In this topic a question arose what will be the initial price for uploading to the Safe network - my understanding is that it will be set by the team. Is this true?
Currently, the price per GB in the Filecoin network is 20 times cheaper than in the Amazon S3. If we are going to set a starting price then how many times cheaper do we want it to be than Amazon S3? 10 times? 100 times? 1000 times?
This is not an effective approach to pricing strategy. One must layout the relative benefits provided by different solutions in order to understand a price that makes sense. Itās not just about being ācheapā. In fact, sometimes having a price that is much cheaper than the marketed value of the product can be damaging.
Otherwise put, if you tell someone youāre going to sell them a (vehicle commensurate to a) Bentley for $10K they are going to believe youāre lying about the quality of the car. Similarly, if you tell people youāre going to store their data forever for 1000x less than AWS, the price will make people doubt the quality of the product.
Effective pricing strategy is rooted in a firm understanding of behavioral economics and human psychology.
I reckon if a price were to be set (which will probably be implicit rather than explicit, see below) a decent starting point would be to aim for roughly matching S3 pricing. Amazon has a sustainable (profitable) business at that price so why reinvent the wheel. Maybe slightly cheaper than S3 so we can get some marketing advantage by the efficiency and cost effectiveness, but not 10x cheaper, maybe 2x at most.
Hereās what I imagine might happen and why the initial price wonāt be āsetā by anyone.
[1] Maybe thereāll be a way to make storecost cheaper in dollar terms besides having the exchange rate drop? One way to achieve this is to use the high speculative price to generate interest in farming and bring on more resources so the storecost is cheap in safecoin terms (but is reasonable in dollar terms due to the high exchange rate). Sounds maybe ok but this strategy of taking on new resources might introduce a risk those new resources may depart when the speculative price is not so speculative any more.
Pay once; available for ever, is different and how the value of that is resolved not obvious to me.
I wonder there are two risksā¦
One risk of under pricingā¦ no point under selling something valuable.
Another risk of harmonics in price similar to pump and dump volatility. Pricing high perhaps helps dampen the risks.
Why not price equal to Amazon et al and note itās a one off payment etc etc.
Defining relative to others perhaps an error???
Not as simple to answer. It should work like this. (remember the network sets the price).
At genesis, we have a price of 1 safecoin per Put (for example, it does not really matter). As the network grows (as we dd nodes) the price gets super cheap, then as resources are required it goes back up again and so on (super high level).
So you could say we set the price of the first put, but itās not setting the price per seā the network will rapidly change that.
Thank you for the answer David! Iām sorry I didnāt clarify better.
The initial price is clearly irrelevant. What matters is how much the network will pay extra through inflation - this became clear in the topic I am quoting - filecoin pays extra and subsidizes with inflation, what will be our initial inflation? Obviously, there must be one to reach 4.3 billion safecoinsā¦
The Safe network has two prices for storing data - what the user pays to the network and what the network pays to the farmer. My question is what the network will pays the farmer initially.
Ah I see. We have no final decision there yet, but likely it will pay out something like 2X the reward or similar. We want all coins in circulation quickly, but we cannot yet define clearly āquicklyā. When they are ll out there then they are in the hands of people and not a network wallet, so even bad sections cannot mint new coins. etc.
This is something Iāve always wondered and have failed to address. When I first started reading here I just assumed Safe would adjust its fluctuating token cost based on dollars. Maybe thatās completely wrong but the general population will look at it the same way and want to compare apples to apples.
Thatās why I would think, oh maybe there will be some network oracle that has a price feed that informs the store cost. It is a solution but likely one that causes more problems than it solves?
I still live in a world where there will literally never be all coins in the circulations. I thought we will get in 3-7 years in the sustainable point when there will be around 3.7B (85%) coins in circulation. Have I missed something important?
That sounds like quite fast to me 
With x2 farming reward it will take several years I guess.
Anyway here were put lot of thoughts: RFC 57: Safecoin Revised
This depends on how quickly the Network reacts to shifts in Safecoin market price as well as Network supply and demand.
Per Davidās response:
While the mechanism that will deliver this high degree of sensitivity is TBD, the target for quick responsiveness seems clear.
Yes, the common POV shared on this forum over the years has been that it would take years before a volume bordering on max supply hits the market. I think a rapid inflation rate would be a dangerous proposition.
In my head I still imagine some kind of orderbook auction type with free floating for farmers to join or leave the network. A free-float market where there is no need for an algorithm. Where a user for example sets a high/low cost limit for storage/GB and then the client random buys storage, 100MB each time, within choosen range, until either low/high limit reached and then the client would be asked to choose new limits.
To set a low/high limit would allow for price fluctuations, the data to be scattered across various nodes and to reject evil actors from setting price to 0 for evil purposes of gathering data or destroying the network.
Donāt know if a free floating solution is only a dream or would possible. The hypothetical model is very basic and excludes probably alot of important scenarios, for example but excluded, not only choosing price but also reliability. latency and such.
Sia works on this principle. I was a farmer there for 1-2 years, I even give my storage for free. Unfortunately, their software was so buggy that it constantly broke when there was a power outage (just then they were building a subway next to my apartment and the power went out several times a month)
Iāve been thinking about this. Even if all money were minted, wouldnāt a bad section always have something to steal? For instance, it could steal the section wallet since the section disburses payments to participant nodes only after they relocate to another section. Is the idea that if the bad section does that then itāll be caught because those who didnāt get paid would report it? Wouldnāt it be possible to likewise catch a section that misuses newly minted coins because it wouldnāt be able to pay nodes that did work?
We have an option where with DBC for instance a client pays directly the nodes the data will be stored on. It changes a few things, Adults IP will be exposed etc. but also the network only transmits the payments, they could be transmitted via a usb drive etc.
This stuff is really a focus for me right now, have the most secure network we can but give it no authority to mutate any (humans) data or data that can harm humans.
Itās all just me and a few others pondering right now, but all this is well within reach if DBC works well. The only gap left is the section wallets for the initial issue of coins and I am positive we can come up with some neat solution there to complete the circle.
PS: with that design change, youād have to find another mechanism to ensure the nodes do keep and serve data entrusted to them. I really liked the ingenious simplicity of paying the node only after it has fulfilled its duties to the section and relocated to another. Iām sure you and the team have considerations like these well under control though. More power to your elbows
My current thinking is pay as you go. So a node who takes and runs is doing so for a few chunks, if he stays he gets paid more. If he leaves then others will get paid for all the new chunks. I recon itās fair and balanced. So no wait penalty and we can show nodes wealth increase gradually and not in steps. So from a UX it might lead to nodes being more sticky.
As I say all thoughts right now, but with the tools we have right now these things are all possible. I see much more as we release. Just in case anyone reading thinks this slows launch, it does not, itās typical last minute Engineering tweaks as we launch. I know some folk get scared when new angles appear, but this is absolutely to be expected. Itās using tools we know are proven to try a few improvements. In saying that DBC is not there, but if it was these considerations become real.
You guys have made the right technical call over and over. So Iām sure youāre having these considerations for very good reason. Thanks for the reassurance nevertheless, and I think having an imperfect version out to build upon would be a tremendous starting point.
Probably my bias talking and I stand to be corrected, but I suspect thereāll need to be some mechanism whether wait to get paid or deposit that can be forfeited otherwise nodes may not behave when it comes to serving back the data especially in the long term and with old/unpopular data.
EDIT: thinking more about it, it could work if itās very difficult to get into position to start earning in the first place. It that case, the node might not want to go through the hassle. So that could serve as the penalty.