Safecoin and stable pricing

Yeah, that was going to be my next question on how the price per credit will be decided. I think it is done with the federation servers with Factom.

I wonder what happens if they disagree? Maybe it’s just an average price of all the nodes that vote?

Just to clarify, this is true of ‘price of network PUTs measured in safecoin’, but is not true of ‘price of safecoin measured in usd’.

I think a better way to phrase this is using price vs cost consistently, ie safecoin has a price measured in usd, and PUTs have a cost measured in safecoin. This is obviously not an enforceable convention but differentiating between exchange rate vs put cost is going to cause a lot of grief in the future I reckon!

As per the link from @tfa above, the cost of each PUT credit measured in safecoin is calculated as:

StoreCost = FR * NC / GROUP_SIZE

FR = farm rate (which ultimately measures unused storage space)
NC = number of clients
GROUP_SIZE = 8 (number of elders in a section)

but since safecoin is convertible only in whole units, it’s more useful to think of it as

PutsPerSafecoin = 1 / StoreCost

Do you guys think the puts will be bankable and tradable? Ethereum has a similar system with ETH and gas. Recently someone released a contract that allows you to bank gas for the future, and I think it also tokenized it making it tradable, which was pretty neat.

Hopefully to clarify even further, assuming farmers will adjust resources offered to the network based on profitability & the market for farmers’ resources functions well, it should hold true that if Safecoin’s USD price doubles, the network’s price per PUT should halve in terms of Safecoin and remain stable in terms of USD.

E.g. imagine the network is stable with optimal resource availability at 1000 PUT per Safecoin & $1 per Safecoin. $0.001 per PUT.

In this case, if Safecoin increases to $2 over a period of time, the price per PUT should settle at 2000 PUTs per Safecoin, and still $0.001 per PUT (assuming resource supply and demand remain constant over this period).

From a user perspective, if both Safecoin price and PUT price are considered in USD / other Fiat, it becomes quite simple to then work out the number of PUTs per Safecoin when required.

As you say, there could easily be confusion around this, so making it as simple as possible for end users will be important.


But of course this is complicated by the fact that if things happen as expected, then the price of PUTs will rise against $$$ initially after a doubling of SAFEcoin $$$ value then drop back to some equilibrium as more farmers farm due to the increased $$$ value of safecoin.

  • price $$$ of safecoin doubles overnight (as an example)
  • then effective price of “puts” doubles as a consequence
  • people see increased value in farming (real or perceived)
  • more farmers start up
  • after a period of time the number of puts bought for one safecoin increases
  • thus $$$ price of puts drop as a consequence.

What the new “equilibrium” is is the question to be answered.

So the $$$ price of a “put” is not an easy one to model since it relies on human responses to both exchange pressures and network “protection” schemes


In this scenario, assuming demand for resources remained constant, the price per PUT in terms of Safecoin should very quickly drop, as the network could detect in real time that users are reducing consumption of resources vs available resources as the Safecoin price is rocketing.

This may happen as intelligent SAFE backup / sync apps all over the network automatically slow down uploads awaiting network PUT price readjusments during rocketing Safecoin price, or users just see the PUT price in USD is above the monthly average so delay using network resources ahead of the network adjusting prices. The network would adjust to the decreasing demand by reducing the cost per PUT in terms of Safecoin, potentially within seconds / minutes.

Obviously doubling Safecoin overnight is extreme, but if the network is able to respond quickly to an event like this, it could still keep USD per PUT price fairly stable in that extreme time scale, and in a normal situation the stability of USD per PUT could be quite high with only small fluctuations having the desired impact on supply / demand.

There are many factors, so it’ll be very interesting to see how it all behaves once test Safecoin is implemented, and then as the network grows.

The PUT cost in safe coin is not dependent on demand but rather how much free space is available. So even if there is one PUT per second or 1000 puts per second the price in safecoin mains approximately the same. The price might very slowly increase due to space being used up but over the whole network is slow so price increase is slow.

As to demand remaining then if no new farmers join up then the cost will continue to rise both in $$$ and safecoin. It requires new farmers to increase the total available free space throughout the network to reduce the put price in safecoin. If the price of puts in terms of safecoin then dropped to less than half the previous price then puts would also have dropped below the previous $$ price.


  • price of safecoin doubles
  • if no new farmers then price of puts in both safecoin and $$$ will continue to increase due to spare space dropping
  • if new farmers then spare space increases and put price in safecoin decreases and this reduces the put price in $$$ terms from the price hike due to safecoin doubling in $$$ price
    • if put price in safe coin is now less than half than at the time of doubling of safecoin $$ price then $$$ price of puts is lower than before the safecoin $$$ hike
    • otherwise the put price in $$ will be at a point between what it was previous to safecoin $$$ hike and the price after the hike

The ability of the PUT cost in Safecoin to adjust to demand will depend on the network’s sensitivity to fluctuations in the level of free space available.

If demand for resources drops, free space available increases, and the network can adjust cost per PUT in terms of Safecoin accordingly, and well before farmers have time to increase capacity on the network.

My hope is that the network will be able to detect a drop in the level of data being put onto the network vs new space being made available, and will be able to use that information to adjust the price of PUTs in Safecoin on the fly to avoid the scenario you mention.

It would be very worrying if the network were so insensitive to changes in demand that a spike in the price of Safecoin affects the cost of putting data on the network to any significant degree over any significant time frame.

It would be a significant failure if the network encouraged farmers to contribute more resources in the absence of any increase in demand.

If the network cannot sense a drop in demand, a price swing wither way in Safecoin could seriously damage the network and reduce its usefulness, sending confusing price signals to participants & moving away from a balance of resources. A low degree of stability in the USD price of putting data onto the network would also hinder adoption significantly.

But, I don’t think it needs to be like that, especially when there’s not even test Safecoin yet. When it comes to implementation, I’m sure the devs will consider ways of making the Safe network’s internal market highly functional and responsive, even if it requires new ways of achieving that.


Once the data is stored it isn’t released because demand reduces.

If there was 1PB spare space while demand is 1000 puts per second then if demand stops then the spare space will still be just less than 1PB. That is until more farmers join

No model of safecoin presented takes any note of demand. It is all on the amount of free space.

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On this one, I would expect spare capacity to increase, not decrease if the $ price per PUT were to double; a drop in demand combined with no reduction in the rate of new space coming available would result in more free space, not less.

I view aggregate network capacity as a stream of new capacity coming online all the time, roughly in line with the rate of new data being stored on the network (when in equilibrium), so rather than saying ‘no new farmers’ I’d see it as ‘no increase in the rate of new resources being offered’, which does change things, and may explain a different way of seeing things.

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Only when new farmers join or farmers increase vaults. And there is a definite time frame for this to happen. Maybe a day or two

There will be times when farmers are leaving overall because the price (or rate of creation) of safecoin is too low due to too much free space

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If capacity were being added at 100gb per hour, and demand was 100gb per hour, a drop in demand would lead to an increase in spare capacity until the network adjusts prices.

Seeing spare capacity as static vs a stream does change the analysis significantly.

The amount of free space is a function of supply and demand, so it inherently takes demand into account.

There will always be farmers joining / leaving / increasing resources supplied / decreasing resources supplied. It’s the aggregate rate of this that matters when it comes to supply of space to the network.

Assuming ongoing demand for storing new data, there should never be an overall reduction in network capacity, just a slowing in the rate of new capacity being added if supply is outstripping demand / too much free space available.

In the event of a spike in demand, there will certainly be a lag on the response of farmers to add more capacity, which makes it very important that the demand side is managed by adjusting the Safecoin price per PUT.

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But this may not be true.

I’d expect that when we see jumps in the price of safecoin then we will see jumps in spare space (new farmers) and when safecoin drops in price then we will see farmers leave and spare space may drop

And when price jumps the increase in spare space maybe massive and the creation of safecoin drops so far that new/old farmers decide to leave and space space drops. So if we take the safecoin price doubling we would see a massive increase in farmers over the next week and then they get little safe coin due to drop in creation rate (farming rate drops). Then we see disillusioned farmers leave due to too little coin earned in a few days. So a bit of a pulse function in this case.

It will never be as simple as 100TB added each day

This example given was to show how from a stable situation, a drop in demand might lead to an increase in available network resources rather than a drop.

Any time there’s a stable price of Safecoin and PUT price, there will be an equal flow of new capacity being provided to the network and flow of new data being uploaded onto the network, otherwise prices would be adjusting to seek an equilibrium. Of course in general there will be a deviation from any actual equilibrium, but hopefully by a small degree if the market functions well.

I very much hope the price of Safecoin can be successfully de-coupled from the price of storing data on the network (PUTs per $). If it isn’t and Safecoin is volatile, it could be quite negative for the economics of the network and its appeal to users who can’t anticipate the cost of using the network, or farmers anticipating their revenues.

I suggest this situation should be avoided. It sounds terrible & I see no reason why it needs to be as clunky as that.

Safecoin price pumping shouldn’t cause an increase in resource provision by farmers, but a resulting increase in the number of PUTs per Safecoin.

Farmers should be incentivised to provide more resources when there is demand for more resources, not when Safecoin pumps, and vice versa.

The network has the job of balancing supply and demand. This means balancing the rate of new storage being provided to the network with the rate of data being stored on the network. If it achieves this, at some point it should be pretty much as simple as 100tb being added per day with 100tb being stored, until demand increases / decreases.

I’m not sure I’d agree… farm rate depends on “Total primary chunks count” (TP) and “Total sacrificial chunks count” (TS). Wouldn’t it be fair to say TP is demand and TS is supply?

NOTE: this has been changed according to comments by David and he refers to it more as spare space. But I’d see it along the same lines, just free space is determined differently.

TP == a count of data stored excluding TS
TS == a count of “S” stored.

These are after the fact figures and not related to a dynamic rate.

The rate determines the increase of TP/TS every time period.

So the free space calculation is using the static figure of TP & TS

So the change in price is a function of the rate (demand), but the price at any point in time is a function of static figure of TP & TS at that time.

So the price of PUTs in safecoin is not dependent on demand at any point in time.
So the change in price is a fn(rate and delta spare space) Spare space affects TS if there is not enough spare space to hold all the TS and this is expected to be the norm.

EDIT: I meant to have this

This means that demand at any point in time does not determine the price of PUTs when you do a PUT. The demand could be 1 put per second or 1 million puts per second. The effective price of that PUT is still the same either way.

Also when the network is largeish the demand will take time to change the PUT price using TP & TS since the ratio change will be minor whether the demand is 1 put/sec or 100,000 puts per second. 100PBytes of storage is only changed by a little bit every minute in both cases, but the demand is 5 orders of magnitude difference.