Proposal to scrap expanding to 4.3bn Safecoins and just 10x everyone's holdings instead (i.e. moving the decimal point)


#42

If more storage resource is required, it means someone has been paying the network Safecoin to put data onto the network. The network can use this Safecoin to incentivise farmers to provide more space by increasing farming rewards, and at the same time start increasing the price of putting data on the network as space becomes more scarce.

Assuming some people start farming out of curiosity, there should be sufficient storage in the very early days to kick-start a market.

Farming wouldn’t need to rarely create a coin; if it is receiving Safecoin from those who want to store, it can distribute Safecoin to those who are offering resources.

Reasons for Safecoin increasing in value from there could be anything that increased demand for Safecoin, including growing use of the Safe network, or Safecoin as a crypto currency. If demand goes up with a fixed supply, the price will also go up.

Not having an increasing supply will in no way prevent the rise in value of Safecoin - with a given level of demand for Safe network services, the value of each coin will be higher the smaller the supply.

Investors will factor in future anticipated dilution when calculating a present value for an asset like Safecoin to make decisions on whether to invest or not as a matter of course. Investors making such decisions will have a very significant impact on price.

Saying this isn’t the case is like saying investors in shares don’t take into account anticipated future dilution, or that investors in fiat currencies don’t take into account inflation.

Even with all coins issued at the start, people would still need to pay for network resources with Safecoin, and would need to farm in order to receive Safecoin, which people would want to do, as Safecoin would be valuable for use in paying for network resources and as a crypto currency. So all required incentives would be in place for a functioning market.

Yes, I think markets will have factored in the anticipated dilution to some degree. The price would very likely be significantly higher if there were no anticipated dilution because big investors would divide their future projected network value over a smaller number of future coins, that when discounted to today would result in a larger present value. This means they would likely buy at higher prices, and only sell at higher prices.

I’d be very interested if you could point to any actively traded coin unexpectedly increasing or decreasing its ‘hard cap’ significantly without impacting the coin’s price.


#43

IIRC safecoin is “hardcapped” to 2^32, and each will be divisible to at least 2^32 as in the original proposal. This maximum total supply that is able to circulate won’t change, unless the private keys for coins are permanently lost by human owners. Much like when bitcoins are “burned”. In that case the effective hard cap will be reduced, thereby permanently increasing the relative value of each coin.

As far as the total amount of coin in circulation (within the network) at any particular instant, this is supposed to fluctuate. An analogy is how supplies of agricultural commodities fluctuate depending on whether rice farmers had agreeable weather pattern which gave them a bumper crop, or there was a drought which didn’t. Investors profit greatly from commodity speculation in traditional stock markets all the time. I think safecoin will feel familiar in that regard.


#44

But will only pay out at 1/1000th or 1/430th or 1/200th the rate depending if billions or 1000s of people start uploading large or smallish amounts each. This is because you gave out all the coins.

Be like paying all workers collectively all the money the company has when when they start the job. A very small few will stay and toil and most will relax. You need more than meager incentives. And then you made the coin worth 1/10th at the start so 1/10th the incentive too.

Even if you paid out quicker by removing the scarcity factor then all the coins are rewarded quickly and farmers are then left being paid only when a “PUT” balance of uploads is done. Thats like living hand to mouth all the time and never enough.

Considering I didn’t say that. I said they have taken the future increase over 2 decades into account from the start.

You can only “hope” that this will happen and safecoin worth 1/10th of what it would be. You need to change the reward model for SAFE in order to succeed. The current model simply would not work if you gave all coins out to start with.

Why???

SAFEcoin will never have this happen either. There cannot be a situation where there is even a 10% increase/decrease “suddenly” occur.


#45

I really dont think those things are detrimental to the network at all.

Competitors views dont affect network function.

Its not meant to be an investment. It is to buy storage.
Yes, it will be treat as one by many no doubt, as it already is. And no doubt will have a plethora of other uses beyond those two.


#46

Where is the laugh button :grin: :joy:


#47

Are you saying the network can only pay out a fraction of what it receives in Safecoin back to farmers? That makes no sense to me. Surely if the network receives 5000 Safecoin on day 1, it will have 5000 Safecoin to reward farmers with to incentivise resource provision as required?

I think we’re in agreement on this one - the planned supply increase will be priced in today. When I stated this previously you replied that it was a false argument without merit, hence why I didn’t think you agreed (perhaps my wording could have been clearer).

We seem to be misunderstanding each other here - basically what I want to know is: what is the reason for the 90% of the coins that the network holds? What function will it play? Why is it required?

A simple economic answer of what role the network’s subsidy will play & why it is required would be appreciated, as I can’t see any need for it to create a healthy, functioning market for Safe network resources.


#48

I disagree, the white paper suggested Maidsafe/Safecoin as an investment as well as the storage/decentralised internet etc


#49

If you read my previous post then you would see that its not paying out a fraction of what it receives. But rather the CHANCE of receiving it is 1/430 (if 10K coins available). Over time the random probability would be that the whole 10K will be distributed. But EACH time there is only a 1/430th of a chance of the farming attempt succeeding. So farmers would be pissed off to say the least.

This is why I said to give out all coins to start with, you need to redesign the reward system.

And if you read further I qualified that

I think though that I treated the “impact” as meaning something different to what you meant it to be

The reasons are

  • future incentives The network can reward people when uploads are low.
  • Fast response to low spare space conditions. The network is able to reward much faster then spending to network is.
  • When spare space is low, then rewards are higher (faster), but the safecoin cost to buy resources increases also (to slow down uploading). This creates a problem if working hand to mouth since the network runs out of coin very quickly, but with the “reserves” then the network can very easily ride out this situation.
  • Generally people (yes not all) naturally lose interest if everything has been given out and new people feel they have little chance of getting a coin and indeed they would. Only those creating large farms would have a chance of success and if all given out at the start then the returns are 1/10th $$$ wise of what they would have been if only 10% given out.

It allows the network to change rewards/costs by large amounts without causing a loss of ability to reward.

Not as an investment. There are more reasons than investments when something rises in price.

For SAFEcoin the rewards reduce (very slowly though) as more coin exists. So for a farmer in the early days they might get “X” coins per year and 10 years later it is “X/8” coins per year for the same “work” This is due to the scarcity of the coins function in rewards

So the thought based on just that factor alone is that its not worth farming in later years.

What the graph shows is that the coin in $$$ value will be rising ans so the “X/8” will be worth a lot more $$$ wise than what the “X” was 10 years prior. And thus still worth farming.


#50

I thought that Safecoin & farming hasn’t even been coded or the specs finalised?

I think it would be worthwhile letting desired market dynamics shape the algorithms / code, rather than the other way around, so hopefully the reward system can be adjusted or redesigned if improvements are possible.

Thanks for these points.

When uploads are low (demand for network resources is low), the network should reduce farming rewards in proportion to the degree it reduces the price per put. If a subsidy is required, then the market is not functioning - the point of reducing rewards when demand is low is to disincentivise further resource provision when it is not required, and encourage people to use the network more.

Having a fast response to low-capacity should not be required, as the price will gradually increase as demand increases relative to supply, leading to a gently increasing incentive to farmers to increase space being made available, at the same time as reducing demand through increasing put price.

With a well functioning market, the rate of new resource being made available should not stray far off the rate of demand for new resource, and if it does, it will balance out due to the pricing mechanism the network manages.

I don’t think people will lose interest in providing sufficient resource to the network as long as the reward for doing so is makes providing resources worthwhile. I don’t think returns should in any way be affected by how many coins there are to give out - they should only be determined by supply and demand for resources. There will always be rewards to give out as long as people are uploading data to the network.

If none of this makes any sense, let’s just leave this for now, and when I have time I’ll put together a basic outline of the network economics as I see them to make discussion easier :slight_smile:

@Deadloch, have you managed to progress your idea of an article on the economics of the Safe network? I’d be very interested to hear your thoughts & insights.


#51

I’m confused. I’m not sure if you are speaking in terms of external world markets or the internal “closed cycle” safecoin ecosystem when you talk about pricing. I also think subsidy is not a fair “coin of phrase” for describing the process. The external market of human creation will decide the price of a safecoin based on normal supply/demand market fundamentals. The internal safecoin network fundamentals consist of 3 players ( consumers, producers, and the network which facilitates the exchange based on supply and demand of physical network resources). As I mentioned before, it seems rather obvious that the initial condition of ~10% humans vs. 90% network safecoin ratio was in order to allow a supermajority of resources so that the network could have the opportunity to rapidly expand to steady state as it deems necessary. From the network’s perspective I see it as kind of like having startup funds for a new venture, or analogous to having a good layer of fat in the rare case of famine. :sunglasses:


#52

There is an RFC which has the basis for the coding. The basics have been around for quite a while now.

Ummm that is what was done. It is the desired dynamics that shaped the RFC and what I explained.

The costs at this time are determined by the primary variable of Farming_Rate. This rate is influenced by the amount of spare space.

It might be more difficult to determine when demand (uploads) is low, because you have to have a metric for that. The metric at this time is how fast spare space is reducing and the amount of the spare space is used to measure that.

I am a bit worried about you use of subsidy. That is not a part of the RFC and suggests there is a base rate for payments of resources. There is no base rate unless you consider 10^-18 as the base rate and you cannot subsidy that.

The use of that terminology suggests you have an alternative view of the dynamics.

Fast and gradual are not defined by you. Fast as in hours or fast as in days/weeks??

When the network is small to medium fast will NEED to be in terms of hours since in a 10000 node network a small outage of a country could mean the network is low on space immediately. Or if people react en mass to $$$ price changes to safecoin then the network could be low on space in hours. As the network grows the problems reduces a lot and the fast becomes days then weeks.

The issue is that if you give out all coins then the smaller the network is the worse off it is in its ability to react. If farmers are unlikely to get a coin then only the diehards will be farming and that may just not be enough. You need to reward farmers early on to grow the network. Giving out all the coins is a self defeating system since only diehards will farm and if they don’t increase their space regularly then they eventually end up with all the coin then no more space.

This is a typical control system scenario and giving out all the coin is like putting a huge damping block into the feedback loop.

I still hold to the statement

If you want to give out all the coins to start with you NEED to change the basic model SAFE is going to implement.

Only then could it work and I do not deny that. I just think its a difficult task and the 10% ~ 90% model that David devised seems to be a good one that has a lot of benefits.


#53

I better get cracking on this, just back from holiday in sunny Finland. Keep up the good work @DavidMc0 I’m liking the discussion you’re fuelling here, I feel we might be on the same page on some of these issues.