Questioning Core Assumptions on Our Emissions Model

There are a few things that I think are important to address:

A) Interest Rate Balancing:

While I appreciate the philosophical nature of 1 G/s forever, and while in the first few decades it looks like a feasible model we actually run into two problems with a non-adjusted rate:

  1. The rate of new Grin produced will eventually be so minuscule that it will be insignificant against our market capitalization and therefore not worth mining ruining the reward mechanism of securing a network.

  2. In any monetary system, you need “reprints”. For paper money that is replacing bills that are old, damaged, torn or lost. For crypto that is replacing coins that leave the system through corrupt harddrives, lost keys, sent to wrong wallets etc. The goal would be to eventually have your inflation rate in perfect balance with this loss/reprint rate. While it is impossible to know the exact number, we can know that it is some estimated percent of currently existing circulation. If we have 1 G/s, then eventually you run into the issue where because of the sheer size of circulation, the loss rate is far larger than the interest rate and so the free float supply ends up going down. Eventually this makes the currency more valuable as an investment/store of value than a monetary unit.

B) Spendability:

One economic argument that I’ve not seen covered in this debate is in the spendability of a coin.

Far to often when we discuss emission rates, we look at the distribution equity and participation motivators for what gets a user included to adopt mining or acquiring a coin. This is in part why so many cryptocurrencies are viewed as get rich quick schemes, they are optimized towards the adoption of the individual.

Spendability is a balance between the incentives of merchants to accept the coin as payments, and users to use it as their payment method.

Why do people not use Bitcoin to buy things? Beyond being a bulky payment method and complicated interface, why would I buy a coffee for 0.0000X BTC today if I thought that same amout of BTC could buy me two coffees tomorrow?

To that same end, why would a merchant accept 0.0000X BTC if they thought there was a chance that tomorrow that BTC could be worth only half of a coffee.

So there actually become a series of criteria:

  1. We want adopters to get onboard because the early rewards are lucrative enough.

  2. We want the price of a Grin to not deflate too much, otherwise it becomes useless to accept it as payment because it declines too rapidly and is too high risk.

  3. We want the price or value of Grin to not inflate too much, otherwise it becomes too strong of an investment and it doesn’t make sense to spend it today if it will be worth more tomorrow.

  4. We don’t want the early rewards of adopting or mining Grin to be too lucrative, otherwise it seems unfair to later players.

For example, consider right now that in the first year of Grin there will be 100% inflation in the supply (and therefore 50% deflation in the value relative), it doesn’t make sense to collect Grin because of the value rate it will drop at and it certainly doesn’t make sense for merchants to accept Grin, because Grin is losing value at around 0.27397% per day.

We know that, anything about a 5% interest rate in value is interesting to large scale institutional investors for long-term hold, and is better than idle money interest.

At the same time in these markets it is not enough to create wild speculation.

That same 5% on the deflation side would be harder, but still probably manageable spread out across a year in terms of risk stability as now we are talking about 0.0137% value loss per day, which is an order of a magnitude and a half smaller than the previous rates. This is still on the high end for a business to consider accepting as they will need to be diligent in their sales back to fiat cash, and the higher the inflation rate the higher the volatility as well.

However, we currently won’t hit that rate until around 18-20 years out

This is far too long for us to develop the ecosystem. Quite simply, in the first 5 years of its existence, Grin will lose too much value to be worth merchants accepting.

C) Positioning:

As I mentioned I think the philosophical idea of a 1 G/s to always be fair is admirable, but I don’t think it is feasible given the points raised in A) and B).

Whatever the rate is, it should however be something that is line line with the mantra of Grin.

Those are core criteria that I think are important and not fully vetted in our current model.

I’d love to hear from others:

  • Do you think these are important core criteria?
  • Do you think our current model addresses them?
  • Do you think there are other core criteria I’ve overlooked that we should consider?
  • Do you have any alternative emissions models that may meet these criteria?

TL;DR: The 1 G/s creates some economic challenges that make it unlikely a good choice for businesses or people to accept Grin as a payment since it will so rapidly decline in value. This means, it is hard for people to spend and use Grin. It’s going to be almost 20 years before its at an acceptable deflation rate and that seems too far out to be feasible.


Adding this in as a second post to seperate it from the above questions.

One model I’ve been playing around with but is in its very early infancy is as follows:

The Oscillating Variant Model:

Within a variant model, the emission rate of grin would not only go down over time (like with Bitcoin) but would have reset periods where it spikes back up.

For example, within the first month Grin could be produced at 5 G/s, a high-rate to incentivize miners to join.

Then it would drop down to a low rate of 1 G/s for the next year.

After the first year, that rate could slowly climb over a 3 year period up to a high of 10 G/s. While this is 2x the previous peak output volume, the market should be more robust by then and so it should actually be less Grin per capita.

After reaching that peak and remaining their for a set time, the amount of Grin slowly declines until the annual emission of Grin is 3.33% of the total circulation.


  • Rewards early miners for participating in joining Grin and securing the network.
  • It ensures that the value of Grin does not rapidly inflate, causing people to simply hold and invest.
  • It ensures that the value of Grin does not rapidly deflate due to a rapidly doubling circulation. Thus, making it feasible for merchants to accept Grin in the first few years.
  • The variance makes mining more profitable at certain ties, and less stable, so its less likely that ASIC miners would invest in robust operations within the network.
  • It allows us to meet the needs of loss replacement.
  • The timelines are long enough that people are not likely to mass buy or mass sell their Grin based on the changes.

It still needs a lot of work but it is an interesting concept.

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Most miners sell their coins immediately to cover costs (source needed). So as long as it’s worth more than zero some equilibrium should be met to secure the network.

If network is worth a lot, then the 60 grins mined per minute will be worth a lot (doesn’t matter how small the mining reward is).

Disincentiving hoarding early on supports wide distribution (20 years to get your grins before it becomes a “SoV”).

All of the assumptions about high inflation have to do with national currencies where the inflation rate change is unknown, and so you cannot adequately prepare for fluctuations in the value of your money. With grin you will know exactly how long you should hold your money at a given day. If inflation is high you will exchange it to something else immediately, if it is not so bad you might keep it a week, if it is low you can hold on to it.

This transparency is the real innovation of bitcoin, and should allow equilibrium and price discovery to happen naturally, whatever the inflation rate.

Also, ASICs are good long term.

Also as adoption increases it will become more valuable and useful, with the possibility of actually utility outstripping supply inflation. 50% inflation doesn’t mean 50% price drop.

All hypothetically.


This assumes that the majority of individuals within the system are rational and informed actors, which we know not to be true.

A large portion of users still believe that the value of a coin is only denoted in its USD value per coin. They struggle with concepts like marketcap and circulating supply.

It’s one of the challenges we see in the Kin community where I am quite active. You have users who think the coin can never be worth anything because there are tens of trillions of it in supply, and don’t realize percentile gains matter.

Then you have another camp that think its great because it is only worth fractions of a penny and they say “Imagine what happens when this reaches $1” or “Imagine what happens when this reaches the same price as Bitcoin”

So, I’d say we do have a bit of an onus to design a system that is not only theoretical to how the rational actors would play, but also to take into account the game-theory of users who haven’t a clue about this stuff.

In one of the other threads someone said “it needs to be easy enough that my mum could understand it” - I’m not sure about you but my mum probably wouldn’t be looking at the inflation schedule of a digital currency to figure out how its value may change over time, she will be looking solely at the buying equity and “why can I only buy half a coffee with money that previously bought me one coffee a few days ago?”

These are fundamental challenges to be solved if we want Grin to be functionally usable as a medium of exchange rather than just becoming a SoV.

(As an aside the premise that “the network being worth a lot means 60 grins a minute is a lot” makes the assumption that the rate of growth of the grin networks value is the same rate at which the supply grows. The curve mapped out in that sense is a very aggressive growth in network that to create real value requires lots of people using and spending the token not just hoarding it.)

But, I do see what you mean with your premise, I think it’s brilliant and agree with it, and think it would work great were it a small system of informed rational actors. But, the mainstream seldom fights that category.


all Good points. People have decades to learn and for the UX to meet them in the middle thanks to the long tail emission as well.

I also think that anarcho capitalism and the cypherpunk thing simultaneously assumes people are easily corruptible, but also holds that any individual deserves to be treated as a potential informed rational actor deserving of ultimate personal responsibility. Dumbing things down, so to speak, is counter to the ideal of having people lift themselves up.


Sure, but this gets into a philosophical debate about ethics, is the intent of the action more important than the outcome of the action or the other way around?

I’ve always struggled with that one and so I personally try and balance it out with a modified Kantian approach in “Create the maximum happiness, for the maximum number of people, while doing what you believe to also be good and morally right”

In my mind, the impact of getting millions of people to successfully self-sovereign in their financial systems, is a better way to fulfil an ideology, rather than strictly interpret that ideology and only get a few people to meet the end goal.

Yes, this is a huge problem. This is why adoption from merchants is important. If we’ve set up Grin to not be a SoV for a very long time, then people aren’t buying it as a speculative investment.

But, with all those miners selling and putting downward sell side pressure on the market, someone has to be buying or the volatility of the downtrend just becomes exponential because each miner wants to recoup some of their investment.

So if buyers aren’t buying to speculate, they must be buying to use the coin as a medium of exchange. Which means they need things to buy.

This means merchants must be motivated to adopt it as a payment method and early on.

Yes, but people don’t use products they don’t understand for decades, and they don’t use products that deflate their money for decades, and once you lose a user its 2x harder and 3x more expensive to get them to try and come back in the future.

Also decades is a long time.

Are we saying we don’t want any merchants to think its a good idea to accept Grin for the first 5-10 years?

That’s a really long time.

I’d love to get us into the hands of merchants in the first year.

But, if I am a merchant, and I know that someone makes a purchase on my eCommerce store mid-day on a Friday, and I can’t get to dealing with the payment until sometime Monday, and then I have to transfer it to an exchange to cash out, I’ve lost roughly 1% of the sales value even if there is no volatility.

But since miners sell right away to cover their costs, and Grin is being pushed out at high rate, that means there is immense downward pressure on the sell side.

That means we so maybe those miners are competing because they know by next week they’d be down another 2% so they under cut the market rate by 1.5% in order to make a quick sale.

So now I am down 2.5% if I sell today, plus my exchange fee so 2.52%.

If I have to then convert to fiat on an additional trade, or deal with a withdrawal fee I could be looking at anywhere from a total fee cost of 2.54% - 7.54% in lost value.

Seeing as PayPal is 2.9% + $0.30 and more reliably stable, why would I accept Grin?

Well why do people except Bitcoin, they fall into one of four categories:

  1. They fundamentally believe in the philosophical motivations behind Bitcoin (very small group of early merchants who are not enough to sustain a large amount of sell side pressure).

  2. They are a small business wanting to attract new customers (very small group and a chicken and the egg problem).

  3. They believe it is a good business decision because Bitcoin can be worth a higher rate in the future.

  4. They believe the fees are lower than other payment methods.

So we know #1 and #2 are not useful for us in sustaining the network.

#3 isn’t true because Grin is not set up to be a store of value.

So we are reliant on a variant of #4 where we can say Grin is something these people can believe in, but, it also makes enough business sense because the risk and the loss aren’t higher than what they would experience with something like PayPal.

Otherwise, we won’t have enough merchants to upkeep the network and increase the network value.

This is a false premise that the cryptocurrency community has. “Adoption”

Currencies need to have a utility. That utility can be as a store of value/investment if the network is set up that way.

If not, then the token must be redeemable for something else.

So, if you aren’t an investment you need to have people willing to take your token/coin for goods, services, consumables, experiences, something. That’s the only thing that drives real, long-term and sustainable value.

Everything else is speculation that crumbles away - and I think from what I’ve seen in the short-time I’ve been a part of the Grin community, everyone here has no interested on making money off of speculation, we want to see something real, a stable useable money of the future that lets people transact freely and safely. :slight_smile:

That means, we’ve got to consider:

  1. How the average person would use and understand the coin,
  2. What risks/rewards merchants need to feel it is the right business decision to accept the coin.

(PS - loving these conversations!)

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I think this is incorrect. The loss decreases circulation, which has a negative impact on the loss rate! You can’t lose a coin that is already lost.

Correct me if I’m wrong, but doesn’t this mean that the loss rate (if it stays constant on average) can not exceed the supply inflation rate, in percentage terms? I think they approach parity over time.

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While this is a noble goal, I am wondering whether it contradicts the core tenets of this community. Does the average mom care about privacy or self-sovereignty nowadays? Probably not. We should get back to our mission statement and make it clear what is our end game here. I understand that we need to appeal to as many people as possible but Grin has certain utility (privacy which also implies fungibility), and people onboarding to Grin should be aware what they are signing up for.

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A couple of comments:

  1. We want adopters to get onboard because the early rewards are lucrative enough.

I have not noticed any importance being put on onboarding “adopters” seeking to make “lucrative rewards”. What do you base this on?

For example, consider right now that in the first year of Grin there will be 100% inflation in the supply (and therefore 50% deflation in the value relative), it doesn’t make sense to collect Grin because of the value rate it will drop at and it certainly doesn’t make sense for merchants to accept Grin, because Grin is losing value at around 0.27397% per day.

Yes, exactly. It doesn’t make sense to collect Grin. It might still make sense for merchants to accept Grin though, depending on the needs they and their customers have. But more generally speaking, merchants should probably not rush to adopt Grin as a preferred method of payment any time soon. Not sure this is a problem.

The plan as it stands is for Grin to do a fair launch, using POW mining, 1 minute blocks, with 1 grin/s in coinbase reward. Do you have a concrete proposal for how this could be improved?

They do reach parity over time, but, in theory but that assumes that the loss rate each year is as constant as the emission rate.

If we create 10 Grin/year, and 1% of total Grin each year is lost:

  • After X years there is 1000 Grin in circulation.
  • The loss of 1% means that 10 Grin is lost.

That’s fine.

If the next year we have 1000 Grin in circulation, but the loss rate spikes to 3%, now we’ve got 30 Grin lost with 10 emitted. So the actual floating market shrunk, while the total supply went up.

We have no way of knowing this, since there aren’t public addresses and you can’t monitor idle wallets.

It may not be a problem for a long time, and may not be a large problem, I just wanted to make sure the questions were asked.

Fair lucrative rewards is not the right term.

Perhaps just rewards.

Those can be mission based, philosophical, financial, or in the pursuit of freedom. There needs to be some positive motivator to attract adopters of all categories, and those positives need to outweigh any friction points.

So this is the problem I’m having with this point. From what I’ve read, one of the goals with Grin is to make it a practical currency to be used and spent. We want people to use it as a medium of exchange, correct?


  1. We know many miners sell right away to cover their costs. This puts downward sell pressure on a market.
  2. Merchants shouldn’t adopt Grin because it doesn’t make financial sense due to the heavy downward on the pressure.
  3. Grin has no utility purpose (it is not redeemable for something, nor a function tool like ETH).

So if Grin has no purpose for merchants or sellers to accept as a payment, and is being sold by miners, then who is buying it and why?

If the answer is, no one (or very few people), then they can’t possibly using it as a currency as the downward market pressure would be so immense that the value of it isn’t stable enough to use in that way.

Am I missing something here?

No - not yet. I’m still playing around with some ideas.

I just want to make sure we’re questioning some of these economics. I agree with the philosophical principle of the current model, I just am debating it’s practicality and am trying to contribute to some discussion around that. :slight_smile:

Those can be mission based, philosophical, financial, or in the pursuit of freedom. There needs to be some positive motivator to attract adopters of all categories, and those positives need to outweigh any friction points.

Right, so what does this have to with the emission model? Seems the point you’re trying to make is that if people find it useful, they will use it.

From what I’ve read, one of the goals with Grin is to make it a practical currency to be used and spent. We want people to use it as a medium of exchange, correct?

Yes, but over the long term.

  1. We know many miners sell right away to cover their costs. This puts downward sell pressure on a market.

And so the price goes down. Why does this matter?

  1. Merchants shouldn’t adopt Grin because it doesn’t make financial sense due to the heavy downward on the pressure.

Again, you can trade in and out of the coin, you don’t have to hold it. So what has price got to do with it? Merchants shouldn’t adopt Grin (yet) because it’s a work in progress effort that could use a year or so to mature a bit more. :slight_smile:

  1. Grin has no utility purpose (it is not redeemable for something, nor a function tool like ETH).

Grin offers a high degree of privacy. This is utility, and serves a function to those who value it. It comes at a high cost of low adoption, friction, and lack of supporting services. For now. Those who are willing to pay this price will use it. This cost will go down over time.

Part of its usefulness is in how low the risk is in holding it. For example many Argentinian’s adopt either the USD or crypto right now as their transacting currency as it is less volatile than their own currency which is crashing aggressively each day.

When we look at the price going down over time, this presents a risk in using Grin as the time of the transaction (from someone buy it, then transferring it, to the other person selling it) presents a loss.

Since other privacy coins exist, then the value of Grin’s privacy would have to exceed the privacy of those coins, by a degree larger than the risk of holding Grin due to the deflating rate.

So I guess the question is, objectively how much more private are we than other privacy coins and how valuable is that delta?

As is pointed out in the Moneatry policy doc “The first four years of Bitcoin emission rate are identical to the first four of grin. Bitcoin had a full reward for 4 years, followed by half that for the following 4 years. So, compared to a constant supply, after 8 years, the total amount of coins emitted is only 33% less. Compare that to daily price fluctuations”. Bitcoin started with a high inflation rate, did Bitcoin lose value over those first 4 years?

Why are you assuming that multiyear emission curves have an impact on short term price? The rate of adoption should have a much greater impact on price. Regardless of the emission rate a coin is going to be inflationary if supply increases faster than demand and deflationary if the opposite. Speculators will be buying Grin on market because they believe in its future value as a medium of exchange. For all we know, the price of Grin could rapidly appreciate after main net launch.

I think you’re over analyzing things and looking for answers that can’t be found yet.


I think the philosophy of “build it and they will come” can be done if it’s sustained of a solid economic model for—at least—some of the network participants. In Bitcoin, it worked with core users as they were incentivized to hodl based on a speculative bet on a limited supply—but what about Grin?

By design, Grin wants you to sell your coins as soon as possible as they become less valuable in the long term. In the short term, we have miners that need to cover their costs, in an industry where currently we can count with one hand GPU-mined coins that are profitable—and no one can point to a reason why would anyone want to buy and use Grin.

Sure, miners will speculatively mine as long as they can afford to do so, but what about if there is no organic demand for Grin in a multiyear long bear market? How strong would the security be, after most miners shut down their equipment because they can’t afford not to? And how would that erode Grin’s long term potential?

I do get the idea of just launching the network and see how it goes but as others, I’m a bit skeptical that the right incentives are set in place for a healthy growth in a diverse set of scenarios.

I think incentives in the market are skewed with this model and it leaves the market more open to manipulation than with a constant emission. Assuming adoption is constantly but slowly increasing over time (what happens in most legitimate networks that advance the status quo), if speculators know that the inflation rate will decrease over a period of time, they are still incentivized to buy more and vice versa even though they don’t have big short-term gains. Since they comprise a big portion of the market during its early stages, their behavior has a huge impact on the price which in turn affects everybody else. How fair is the market for new entrants during price spikes and for existing participants during inflation spikes? What makes you think that price stays constant over time with this model especially when investors comprise a big portion of the network and the very same technology allows them to move funds between networks almost effortlessly?

  • The variance makes mining more profitable at certain ties, and less stable, so its less likely that ASIC miners would invest in robust operations within the network.

Not sure what you mean here. Variance in mining profitability is a network security vulnerability.

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What do you mean no one can point to a reason to buy grin? It is an extremely powerful tool designed to do something practically everyone on the planet needs and wants.

If you are anything like the average person cash probably makes up the smallest allocation of your wealth. You have property (ultimate “SoV”) which represents majority of your wealth. Then you have investments that are not as “sound,” but still you expect to be a decent store of value, stocks, bonds, etc. Then you have a much smaller allocation in a savings account, a tiny fraction of your total wealth ideally. An even smaller amount probably in your checking account. And then maybe you have twenty dollars you get out of an ATM to spend on your daily needs.

What purpose is there to take twenty dollars out when all it is going to do is depreciate in value? There are so many better ways to make money than holding a twenty dollar bill in your pocket?

If you can think of any reason you might pull twenty dollars out of an ATM you have an identical reason to use grin.

You turn some of your wealth into grin to spend it because cash is king. But grin is cash you can send anywhere in the world essentially at the speed of light. I’m sure someone somewhere will find that useful.

The majority of people who’ve bought something with bitcoin exchanges fiat for it and spent it immediately. And the person receiving that bitcoin probably turned it into fiat immediately. Grin probably not going to be different, except it is better designed for that very usecase, and because it is more useful it is likely to have less price fluctuation than bitcoin.

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We weren’t just incentivized to hold Bitcoin based on it being a “limited supply” we were holding because we believed it would become global P2P sound money and there would be more demand for it in the future because everyone would be using it as a MoE.

If Grin gets wide spread adoption then demand will exceed supply and Grin coins will become more valuable. The law of supply & demand determines the price of Grin, not the emission rate. If there was enough demand then Grin could see exponential growth for years until it reaches an equilibrium

If you think there is no reason for anyone to buy & use Grin then changing the emission model is not going to change that. Do you think the economic policy should be changed just because we could be heading into a multi year bear market? Should we change it again at a later date just because we could be heading into a bull market? That’s the kind intervention that central banks try to do and that we’re trying to get away from.

Early miners will be organically incentivized to mine in a bear market by reaping the extra rewards from a low Network hashrate.



Miners selling their coins to cover for costs are going to serve as the first price discovery mechanism in the market but eventually it will all come down to demand, which is going to be fueled by Grin’s focus on privacy and fairness and the trust on the community to lifecycle the project.

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  1. Why is this called interest rate? shouldn’t this be addressed as emission rate?
  2. Bitcoin will eventually encounter itself in the same situation, and it’s users suppose that the transaction fee will be enough pay for the miners.

I disagree. There is actually no need for “reprints”. Just putting some loss of precision aside, any amount of money is enough for a monetary system.

This is a concluding quote from von Mises:

Whoever got their grin “burned” or lost simply kind of donated purchasing power to other grin holders. There may be, relatively, less grin on the sell-side and therefore it’s price may be higher than otherwise. This is very natural to happen, and there are no disadvantages on such situation.

But considering a 50% yearly burning rate, for the sake of the argument, then I agree the situation is different because the precision is severely reduced (cannot be put aside anymore). The solution is very simple, and I actually have talked about it in another topic.

Simply duplicate the whole grin blockchain data (Ctrl+C Ctrl+V) and do a split which avoids replay attacks. This way you double the quantity, and that precision loss from the 50% burning rate is gone (for that year).
I don’t know if it would be feasible, but a forking increase in the data length for quantities could also deal with the precision loss.
Any way, both of those inflation methods would be relatively “neutral” (without wealth transfer).

No good, including a money-good, is free from that risk. But sure, merchants and consumers will look for some money-good which actually helps with their savings and calculation, their life/daily planning overall. But this is a task we all must do on all of the decisions we make. This is not a given for any money-good. We all take the risks, and those who correctly predicted the future will get some profits.
Holding US Dollars and US bonds may seem like a common and reasonable thing to do. But as I said, one is taking the risks, whether they notice it or not.

Sure all else equal, earlier adoption is preferable. But it’s not like the currency will have an expiration date - it has time.
But I agree that a lower early adoption means lower “hashrate” power, which relatively lowers early security. So idk if there would be a “practical minimum adoption” level for a given time.

I noticed that you used [grin’s] “deflation” as [grin’s] “price decrease”. I use deflation as [grin’s] “quantity decrease”, so I’ll comment in the meaning that I use (I’m assuming that you are referring to Grin’s inflation increase, which would tend to make it’s price be reduced).

I agree, inflation is bad but there must be some of it in some for, at least for some time.

Do we? Deflation is love, deflation is life.
(kidding aside, again, I use inflation differently, so I’ll comment in the meaning that I use (I’m assuming that you are referring to Grin’s [practical] lack of inflation (practical lack of quantity increase), which would not tend to make it’s price be relatively reduced than otherwise).

Sure everyone would accept something that relentlessly tends to be more valuable in the future. If Grin price won’t stop increasing for a long period, then let it be, let it keep increasing before spending it. It would be making US Dollars circle around the world faster and faster, like a hyperinflated, desperated cash trying to look for some holders in order to not die, to avoid it’s crack-up boom.
So holding it helps with the US Dollar implosion, so it’s fair (in my opinion) to profit for doing it (holding a Grin).

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