It just thought it might be nice to define a Grift Index for cryptocurrencies; some number that quantifies how much the creators of a new cryptocurrency could profit from launching it.
Something that recognizes premines, instamines, fastmines, un(der)optimized mining software, mining taxes, and outsized early mining rewards, and anything else that disadvantages late adopters.
Then we could more easily compare different cryptocurrencies…
Huge coin supplies for premines, combined with paid exchange listings (and probably lots of wash trading), seem to be the number one way to ensure high mcap rankings.
Good idea. There’s a huge noise in the space around fairness and we could all benefit from some signal. One could compute their grift score from their marketcap probably, the formula would need some thinking though (and research for each coin). Seems like coinmarketgrift.com is available.
sounds useful, but it feels like it takes a lot of work to get it done. There are also some premines which are being used as a treasury now, which imo isn’t the same as “they have the money”, so i believe it would be pretty hard to create a good index. Like what would the score be for btc? People think “yeah anyone could have mined it on the first day” which is true, but i believe it’s important to understand that 99% of the people never heard of it, so i consider that as an unfair advantage (not saying i know how it should have been done, just pointing out what i believe are some “unfair” downsides)
I was thinking of a number from 0 to 100. Perhaps the percentage of (soft) total supply that the creators would eventually have if they mined from genesis with just one of the best commodity GPU available at the time using the best mining software available now. Or for airdropped coins if they subverted the airdrop in a way that is not publicly verifiable.
For coins using some form of PoS since launch, one might think that the index should be 100, but if they keep all supply to themselves, there would be no profit. So they might sell some percentage at launch (which could be a smaller percentage than what they claim to have sold, as they can freely sell to themselves), and then sell other percentages later when the price jumps enough. For any such strategy, the price history would then tell us their current share.
One could separately compute the Grift Profit, by summing coins they sold times the price they sold at, but these numbers do not compare as well as the Grin Index I think.
It sounds like a lot of work to get all this information. I think a similar and much simpler index could also be useful. This would measure not just the profit potential of the creators but the profit potential of anyone that managed to obtain a large enough chunk early (e.g. some projects have halvings every 2 months and may look fair with pure PoW, but they’re anything but that). Let’s ignore who created the coin and instead assume that there exists someone that holds 30% of the total supply after the first two years. The index could answer how much % they have left after 5, 10, 20 years. That’s purely the work of inflation, but it shows the network tries to keep participation fair for the late adopters by reducing early accumulations over time.
In most PoWs, the percentage would drop slowly over time and the initial buyer would retain a large % after 10 years.
In PoS (assuming staking is rewarded), the percentage would have to be computed from the rewards and emission.
In PoS, assuming everyone holds and stakes, ownership percentages don’t change no matter what rewards. In that sense, changing to PoS is just like ending emission.
Interesting Idea but could it be possible to plausibly balance these different aspects?
For ESG investing (also nice Idea) there are indexes, but they can not plausibly balance Environmental aspects versus Social or Governance aspects.
My propose for the future BTC killer shitcoin that would have low grift ranking would have different coins on the same sha256 POW chain. And the miner could select for each block to get:
keybase reward coin A = blocknumber
keybase reward coin B = floor((intmax-blockhash)^0.5)
keybase reward coin C = (current supply of coin B) / (10^6)
I could not predict the marketcap factor of coin A, coin B and coin C over time or which would win in transaction count.
PoS coins are just money printing. Those guys are disgusting…
The problem is, VC funds buy tokens at almost zero price, which is not disclosed. There are price tiers, so different investors get different token prices (and allocation sizes). I think due to the lack of data, it is impossible to track the insiders benefits accurately. I suspect PoW coins are more doable…
Those allocation pie-charts are rather silly. The creators have 100% of supply and can label them as they please, with little verifiable difference. In principle you could airdrop to e.g. existing BTC holders in a verifiable way, but they always seem to do it with a limited timeframe to claim and no way to publicly verify.
Perhaps all those pure PoS coins should just be set to 100 Grift Index, with no need to consult price history.