Wouldn’t linear emissions mean that value earned from mining later would be less significant than value earned earlier because ツ60 now is greater in proportion to supply than in the future?
Yeah, we need exponentially increasing emission!
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Correction: “Linear emission is fairer for late adopters”
Sure, as a percentage of the total supply, a Grin mined today creates a greater increase to the supply than a Grin mined tomorrow.
However, it’s designed to be ‘fairer’ vs Bitcoin and other “deflationary” style coins where block rewards are skewed to favor early adopters. Half of Bitcoin’s emission was mined in the first 4 years- Now close to 85% has been mined already. Ownership is forever centralized.
If you haven’t figured it out already; Grin is an attempt to improve on bitcoin’s shortcoming as P2P digital cash: I.e Privacy, scalability, fixed supply( Bitcoin’s security will come under threat once its block subsidy gets too low), centralized ownership (due to emission being skewed towards early adopters)
Grin adds fungibility while improving scalability( chain size/ IBD) and attempts to make mining more predictable( less reliance on a fee-based market) with a ‘fairer’ emission for those late to the party.
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Is that not a concern for Grin as well but instead a problem many years from now?
But also, we don’t know if this is true or just conjecture. It could be that security can be maintained just fine with fees. In which case, fees and no inflation is ideal for all participants at any point in time. This is to say fixed supply from the genesis block.
If it is true that we need some inflation in order to subsidize security, then it should be proportional to transaction volume. Why? Because volume is what is needing to be secured. How much of a proportion should be shown given some proof for the hypothesis (that inflation is needed for security). In this case, we could rely completely on emissions for security. Fees would not be needed unless for another use case.
Sure, but to a lesser extent. Grin always has a block subsidy. Bitcoin’s subsidy will one-day be zero, while Grin’s trends towards zero. Grin’s 1/g/s forever makes things as simple/ predictable as possible. But it’s not perfect.
It sounds like a good theory but you can’t just create some kind of algorithmically(variable) controlled inflation based on tx volume- It would be too easy to manipulate( All sorts of attack vectors). There are other projects who have attempted this sort of thing. But there’s really no perfect solution.
If you were going to create another experiment into P2P digital cash ( While having reviewed Bitcoin- which now appears more like digital gold) then Grin and it’s monetary policy becomes a logical choice.
Fixed inflation over time with limits on transaction volume over time. This is one way to prevent manipulation as you’ve mentioned.
It doesn’t sound like this avoids manipulation at all. If something, it would probably reinforce manipulation. You would have to choose a volume limit that will either be too low thus have to be updated at some point in the future and still be gameable or it is too high which is gameable as hell.
All cryptocurrencies have to start with infinite inflation: creating one coin out of thin air. Or a hundred.
Who gets the first 100? One lucky miner, who now owns 100% of the supply? Let’s say after infinite inflation we set t at 2%… that means the next block there will only be 2 new coins minted… our friend with 100 coins from the infinite inflation days still controls 98% of the supply.
Maybe you would volunteer to be the person to get all of the first infinite inflation coins? That would be very convenient for you. Then we could make inflation .01% and you could manage 99.99% of the entire supply with an iron fist in the way you best see fit.
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^ If anyone wonders how banking works.
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I’ve been giving this some thought even before you mentioned it. Now that you mentioned it here are my thoughts.
Let’s set up the scenario: Let’s say we have a coin with 0% emission and with a supply of x. The genesis block would define the supply at x and give it to the founder. Miner’s are solely incentivized by transaction fees. Now, like you mentioned there would be one “lucky” person with all the supply (in this case the founder). However, there is an argument to be made here: The market cap is effectively worthless at this point, so the founder really is not benefiting from holding all of the supply. It is in the founder’s best interest to share or make purchases with the coin.
Once someone demands the coin as payment for some good or service, it would be wise for them to ask for half of the supply (x/2 coins) because there would be only two participants in the network. The second person to demand the coin might ask for x/3 coins because there are only 3 network participants. The point is that the coin would be traded based on market cap and not unit price, and earlier adopters benefit proportionally to late adopters as it is expected that market cap grows quadratically[1] as more participants enter the network. It would be ideal to even make supply 1 in order to make transparent that market cap = coin price; fractional unit prices would be a user experience related.
I’ll admit that this scenario depends on three things to be solved:
- Fee for mining incentive does not create time-based security like emissions would. Security would change based on transaction throughput. This could be solved if participants opt to send money back to themselves with a minute amount in fee to secure the network which would simulate the emission. That is one idea.
- Determining the number of participants in order to derive a unit size that is some proportion to network growth is a hard problem. Sybil attacks would make it easy for someone to emulate a growing network. One idea is somehow disincentivizing ownership of multiple keys (not the best idea). Or, include time as a factor into the unit size formula in order to put a ceiling on calculated network participants that raises over time. This could make network growth steady over time.
- Given the formula
unit = 1/n | n is number of participantsand if the first network participant (founder) hoards his 1/2 stake over time, this would be an issue. There would need to be disincentive for this. Could it be theorized that hoarding is already disincentivized by existing market dynamics? Is it already in the interest for network participants to spend their stake in the network in order to increase network participation perhaps?
Addendums:
[1] Going off of Metcalfe’s law: the market cap is proportional to the square of the network participants (quadratic growth rather than exponential).
Fantastic you are starting to catch up. Let us know when you conclude that the best network is one with lots of coins lots of participants more than just fees and disincentive to hoard. You’ll have caught up with grin.
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