ultimately recorded on the blockchain, this protocol upgrade seeks to achieve a substantial increase in the network's overall throughput, enabling it to handle a significantly greater volume of transactions within a given timeframe.
 
-The Cardano Problem Statement [CPS-18 Greater Transaction Throughput](https://github.com/cardano-foundation/CIPs/blob/master/CPS-0018/README.md) further motivates the need for higher transaction throughput and marshals quantitative evidence of existing mainnet bottlenecks. Realizing higher transaction rates is also necessary for long-term Cardano techo-economic viability as rewards contributions from the Reserve pot diminish: fees from more transactions will be needed to make up that deficit and keep sound the finances of stakepool operations. (Currently, the Reserve contributes more than 85% of the reward of a typical epoch, with less than 15% of the reward coming from the collection of transaction fees. In five years, however, the Reserve contribution will be much diminished.) Because a major protocol upgrade like Leios will take significant time to implement, test, and audit, it is important to began implementation well before transaction demand on mainnet exceeds the capabilities of Ouroboros Praos.
+The Cardano Problem Statement [CPS-18 Greater Transaction Throughput](https://github.com/cardano-foundation/CIPs/blob/master/CPS-0018/README.md) further motivates the need for higher transaction throughput and marshals quantitative evidence of existing mainnet bottlenecks. Realizing higher transaction rates is also necessary for long-term Cardano techo-economic viability as rewards contributions from the Reserve pot diminish: fees from more transactions will be needed to make up that deficit and keep sound the finances of stakepool operations. (Currently, the Reserve contributes more than 85% of the reward of a typical epoch, with less than 15% of the reward coming from the collection of transaction fees. In five years, however, the Reserve contribution will be much diminished.) Because a major protocol upgrade like Leios will take significant time to implement, test, and audit, it is important to began implementation well before transaction demand on mainnet exceeds the capabilities of Ouroboros Praos. The plot below shows the historically diminishing rewards and a forecast of their continued reduction: the forecast is mildly uncertain because the future pattern of staking behavior, transaction fees, and node efficiency might vary considerably.
+
+![Forecast of rewards on Cardano mainnet](images/reward-forecast-bau.svg)
+
+Ouroboros Praos cannot support the high transaction volume needed to generate the fees that will eventually be needed to offset the diminishing rewards. However, as sustained throughput of transactions grows beyond 50 transactions per second, there is more opportunity for simultaneously reducing fees, augmenting the Treasury, and increasing SPO and delegator rewards.
+
+![SPO profitability under Praos, as a function of transaction volume](images/spo-profitability.svg)
+
 ## Specification
 
 > [!NOTE]
@@ -292,8 +299,11 @@ Techno-economic analyses indicate that at a sustained transaction volume of 50 t
 1. The intake of transaction fees would be large enough to lessen or eliminate the need for supplementing rewards from the Reserve pot. In particular, the `monetaryExpansion` protocol parameters to be lowered and/or the `treasuryCut` parameter could be increased.
 2. Stake rewards would increase.
 3. Stake pools would become more profitable. In particular, at 50+ tx/s the costlier Leios hardware would be overcome by higher rewards.
+4. Transaction fees could be somewhat lowered. That could further drive adoption and make smaller transactions more cost effective, perhaps even opening the possibilities for micropayments or IoT applications.
+
+The following plot shows a forecast for SPO profitability under Leios, assuming a "business as usual" scenario where the fee, treasury, and monetary expansion protocol parameter stay the same as presently. The precise profitability of individual SPOs depends strongly upon how they host their nodes, but there is a clear trend towards profitability (without any contributions from the Cardano Reserve) once 30-50 transactions per second are sustained. Note that profitability slows at very high throughput because of the substantial expense of network egress and storage of the ledger.
 
-Alternatively or additionally, transaction fees could be somewhat lowered. That could further drive adoption and make smaller transactions more cost effective, perhaps even opening the possibilities for micropayments or IoT applications.
+![SPO profitability under Leios.](leios-forecast-sqrt-fill.svg)
 
 #### Intensive Plutus execution