Let's Change Grin's Supply by Not Changing It

Development and Technical Discussion
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Abstract

One major complaint about Grin is it’s monetary policy. Often, Bitcoiners tout Bitcoin’s monetary policy as if it’s the holy grail of monetary policy, and by some extent they’re right. What they’re right about is that having a monetary policy that is as easy to understand as “∞/21 million” is not only convenient, but crucial in maintaining the policy remains intact now and forever (which is a desirable property of money).

Gringotts

What is missing from Grin is the same monetary understandability. Currently, we have “1 grin, 1 second” which is simply in saying but more nuanced in understanding. What does it mean to have monetary expansion fixed to time? What does it mean to not have a fixed supply, but still a predictable one. These understandings require an extra step in enlightenment and are often conflated with the wrong understandings. And example of a misunderstanding is that Grin’s supply is “infinity” and this means the price will always decrease over time. Grin’s monetary policy is sound, but it’s interpretation/understanding is where it fails.

So what if we kept the monetary policy intact, but changed the explanation. What if we declared a fixed unit to represent the entire supply of Grin at any given point in time? This would give an explanation and immediate understanding similar to Bitcoin’s “∞/21 million”. Say we call this unit 1 gringott. Then we can say, “there only is and ever will be 1 gringott”. What’s powerful about this statement is that we’ve already achieved maximum supply.

Gotts

Once we have this fixed unit representing all of Grin’s supply over time, we can derive smaller units to represent denominations of this fixed supply. When representing account balances in these smaller units. One idea is to represent 1 Gott as a fraction of 1 Gringott, specifically 1/b. The value of b can deterministically double every x number of blocks equivalent to 4 years. This installs a “halving event” whereby everyone’s account balance doubles every 4 years. This feature would have massive economic impacts and network effects causing speculative interest in Grin. Keep in mind, we still haven’t changed Grin’s monetary policy, only the perception and understanding of it.

Theoretical Effects

The “emissions” of new grin now appears only as a global network fee paid be all holders. This fee decreases over time and is transparent of its effect by virtue of the account balance change in each wallet over time. However, the negative perception of this downward balance trend is countered by the halving event proposed above. I believe network participants would anticipate the halving event and even price it into the exchange rate. The halving event will introduce a predetermined time of economic interest. The halving event’s frequency can be discussed (maybe more or less than 4 years), and picking the right interval will be critical to success.

Conclusion

In conclusion, we can change Grin’s network effects not by changing the monetary policy, but rather by introducing a new framework in which to think of Grin’s existing monetary policy. This new framework could have positive implications towards the network adoption by way of making new economic interests. Positive network adoption simply by changing the “language” (units) will impact the project as a hold and the community.

Perception is a significant theoretical piece to a currency. A currency is theoretically just a language.

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That’s not that easy to understand. Ask a random bitcoiner how much bitcoin supply was in the first year. Ask how much bitcoin supply was in its first decade. They will struggle to answer it.

Grin’s 1 per second is far easier to understand.
As is the fact that supply inflation goes down year after year as 1/n,
to eventually surpassing Gold.

What you’re proposing is to obscure the simplicity of Grin’s emission.

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With all due respect, I believe you’re missing the point when I say “easy to understand” here. The point isn’t about how much Bitcoin there is at any given time, but rather what’s the monetary policy constraint. The answer to monetary constraint is max 21 million at the year 2140 roughly. This is easy to understand and the perceived implications of this is easy to understand as well.

Arguably, asking “what is the monetary constraint” is the relevant question for a currency. When you ask this, you find out how secure or insecure of a value store the currency is. When you ask this about fiat, you quickly realize the flaws there. When you ask this about gold, you might not be able to fully understand the real constraint without further explanation about how commodity coin emission aren’t constant (rather it is variable and heavily influenced by price). I’m digressing from the main point. So, asking what’s the monetary constraint is the insightful question.

Asking what is the monetary policy constraint of Grin is challenging, and could be easier with the proposal above. Here’s an example answer to illustrate: Grin’s supply is fixed at 1 Gringott, there will only ever will be 1 Gringott. The Gringott is divided into 1 million gotts, and by the year 2023, that number is doubled to 2 million gotts and evenly distributed to all grin holders effectively doubling their holding.

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I agree about the perception part, so maybe we should communicate better the inflation. It does however sound like a halving event is to much artificial, since nothing is being halved. Or do you mean celebrating the halving of the inflation? For example, we could celebrate Grin’s birthday, as well as the inflation of only 30% (33% tomorrow) which follows soon after the birthday of Grin. Giving attention or celebrating whole inflation numbers would make sense to me, e.g. only 30% inflation, only 25%, only 20% etc.

In am still a bit confused about how you would define ‘gringott’ this would be the amount of Grin at any moment of time, so it is always changing and should be recomputed every day since new Grin is mined. it would mean someone’s balance is going down slowly every day. I am not sure if that would be good for perception :thinking:

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The halving would be the size of the Gott unit relative to the 1 Gringott which would bring the number of everyone’s unit up. I agree this is confusing, so we should probably instead call it the double-event because it’s the event when everyone’s balance doubles.

You do make a good point about how the account balances would decrease daily. But the doubling of balances would be the counter to this and should add incentive. This make me think the doubling should happen every year on Jan 15th (Grin’s birthday).

Having both the emissions reflected in the daily balance makes inflation very transparent to the user. Keep in mind, no monetary policy changes here (still 1 grin per second). Yes there will be some incentive to not hold gotts if the price of 1 gott doesn’t increase counter to the decrease in balance. However, those that do sell will lose the opportunity to sell after the next doubling, which may incentivize holding which may cause upward pressure in price. If there is enough upward price pressure, the price may go up to counter the decreasing balances.

Of course, price will move up and down and speculators will be in and out of the market. However, having this model could spark more interest in the currency and blow a hole in the entire “fixed supply” debate. After all, grin’s supply would now be fixed at 1 Gringott now and forever.

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What’s interesting about this proposal is that it could effectively be done with a psuedo-fork of Grin.

What the heck is a psuedo-fork?

It’s not really a fork at all. You could fork Grin’s codebase and keep everything the same and remain backwards compatible with Grin. The only thing that would change in your fork is calculating balances for accounts and transactions by introducing the gott unit. Both Grin and the new fork Gringotts are the same underlying network/blockchain. The only difference is how it’s used. Effectively all Gringotts wallets would be importable to Grin clients, and visa versa. It could be an opt-in and opt-out system; truly free choice.

However, an exchange may list Gringotts, but not Grin, and the price of a gott would be different from 1 grin, though arbitrage would keep the exchange rate tied by some mathematical factor. You can see how this idea of introducing a new unit without making monetary changes would just be a way of hacking exchange price. They’ll more likely be pumps before the doubling event and then dumps after the doubling event. However, this pump and dump creates a business cycle and more speculative interest in the currency which would increase network participants and therefore long-term adoption. I think the hack is worthwhile.

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It’s not obvious to me what impact your scheme would have on security/mining if everyone (or a subset) interpreted the value of Grin differently. The value function of your Grin is 1/time. If 2 years passed, then your 1 grin is worth 1/(2*year) where 2*year represents the number of seconds in 2 years. In Bitcoin, the halvings are artificially created events that cause disturbance in both emission and subsequently security. I’d preferably avoid any kind of halvings because of their “disturbing” nature. They are an edge case that happens every 4 years that adds complexity and unpredictability. The simplest function is one that has no edge cases and that’s a straight line which can be achieved with a constant emission. Yes, this does mean we have no fixed number so we can’t have a static slice of a pie, but that’s a good thing because an ever growing pie has better properties for a medium of exchange.

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It feels great, which can make more people pay attention to and hold it, and maybe change the situation of the decline

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There is no hard change in the scheme. 1 grin still equals 1 grin and the block reward still is 60 grin. The only change here is how wallets and exchanges interact with the data; instead of interacting using units of grin, the interaction is on this new unit called gotts. The wallet balance would be reported differently in gotts but remain constant in grin units. Though, because the wallet would abstract the grin units from users and exchanges, now we have a change in user behavior and market behavior because the price won’t immediately respond to these mathematical changes. The markets delayed response would cause users to value the same thing differently, just because we change the language a bit and the way to think about the exact same system.

All that is needed for this psuedo-fork is to implement a two functions: one which takes units of grin and returns units of gotts and then another that does the opposite. Then this function would be used to encode me decode unit conversion between the wallet user and the network.

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Isn’t using gotts kind of hiding the current value of user’s coins? You would be showing user his value based on what it will be in the future, not based on what it is now if i understand correctly. To me it doesn’t sound right to have X gotts on tuesday and 2*X gotts on wednesday when you did nothing. I also think btc’s halvings are a bad thing, you want to have a smooth function instead

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God pls not another one

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Grin’s consensus formation doesn’t require this gimmick

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Consensus formation?