Questioning Core Assumptions on Our Emissions Model

Market
21

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.

I said that in the short term, no one can point to a practical use of Grin, as there isn’t a substantial amount of vendors ready to accept it, it’s kind of cumbersome to use it, and neither we have thousands of people waiting to use it. We all think it’s exciting for what it can become, not for what it will be, again, in the short term.

So, for the price discovery, the current model it is betting high on a demand that might not be there yet, letting speculation play a major role, while at the same time disincentivizing it with a strong downward pressure.

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.

The narrative that bitcoin could become "P2P sound money” was partly because of the “deflationary limited supply”, in contrast to “inflationary FIAT”. The thought process of people associating bitcoin with “sound money” would have been harder—if not impossible—without this feature.

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

Agreed. But what happens if the demand doesn’t exceed the supply for years, driving miners out of the network, and reducing the security to risky levels?

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.

I think a robust economic policy should particularly address worst-case scenarios, setting right incentives for network participants and not rely—excessively—neither on speculation nor creating demand out of thin air, especially when the consequences are security related. A good balance between both is ideal and, when one side is expected to be weak—for a period of time—the other one should be over incentivized to maintain that balance.


I’m not saying that I do know which is the perfect monetary policy to implement, I just think the current monetary policy it’s being over-optimistic in the demand side and too aggressive on the speculation side, not setting the right course for a healthy, robust growth regardless of environment sentiment.
22

The point here is that even if you adjusted the emission model to favor early adopters there’s no proof that it’s ultimately going to help increase the demand or improve the security of the network. There is also an argument that it could actually hurt adoption since newcomers have less incentive to get involved. What if Grin had a typical PoW block reward schedule( eg continuous or periodic reduction) and demand doesn’t exceed supply for years? You’re left with the same premise. There are so many examples of this already.

Grin will most likely be the leader in Cuckaroo & Cuckatoo hash. Being the leading coin of each hash function increases the security of the network and greatly reduces the chance of a malicious attack. There will be all sorts of shit coin forks coming up that use the same hash function- They will be ones most susception to an attack. A good example of this is Monero vs all the other Cryptonote/ Cryptonight shit coins.

This sounds great in theory, but it’s not practical to implement. If you try to optimize a monetary policy to x conditions then you’re going to introduce all sorts of bias and end up with some kind of curve fitted model that is more susceptible to falling apart in a different market regime. You should leave it up to the free market. You can’t play god.

There is no such thing as a perfect monetary policy.

Consider this:

  1. Early miners face a lower network difficulty created from the unknowingness & uncertainty of a new project, so they are naturally incentivized from a lower network hash rate( lower difficulty), which increases their share of the block reward. The net/ net effect of this could be no different from offering early miners a greater block reward.
  2. Grin starts off as a 90/10 GPU minable coin that reduces to an ASIC PoW after 2 years. After those 2 years, ASICs should dominate the network, skyrocketing the difficulty. So this creates an additional incentive for early GPU miners to support the Network, knowing that after 2 years there could be an order of magnitude more hash required for the same portion of block reward. I think many have overlooked this nuance.
  3. There is no premine/ ICO/ or treasury cut of the block reward, Grin is 100% community funded, no VCs or early investors have been able to get a slice of it when it could easily be the most interesting project of 2019(arguably the most organic launch since Bitcoin). So, there could easily be speculators willing to scoop up whatever they can get their hands on.
2 Likes
23

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

I think that is a misnomer. Early adopters need a greater incentive, as they are also running a greater risk, using a recent cryptomoeda as a network still in development.
Who would stop using Zcash or Monero to use Grin without has this incentive? In the world, no distribution is fair. This socialist model can disrupt the adoption of Grin. The magic behind cryptocurrencies is to bring scarcity in the digital medium, primarily as money.

24

“when it could easily be the most interesting project of 2019(arguably the most organic launch since Bitcoin). So, there could easily be speculators willing to scoop up whatever they can get their hands on.”

The difference is that Bitcoin is scarce. That is one of it’s main characteristics. People are coming out of the state-controlled monetary system for this: uncontrolled money printing generating inflation.

25

The difference is that Bitcoin is scarce. That is one of it’s main characteristics. People are coming out of the state-controlled monetary system for this: uncontrolled money printing generating inflation.

Just because Grin’s supply isn’t finite doesn’t mean it’s not scarce. A resource is scarce when the amount people desire exceeds the amount available at a price of zero. Everything people want, strive for, or can’t achieve effortlessly can be viewed as scarce.

3 Likes
26

Interesting to understand that you will be alright any inflationary policy, as you “can’t play god” and grin will be scarce because "its demand”.

Whoever set the reward and emission numbers made a calculated guess, which to me looks like it was skewed by the mist of the crazy bull market we had, and didn’t took in consideration worst case market scenarios.

Anyway, this is a boat that sailed already. I can’t justify myself to become a miner but definitely will be interesting to watch how it unfolds.

27

I would reconsider the assumption that people want to leave the current monetary system because of inflation fears.

We are living in persistent disinflation for the past decades. In a case of rampant inflation people simply invest differently, trying to retain their purchasing power. This can be achieved in multiple ways, and crypto will not necessarily be the best option in those times when they come.

The major narrative is to exit fiat in order to have complete sovereignty over your wealth and the transfer of value.

28

So have you just changed the definition of scarcity? Because when you produce any item infinitely, you have to ensure that the demand for that item will be much higher in such a way that it becomes rare. This is the definition of scarcity (see here: https://www.vocabulary.com/dictionary/scarce).
So, how are you going to ensure Grin will be scarce if:

  1. Maximum supply is unlimited.
  2. You are not pioneers - there is already others altcoins as Monero, Zcash, Zencash, Pivx, Zcoin, Bitcoin Private, Bitcoin Confidential and now the Beam. And all (except Pivx and Monero) are scarcity!
  3. There is no emission control (such as Bitcoin’s halving).
    I wish there were solid arguments to show me that I’m really wrong.
29

Blockquote Interesting to understand that you will be alright with 600 or 60000 grin per second as well, as you “can’t play god” and grin will be scarce because "its demand”.

Yeah, from an economic perspective it wouldn’t matter if it was 600 or 60000 as long as the emission rate was still constant and stayed that way forever. It would mean the price of Grin would be less, but you would own more Grin’s.

Whoever set the reward and emission numbers made a calculated guess, which to me looks like it was skewed by the mist of the crazy bull market we had, and didn’t took in consideration worst case market scenarios.

The reward is arbitrary just like Bitcoin. It’s 1G/s for simplicity. It doesn’t have anything to do with market conditions. As has been pointed out- The emmission rate of Grin is exactly the same as Bitcoin for the first 4 years, then only 33% different after 8 years (Annual Emission rate vs Year | line chart made by Bobby_digital | plotly) The first 4 years is an eternity for a new project. Most projects today probably won’t be around in 4 years.

Anyway, this is a boat that sailed already. I can’t justify myself to become a miner but definitely will be interesting to watch how it unfolds.

1 million GPU’s are expected to be online at the Mainnet launch.

30

No, have you? Crops are only scarce after a long drought if people still desire them- If no one desires the crops anymore they are worth zero. For anything to be scarce there needs to be a demand for it, it doesn’t matter if it’s finite or infinite.

There is still a finite amount of Grin per day, per week, per month and per year.

Q1&3: If Grin had the same emission model as Bitcoin it still wouldn’t ensure that Grin was scarce
Q3: I’m not here to convince you on the merits of owning Grin vs XYZ.

31

The supply is fixed at any point in time. Think of apples: their supply is fixed today but it is unlimited as long as people want to consume apples in the future.

What are you talking about? The emission schedule is fixed: 1 grin per second. It also tends to follow gold’s inflation curve after a couple of decades.

32

Ok, so you just created a new definition for shortage lol
Too bad this is not reflected in practice.

Let’s see how this will unfold.

33

Bitcoin halving emission. Do you not know? The Bitcoin emission per block is halved every 4 years. This is really scarcity.

34

Good luck with adopting it as a unit of account.

35

Unit of account is the last stage. Store of value and means of exchange is already a reality since 2014.
I hoped that the Grin would be an alternative as a currency of anonymity but with this socialist distribution, it is difficult to keep that hope.

So, I should say, good luck!

1 Like
36

What is not reflected in practice?

37

Infinite supply and not reduction of circulation supply. It’s not scarce.

38

Infinite supply and not reduction of circulation supply. It’s not scarce.

If Grin wasn’t scarce then you could just obtain all the Grin you wanted right now, for a zero cost. We wouldn’t even need to have this discussion. However, you can’t just obtain an unlimited amount Grin( even in tesnet). Only a finite amount of Grin will ever be at your disposal. Because, there is a fixed emission rate that allows you on average to obtain approximately 1 Grin per second, which does not change, even if you had infinite resources at your disposal.

2 Likes
40

I once estimated the number of high-memory mining GPUs at 1M, and expressed hope that Grin would capture a significant fraction of that.

41

In what system can you get the amount you want? I can not get into a bank and say “look I want a billion dollars now”. Dude, that argument was ridiculous. I hope it is not the same as the rest of the community.