This idea is definitely worth exploring. It’s a fairly simple alternative.
It has a couple of drawbacks and a couple of attractive features. Like all the alternatives.
This proposal consists of two parts:
Part 1: The underlying idea to have the remaining 70% of supply be given to MAID holders and shareholders.
Part 2: The additional encryption layer to impose a gradual release of these tokens.
I will rudimentary address these two parts, with pros and cons, one at a time.
Part 1: Remaining 70% of supply to MAID holders and shareholders.
This is AFAIK the simplest and most secure way to distribute these tokens.
That’s more or less indisputable I think.
The reason for this simplicity/security is that technically, there is no distribution. It’s a number trick.
The other equally simple and secure way to deal with the 70% is to burn them. That is an alternative in itself, so further comments better for another post.
- Most of supply in the hands of relatively few holders.
- There is no stash to stimulate the network with, in case of unfavorable world conditions with too negative impact on the network ability to survive.
- There is no control over when and how these tokens are made available to the market in the form of sell-orders that push the price down.
- It allows an attacker to start accumulating before launch, in order to later attack the network via the possibilities of owning a large share of the total available supply.
1. Most of supply in the hands of relatively few holders
These are some months old figures:
15821 MAID addresses
0.06% (10 addresses) account for 33% of all coins
0.31% (49 addresses) account for 50% of all coins
1.99% (314 addresses) account for 75% of all coins
6.55% (1037 addresses) account for 90% of all coins
29.92% (4733 addresses) account for 99% of all coins
The most optimistic view of these numbers is that 1 address == 1 person. We can be fairly sure that is not the case.
At a first glance, this can feel horrendous.
When you think about it though, what will the tokens do sitting in the hands of these few whales?
Are these bags investments, or are they 14 year long sleeper cells, just waiting to bring down the network in some nefarious way?
Occam's razor would say these are investments, with the purpose of cashing in at some point in the future.
If the network is not a success, we wouldn’t care.
Otherwise, being a success, the increased price would start to see these whales cashing in on their investment. That there is distribution to the masses, and the rate happens to follow the growth (success) of the network.
So… since we didn’t want to see immediate release on to the market of the 70% supply (putting up a sell order is a release, keeping in a wallet is not), and we did want a gradual distribution… I fail to see how this is such a bad thing.
Whales == bad is simplistic. Dismissing this method because of the concentration to a few whales, is playing at that simplified view.
Rather, it would be better to honestly assess the actual landscape.
What are the incentives and mechanisms of investors? What seems to be the behavior of these specific ones? Would this work in favor of the project.
Here, it looks to me like it is very likely that it would.
2. There is no stash to stimulate the network with
This is the only drawback that I see as easily verified as an actual drawback.
Stimulating the network (preferably autonomously by the network itself) could be very useful.
Although it would mean additional complexity, and the actual results would not be certain, it is a sort of life-insurance that feels nice to think about.
I do wonder, if there actually is a need for it though? Or is it one of those things that sound nice, but in reality is not even needed?
Early on in the network I see use for it. Could that be solved in other ways, as with Bamboo Garden Fund for example?
3. There is no control over the release to the market
This is what Part 2 of the proposal is supposed to solve. Even so, there are reasons to address this point in isolation.
So far, current holders (which are the ones in question) have shown to hold on. If anything is to be expected, it’s more of the same.
As price goes up a lot, some of these would start reaching their limits, and start putting up sell-orders - i.e. releasing to the market. As a collective they would be slowly distributing the tokens, very likely at an increasing rate as price goes up. And price going up would be a reflection of increased demand and interest, a growing network. So, as network grows, distribution increases.
It would almost seem as if this is the decentralized autonomous slow release of the tokens that we are looking for?
I have not seen other scenarios painted out in a convincing way. They all include “if there is an attacker”, “if some holder is malicious”. But they fail to show how this would be feasible or beneficial to them. It’s like the 51% takeover of Bitcoin. Once you hold that much, you are hurting yourself if you take down Bitcoin.
Still though, there is no knowing, and this uncertainty is essential. The “not knowing” is not the same as “other scenarios could be just as likely”. There’s no knowing if someone will takeover Bitcoin either. But reason suggests that it’s not likely.
(NB: The Bitcoin example is an actual takeover of the network, the unwanted effect discussed here would not result in a takeover of the network, merely a temporary pushing down of the price.)
4. It allows an attacker to start accumulating before launch
It would not be a cheap attack, as there is no market to support buying up a large share of current supply. Question is if it would even be possible. The increased price would attract attention and new people who would all compete with the attacker, further raising the price, and on the spiral would go.
It would probably be a lot cheaper to try provide most of new nodes to the early network, as to control it by having most of the elders.
Both of these attacks assume someone willing to spend the resources on something yet so unproven and unknown.
The node control attack I think has been generally deemed not a big concern by now, due to realizing that there will be too low interest in the early network, too low risk posed by it, at the stage when it would actually be feasible to take it over.
For the token control attack, that would be even more so, as it likely requires much larger sums of money invested upfront, with a very uncertain payback. Occam’s razor, assuming rationality over conspiracy, disarms this point I think.
- The most simple and secure way
- Would give a gradual release of tokens as network grows
- Would give a distribution to the masses as network grows
As a result of going through the downsides, a couple of additional upsides were found.
They are rudimentarily covered already, so suffices to list them above.
Part 2: The additional encryption layer
I’m actually not so sure this is a necessary addition.
It would seem to me, from the reasoning above, that it’s quite possible that a slow distribution is something we would get for free, simply by the fact that investors will gradually increase selling as network grows.
Even so, I’ll look at what has been said.
- Additional complexity in dealing with the encryption step.
- Risks of mistakes/malice in the process of encrypting the DBCs.
- Risks of improper encryption levels used, leading to too fast or too slow release.
- Bad PR from introducing something similar to Proof-of-Work.
- Scam market for cracking the locks, where people lose their tokens.
1. Additional complexity
It’s a one time thing, so still relatively small compared to the complexity of other alternatives, such as a foundation. Nonetheless, it could prove to be quite tricky, as shown by the next point:
2. Risks of mistakes/malice in the process
The locking up of a DBC means not revealing the details of it. However, as it has been created the details are there, and could be leaked. Setting up a process where the DBCs are generated, without leaking the information, and do so in a verifiable way, can prove to be quite a challenge.
3. Risks of improper encryption levels
Too fast or too slow release would make the whole ordeal done for nothing.
The answer to this is probably, as already suggested, to use a variable difficulty, such as with the Bitcoin mining. I am not able to quite assess the feasibility of this right here and now. Needs more digging.
With a properly functioning variable difficulty, the issue of too slow/fast would be solved.
4. Bad PR from introducing something similar to Proof-of-Work
(to be filled in, need to nip out)
5. Scam market for cracking the locks
It’s hard to say how big of an impact this would be. I can imagine that reputable companies (like Maidsafe) would release software that would be the defacto standard. It would be efficient, verified, free. It would just let people supply their pubkeys, and the software would automatically work along, and notify/take proper actions when results are made.
There would be nothing for scammers to offer.
Nonetheless, some would always fall in to the nets of any potential scammers. I think that would be true anywhere anyhow though. There’s always an angle to fool people, and there’s always some that might fall for it.
(Quoted straight from OP)
rDBC’s can’t be dumped onto the network as payment for data storage immediately, they must first be hacked-open. So the price of SNT’s can’t be manipulated if a large theft occurs.
Reduces the honeypot attack vector of sections holding tokens or of a centralized possibly political body (a foundation) holding rDBC’s as they have no value until cracked open and cracking them open takes a lot of work.
Auto-magically (because of free markets) reduces SNT volatility. As the price of SNT’s go up, there is more market incentive to hack open rDBC’s. As the price of SNT’s goes down, the incentive decreases and less rDBC’s are hacked open.
Although these points somewhat conflate with benefits of Part 1, I’ll let them stand as is. Generally I see them as valid.
From this initial walk through, it seems to me as if Part 1 could actually stand perfectly fine on its own, and that the need for Part 2 is mostly based on poor analysis, fears and assumptions.
I consider this walk though fairly rudimentary, and that there is room for more and deeper looks at all alternatives so far discussed (and hopefully more).
A small word on the Foundation alternative
About the alternative to giving the remaining 70% to MAID holders and shareholders; the Foundation:
The biggest risk with giving 70% of the supply to a foundation, is in my mind not a takeover or a hack (although they are definitely there as well).
The biggest risk is bureaucracy, politics, bike-shedding, etc. leading to a bogged down process which sucks resources and accomplishes very little.
Looking at the discussions within Bamboo Garden Fund, which already see some of the troubles of decision making in foundations, and scaling that up a thousand times… we can already get a picture of the difficulties and the complexity.
The complexity involved in managing an arrangement like that is a completely different universe compared to letting the tokens trickle how they may as investors sell off.
One is a colossus with constant pressure from degrading forces. The other is a self-organizing process.