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An analysis of the two tokens NEO economy (Milestone 1) #19

Closed grantshares-dapp[bot] closed 2 years ago

grantshares-dapp[bot] commented 2 years ago

Abstract

The entire project is composed of two milestones (milestone 1 and 2) and will take place in 12 months. It will consist of a scientific paper called: “An analysis of the two tokens NEO economy”. This first part of the paper (Milestone 1) will end after 6 months and will deliver the first draft of the paper. In the work I intend to discuss the economic fundamentals of the interesting “two tokens” economy in NEO. In particular, how the NEO token and GAS token holdings could co-evolve over time, for a generic user, based on the distribution mechanism specified in the NEO white paper. In particular, I would be very interesting to investigate to what extent NEO token holdings could affect GAS holdings with time, GAS being indispensable for functional purposes such as to invoke a smart contract.

Proposal Information

Description

The theoretical framework that I plan to use in the paper “An analysis of the two tokens NEO economy” “The Representative Agent”, (Blanchard-Fisher, Lectures in Macroeconomics 1989) a widely adopted model in dynamic economic theory, an example of which is contained in this recent paper of mine https://www.frontiersin.org/articles/10.3389/fbloc.2021.443966/full The Representative Agent approach has limitations, but also several advantages, and appears to be particularly suitable to investigate the monetary dynamics in NEO. Among the advantages it allows to model the following, fundamental, trade-off that NEO users seem to face. The larger the amount of NEO tokens held by a user the more the user could affect governance and receive GAS tokens, however the lower the benefit obtained by performing transactions paid with NEO tokens. This is because the Representative Agent approach is based on an explicit specification of a user’s utility function, which can embody her preferences for more, or less, liquidity in one’s wallet. One specific topic that I plan to explore is the existence and functioning of an internal market for trading NEO tokens with GAS tokens, and the forces determining their exchange rate. Indeed, even though the platform is planning to have 100mln units, of each of them, in principle nothing prevents their exchange rate to be different from one, notably because they are introduced in the community at different rates over time.

Motivation

As you can see from my CV, https://docenti-deps.unisi.it/nicoladimitri/curriculum/ I have been working on blockchain, and cryptocurrencies related issues, since 2017. To speed up access to my contributions, for your perusal below I have extracted the following publications from my CV, which represent my publication record in the area of blockchain cryptocurrencies.

Bitcoin Mining as a Contest, Ledger, 2, 31-37 (2017)

The Blockchain Technology; Some Theory and Applications, Maastricht School of Management Working Paper, 2017/3 (2017)

Transaction Fees, Block Size Limit and Auctions in Bitcoin, Ledger, 4, 68-81, (2019)

Skills, Efficiency and Timing in a Simple Attack and Defense Model, Decision Analysis, 17, 227-234, (2020)

Monetary Dynamics with “Proof of Stake”, Frontiers in Blockchain doi: 10.3389/fbloc.2021.443966 (2021)

Who are the arbitrageurs? Empirical evidence from Bitcoin traders in the Mt. Gox exchange platform (with Saggese P, Belmonte A., Bohme R., Facchini A.) Working papers n 860, Department of Economics and Statistics, University of Siena-Italy (2021) (submitted)

Consensus: Proof of Work, Proof of Stake and Structural Alternatives, in Enabling the Internet of Value, (Vadgama N., Xu J, Tasca P. eds) Springer Verlag, (2022)

The Economics of Consensus in Algorand, Fintech, 2, 164-179 (2022)

Quadratic Voting in Blockchain, Information,18, 305 (2022)

Proof of Stake in Algorand, (accepted for publication in ACM Distributed Ledger Technologies: Research and Practice (2022)

Still from my CV, it could be interesting to mention that I’m currently Associate Editor of the journals Frontiers in Blockchain and IET Blockchain When I came across the NEO platform I have found the two tokens system particular interesting to investigate for two main reasons. Standard economies, like those for example of OECD countries, typically are not based on two fiat currencies (tokens), except perhaps for the very rare cases of price hyperinflations. Therefore, from this point of view the NEO two tokens economy is a very interesting novelty to investigate from an economic perspective. Secondly, the ambition is to write a paper that could provide useful insights and conceptual instruments for the NEO community policy decision making.

Goals

As said above, the main goal is to write an academic paper from which the NEO community may obtain useful insights on the possible economic evolution of the two-token system. Such insights could then be used for governance and policy making. A goal will also be to publish the paper in an academic/scientific journal.

Deliverables & Roadmap

Estimated Duration: 6 months

Also, provide a roadmap overview for the deliverables.

The proposed roadmap refers to after the possible approval of the research project

Month 3 first sketch of the model Month 6 first draft of the paper plus a seminar (if requested) (milestone 1)

Deliverables Verifiability

How would the community be able to verify that the promised deliverables (or milestones) were successfully achieved? For each deliverable/milestone, add supporting info on how it can be verified by the community.

With reference to the proposed road map, this is how the deliverables could be verified by the community

Month 3 first sketch of the model. I will send some pages containing some fundamentals of the main model.

Month 6 first draft of the paper plus a seminar (if requested) (milestone 1). I will send a first draft of the paper and give a seminar on it, if requested.

Budget Plan

About You / Your Organization

Short-Bio

Few sentences about you or about your organization.

Portfolio of Projects / Past Experience

Provide information about what you've done in the past. What is your experience? What did you build/achieve in the past?

There's no problem if you don't have vast past experience or a portfolio. We just want to hear more about what you've done or have been doing.

Proposal Info :clipboard:

[ {
  "target_contract" : "0x6276c1e3a68280bc6c9c00df755fb691be1162ef",
  "method" : "releaseTokens",
  "params" : [ {
    "type" : "Hash160",
    "value" : "ef4073a0f2b305a38ec4050e4d3d28bc40ea63f5"
  }, {
    "type" : "Hash160",
    "value" : "5f23339847c3f5d4b84fc7f36167fdf647cb73bc"
  }, {
    "type" : "Integer",
    "value" : "1875"
  } ],
  "call_flags" : 15
} ]

👇 React with 👍 if you liked it, or 👎 if you think this proposal can be enhanced!

nicoladimitri commented 2 years ago

Following the suggestions received, the previous project on "The Analysis of the two tokens NEO economy" has now be split into two connected, but separate projects (Milestone 1 and Milestone 2). Information on my Organization have been included only in the Milestone 2 project. Sincerely Nicola Dimitri

grantshares-dapp[bot] commented 2 years ago

⛓ This proposal was created on-chain! 🔥🚀🎉

➡️ Now, waiting for a GrantShares Member to endorse it... ⏰

🚨IMPORTANT🚨 Pay attention to the following deadlines: ⏰

General info:

gsmachado commented 2 years ago

@nicoladimitri congrats! You made it and managed to put this proposal on-chain! Well-done!

nicoladimitri commented 2 years ago

Thanks to your support. Next time I'll be faster. Now fingers crossed With my gratitude Nicola

Il giorno mer 31 ago 2022 alle ore 18:27 Guil. Sperb Machado < @.***> ha scritto:

@nicoladimitri https://github.com/nicoladimitri congrats! You made it and managed to put this proposal on-chain! Well-done!

— Reply to this email directly, view it on GitHub https://github.com/AxLabs/grantshares/issues/19#issuecomment-1233160667, or unsubscribe https://github.com/notifications/unsubscribe-auth/AVG3CGMDOESUWUEOJG7P5TLV36BYTANCNFSM57IEM5EQ . You are receiving this because you were mentioned.Message ID: @.***>

-- Nicola Dimitri Professor of Economics Department of Political Economy and Statistics University of Siena Piazza San Francesco 7 53100 Siena - Italy tel +39 0577 232695 www.deps.unisi.it

Research Associate UCL CBT (University College London, Centre for Blockchain Technologies)

Member of the UZH Blockchain Center (University of Zurich, Switzerland)

nicoladimitri commented 2 years ago

I just wanted to add the following observation. The project has been available for scrutiny over a number of days on the Grantshares proposal portal. However, now that it has just been put for consideration on-chain I'd be more than glad to reply to additional comments, observations, questions etc. that I might receive before any decision. Sincerely Nicola

steven1227 commented 2 years ago

Hi Nicola,

Thanks for your proposal and I am glad to see you learned how to use N3 network and make things on-chain. After a long time of discussion internally with our team (NF/NGD researchers), we believe the economy of Neo is important and we welcome the research on it. Here I will represent our team to endorse it.

We are looking forward to your first part work.

grantshares-dapp[bot] commented 2 years ago

⛓ This proposal was endorsed on-chain! 📄🔑

➡️ Voting period starts NOW!

🚨IMPORTANT🚨 Pay attention to the following deadlines: ⏰

General info:

nicoladimitri commented 2 years ago

So many thanks for your kind message and content therein. I'm extremely pleased that your group found the project interesting for NEO and endorsed it. Sincerely Nicola

grantshares-dapp[bot] commented 2 years ago

🎉 Outcome: this proposal was accepted! 🚀

➡️ Now, waiting for someone to execute it... ⏰

General info:

grantshares-dapp[bot] commented 2 years ago

⛓ This proposal was executed on-chain! ✅ 💚

General info:

mohammadfarari1360 commented 2 years ago

Hello

nicoladimitri commented 2 years ago

I would like to thank Grantshares for having approved the project. As said, the goal is to write a paper that could provide useful economic insights and support to NEO policy making Sincerely Nicola Dimitri

nicoladimitri commented 1 year ago

To Grantshares and the NEO Foundation

as a follow up to the agreed upon project schedule, please find attached a very preliminary, and incomplete, first part of the paper, due for mid December 2022. The entire paper related to Milestone 1 will be submitted within March 2023. As you can see, in this first part I analyse some fundamental economic issues related to two-token economies. In particular, I investigate alternative indicators of the two tokens' attractiveness/desirability, based on market prices, exchange quantities and on both. I thought this had to be a necessary step for an economic analysis of the platform. Despite its incompleteness, I hope the attached draft may already provide some interesting, useful, initial insights on the analysis. Sincerely Nicola Dimitri
EconomicsofNeo3.pdf

csmuller commented 1 year ago

@nicoladimitri, Thank you for this intermediate draft! We'll find some time to look through the draft. @vang1ong7ang, can you also take a look and give your opinion on the draft?

vang1ong7ang commented 1 year ago

after the discussion with @dusmart @hecate2, I believe it's good to introduce their comments.

@dusmart @hecate2 can you summarize your comments here?

dusmart commented 1 year ago
  1. In section 2.2, some details should be clarified. Additionally, holding 𝑁 in one's wallet, and participating to voting sessions, generates rewards in 𝐺 while in standard economies holding 𝑎 generate rewards in 𝑦, **however** even without voting participation. Actually, NEO holders can get a small amount of GAS reward from doing nothing.
  2. In section 2.3, I think it's unreasonable to compare 𝑒𝑁𝐺(𝑡) with 1. We'd better introduce the ratio of trading volume and circulating volume here. I don't stand with the conclusion Following the above considerations, in general we expect 𝑁 to be somehow more attractive than 𝐺. It could be acceptable if it's we expect 1 token 𝑁 to be somehow more attractive than 1 token 𝐺.
  3. Typo in section 2.5 Pasted Graphic
  4. In section 2.5, the conclusion is based on three markets (USD-GAS, USD-NEO, GAS-NEO). While in actual cases, there are lots of markets like (BUSD-GAS, BTC-NEO, BTC-GAS, NEO-GAS) on Binance and (bNEO-FLM, bNEO-GAS etc) on flamingo. I can not see any benefits from this conclusion.
  5. The paper does not give a suggestion on the current GAS supply and consumption mechanism, and does not take the impact of the dynamic supply of GAS into account.
vang1ong7ang commented 1 year ago

I believe the dual token model of neo has much more careful designs much more than hold foo earn bar.

Hecate2 commented 1 year ago

In equation (8) in section 2.7 i) on page 6, why the "desirability" is exponentially related to \pi{N\$}(t), the total supply of N and G? \pi{N\$}(t) are the total supply ratios, instead of the annual percentage yield of NEO, and are likely to be time-variant. Therefore, it seems confusing to evaluate the desirability with time-variant exponent of price to the ratio of total supplies.

dusmart commented 1 year ago

FYI

By holding NEO, one can earn GAS from block rewards. The reward per block now is 5 GAS and this can be changed by NEO governance. See https://governance.neo.org/#/ for details. Briefly it contains following ways.

GAS are consumed from on chain activities. Briefly it contains following ways.

It's worth noting that the GAS reward and consumption is really different from other chains like ETH.

roman-khimov commented 1 year ago

GAS are consumed from on chain activities. Briefly it contains following ways. every transaction need a network fee and a system fee (system fee are burned for running scripts while network fee are going to the first 7 council members' wallet) register a council member candidate burn 1000 GAS deploy a contract burn at least 10 GAS register and renew the NNS burn some GAS using oracle service and NeoFS burn some GAS

// pedantic: on

I'd say that the only burning mechanism is the system fee. Network fee is a redistribution mechanism (as well as oracle fee) and everything else is just some variations on the system fee value of particular transactions.

// pedantic: off

vang1ong7ang commented 1 year ago

GAS are consumed from on chain activities. Briefly it contains following ways. every transaction need a network fee and a system fee (system fee are burned for running scripts while network fee are going to the first 7 council members' wallet) register a council member candidate burn 1000 GAS deploy a contract burn at least 10 GAS register and renew the NNS burn some GAS using oracle service and NeoFS burn some GAS

// pedantic: on

I'd say that the only burning mechanism is the system fee. Network fee is a redistribution mechanism (as well as oracle fee) and everything else is just some variations on the system fee value of particular transactions.

// pedantic: off

YES

in neo legacy, both sysfee and netfee are redistribution mechanism (sysfee -> NEO holders | netfee -> consensus); in neo 3, sysfee is burning mechanism;

gsmachado commented 1 year ago

Wow, GREAT comments, team! Thanks, @vang1ong7ang @roman-khimov @dusmart and @Hecate2!

I'd take the chance to highlight the comment from @vang1ong7ang, which I also agree with:

I believe the dual token model of neo has much more careful designs, much more than hold foo earn bar.

@nicoladimitri: please, based on the above comments, I've got to the conclusion that the draft should undoubtedly be improved. Any specific timeline for this?

Comments like this, this, this, and this, should be considered when re-working your analysis in the paper.

nicoladimitri commented 1 year ago

So many thanks to all of you for the very interesting and constructive comments. I'm very pleased that this intermediate draft of Milestone 1 generated a debate and reactions. I'll revert soon with a more detailed reply to your observations. Sincere

Il giorno lun 19 dic 2022 alle ore 10:49 Guil. Sperb Machado < @.***> ha scritto:

Wow, GREAT comments, team! Thanks, @vang1ong7ang https://github.com/vang1ong7ang @roman-khimov https://github.com/roman-khimov @dusmart https://github.com/dusmart and @Hecate2 https://github.com/Hecate2!

I'd take the chance to highlight the comment from @vang1ong7ang https://github.com/vang1ong7ang, which I also agree with:

I believe the dual token model of neo has much more careful designs, much more than hold foo earn bar.

@.** https://github.com/nicoladimitri: please, based on the above comments, I've got to the conclusion that the draft should undoubtedly be improved. Any specific timeline for this?

Comments like this https://github.com/AxLabs/grantshares/issues/19#issuecomment-1357233958, this https://github.com/AxLabs/grantshares/issues/19#issuecomment-1357283987, and this https://github.com/AxLabs/grantshares/issues/19#issuecomment-1357294339, should be considered when re-working your analysis in the paper.

— Reply to this email directly, view it on GitHub https://github.com/AxLabs/grantshares/issues/19#issuecomment-1357374887, or unsubscribe https://github.com/notifications/unsubscribe-auth/AVG3CGLUKB4B4C3MC7YWOKDWOAVTNANCNFSM57IEM5EQ . You are receiving this because you were mentioned.Message ID: @.***>

-- Nicola Dimitri Professor of Economics Department of Political Economy and Statistics University of Siena Piazza San Francesco 7 53100 Siena - Italy tel +39 0577 232695 www.deps.unisi.it

Research Associate UCL CBT (University College London, Centre for Blockchain Technologies)

Member of the UZH Blockchain Center (University of Zurich, Switzerland)

nicoladimitri commented 1 year ago

As anticipated, attached I send my replies to all the comments received, in a combined document. I look forward to receiving your feedback on them Sincerely Nicola NEOReplytocomments.pdf

dusmart commented 1 year ago
  1. In section 2.3, I think it's unreasonable to compare 𝑒𝑁𝐺(𝑡) with 1. We'd better introduce the ratio of trading volume and circulating volume here.
  2. I don't stand with the conclusion Following the above considerations, in general we expect 𝑁 to be somehow more attractive than 𝐺. It could be acceptable if it's we expect 1 token 𝑁 to be somehow more attractive than 1 token 𝐺.
  3. In section 2.5, the conclusion is based on three markets (USD-GAS, USD-NEO, GAS-NEO). While in actual cases, there are lots of markets like (BUSD-GAS, BTC-NEO, BTC-GAS, NEO-GAS) on Binance and (bNEO-FLM, bNEO-GAS etc) on flamingo. I can not see any benefits from this conclusion.
  1. Interesting. Can you kindly argue why?
  2. Interesting. Can you kindly argue why?
  3. The conclusion was included for the sake of completeness. It simply observes how traded quantities are related with each other when arbitrage is not possible, which represents a benchmark in reality. If rather than $ we would use a different reference currency we would obtain similar conclusions.
  1. Provided 𝑒𝑁𝐺(𝑡) = 𝑝𝑁$(𝑡) / 𝑝G$(𝑡), its merely a price ratio for one NEO and one GAS. In crypto currency, it's important to let users know one token's decimals (how many uint in one token). If the GAS's decimal is 7 instead of 8, the 𝑒𝑁𝐺(𝑡) will be 10 times of what it is at time 𝑡. That's why I think it's unreasonable to compare 𝑒𝑁𝐺(𝑡) with 1. While in the mean time it is indeed show that 1 NEO token has more $value than 1 GAS token, therefore, I'd like to say It could be acceptable if it's we expect 1 token 𝑁 to be somehow more attractive than 1 token 𝐺 (provided the same cost in $).
  2. In crypto currency, it's important to let users know one token's total supply and trading volume. Let's say, I personally issued a token DUS, and the total supply is 1, the decimals is 0 (1 unit in one token). The price of DUS will be very high since there is even no trading volume. Let me define 𝑒D𝐺(𝑡) = 𝑝D$(𝑡) / 𝑝G$(𝑡). The 𝑒D𝐺(𝑡) will be very high, while I won't say that DUS is more attractive than GAS. No one would have interests on my own token. That's why I don't agree Following the above considerations, in general we expect 𝑁 to be somehow more attractive than 𝐺.
  3. Yes, I agree with that conclusion. I just want to see more interesting conclusions instead of a very intuitive conclusion or an unsurprising conclusion. Let's forget about it if it's for completeness.
nicoladimitri commented 1 year ago

Many thanks for kind feedback. Below, my reply will be after N) (icola)

Il giorno mar 20 dic 2022 alle ore 13:25 dusmart @.***> ha scritto:

  1. In section 2.3, I think it's unreasonable to compare 𝑒𝑁𝐺(𝑡) with 1. We'd better introduce the ratio of trading volume and circulating volume here.

  2. I don't stand with the conclusion Following the above considerations, in general we expect 𝑁 to be somehow more attractive than 𝐺. It could be acceptable if it's we expect 1 token 𝑁 to be somehow more attractive than 1 token 𝐺.

  3. In section 2.5, the conclusion is based on three markets (USD-GAS, USD-NEO, GAS-NEO). While in actual cases, there are lots of markets like (BUSD-GAS, BTC-NEO, BTC-GAS, NEO-GAS) on Binance and (bNEO-FLM, bNEO-GAS etc) on flamingo. I can not see any benefits from this conclusion.

  4. Interesting. Can you kindly argue why?

  5. The conclusion was included for the sake of completeness. It simply observes how traded quantities are related with each other when arbitrage is not possible, which represents a benchmark in reality. If rather than $ we would use a different reference currency we would obtain similar conclusions.

  6. Provided 𝑒𝑁𝐺(𝑡) = 𝑝𝑁$(𝑡) / 𝑝G$(𝑡), its merely a price ritio for one NEO and one GAS. In crypto currency, it's important to let users know one token's decimals (how many uint in one token). If the GAS's decimal is 7 instead of 8, the 𝑒𝑁𝐺(𝑡) will be 1/10 of what it is at time 𝑡. That's why I think it's unreasonable to compare 𝑒𝑁𝐺(𝑡) with 1. While in the mean time it is indeed show that 1 NEO token has more $value than 1 GAS token, therefore, I'd like to say It could be acceptable if it's we expect 1 token 𝑁 to be somehow more attractive than 1 token 𝐺 (provided the same cost in $).

N) I think I now understand what you meant. But if I'm right, what you say seems to be consistent with what I said, except that you are pointing out the importance of "apparent" small differences is it?

  1. In crypto currency, it's important to let users know one token's total supply and trading volume. Let's say, I personally issued a token DUS, and the total supply is 1, the decimals is 0 (1 unit in one token). The price of DUS will be very high since there is even no trading volume. Let me define 𝑒D𝐺(𝑡) = 𝑝D$(𝑡) / 𝑝G$(𝑡). The 𝑒D𝐺(𝑡) will be very high, while I won't say that DUS is more attractive than GAS. No one would have interests on my own token. That's why I don't agree Following the above considerations, in general we expect 𝑁 to be somehow more attractive than 𝐺.

N) This is a very good point. I agree that I need to elaborate more on very specific tokens like yours, with a total supply of just 1 unit, or perhaps even very few units. I gather that exchange (trading) prices in this case may emerge from a selling mechanism like a competitive, first/second price, auction rather than from exchange in standard markets. The case of these specific, rare, tokens does not appear to fit well with the two NEO tokens, whose supply is "sufficiently" abundant, and have specific functions within the platform. Therefore, it may not be appropriate to try to draw conclusions on such rare tokens, using an analysis suitable for abundant tokens. However, that's to be discussed more carefully and rare tokens are interesting to consider. Finally, as you have seen in the paper, I do introduce ratios of traded quantities/ total quantities, to take into total supply, although perhaps not in the same perspective as yours (but I have to double check).

  1. Yes, I agree with that conclusion. I just want to see more interesting conclusions instead of a very intuitive conclusion or an unsurprising conclusion. Let's forget about it if it's for completeness.

N) I can certainly eliminate it from the paper. However, I'm not sure how obvious it may be to readers who see these discussions for the first time.

Any additional feedback from you (if any) would be most welcome. Thanks again for your comments Sincerely Nicola

Reply to this email directly, view it on GitHub https://github.com/AxLabs/grantshares/issues/19#issuecomment-1359283323, or unsubscribe https://github.com/notifications/unsubscribe-auth/AVG3CGOELPJBRTV7Y3VYEF3WOGQSNANCNFSM57IEM5EQ . You are receiving this because you were mentioned.Message ID: @.***>

-- Nicola Dimitri Professor of Economics Department of Political Economy and Statistics University of Siena Piazza San Francesco 7 53100 Siena - Italy tel +39 0577 232695 www.deps.unisi.it

Research Associate UCL CBT (University College London, Centre for Blockchain Technologies)

Member of the UZH Blockchain Center (University of Zurich, Switzerland)

nicoladimitri commented 1 year ago

Dear All

slightly ahead of time with respect to the agreed upon deadline, 17 March 2023, attached I'm pleased to send the final draft of the Milestone 1 paper concerning the project on "An Analysis of the Two Tokens NEO Economy". The version that I'm sending will need improvement, before thinking about submission for publication to a journal, and I hope to receive constructive comments from the community, as you did with the intermediate version. Indeed, as you can see, I incorporated the comments received on the intermediate version and, moreover, I added up few other sections. In particular, I introduced a section pointing out an intrinsic feature of two token economies, where one of the tokens could be obtained for "free" by holding the other token. That is, the possibility (at least in principle) of speculative monetary trades that may (potentially) destabilize the platform. I also argue that they are unlikely to take place but I thought it interesting to point out such a specific feature.
The goal pursued in this first Milestone has been to provide some operational economic indicators, which to my knowledge do not exist in the literature, with the ambition that they could be useful for policy making in two-token economies. Indeed, the indicators are meant to provide real-time information on the "economic values" of the tokens, and the platforms as a whole. There could of course be additional ones, but I thought that these may be sufficiently simple and effective to build up an informative real-time "dashboard" supporting NEO's decision making.

Given NEO's rules and incentives schemes for voting etc. the second part of the project, Milestone 2, will focus on the users' decisions, and how they could affect the platform monetary dynamics. MIlestone 2 would complement Milestone 1 and, together, they should provide a wide perspective on the Economics of NEO.
While looking forward to receiving your reactions, thanks again for your interest and support Sincerely Nicola Dimitri EconomicsofNeo4.pdf

csmuller commented 1 year ago

Thanks Nicola for the update, we'll take a look! I'm also counting on @vang1ong7ang, @dusmart @Hecate2 since they gave excellent reviews the last time.

Hecate2 commented 1 year ago
nicoladimitri commented 1 year ago

Many thanks for your very constructive comments and I'm very pleased that you found the last section, on possible speculative trades, interesting. This possibility is intrinsic to NEO but also to other two-token blockchains, where one of the two tokens can be obtained with no out of pocket payment, by holding the other token. Under appropriate conditions such speculative trade is unlikely; yet, I found important for NEO to be aware of it and monitor the relevant quantities to prevent the taking place of speculation.

The paper is missing a (detailed) analysis on how the G token market price is affected by its demand and supply, which I'm planning to include in Milestone 2 of the project. I already started to work on it and it looks interesting how "external" (to the platform) quantities (demand for G) need to be related to "internal" decisions (supply of G), for the market price to take some possibly desirable values for NEO.

Finally a general, broad, observation on the paper. Although the discussion on the possibility of speculative trade is peharps more of a new point, than the rest of the analysis, I personally consider the first part of the paper (on the indicators suggesting the economic value of NEO) also interesting for two reasons. First because I have not seen it discussed anywhere and because it suggests how to construct simple, but useful, indicators to set up a "dashboard" where the economic fundamentals of NEO can be monitored in real time.

gsmachado commented 1 year ago

@nicoladimitri based on the feedback exchanged since this comment and also this comment, do you consider this proposal "completed"?

Can you please post here the final draft of the article for Milestone 1 (this proposal)?

nicoladimitri commented 1 year ago

Thanks Guil. Based on the comments receeived, and my reply to them, I here include the final version of MIlestone 1 paper EconomicsofNeo4.pdf The version is as the one that I already submitted since I'm planning to develop further in Milestone 2, if accepted, the issue related to speculative trades in a two-token economy such as NEO. However, I wanted to make sure the issue was already introduced in Milestone 1. The Milestone 2 proposal has just been edited, on the Grantshares web site, to take care, in a detailed way, of the content of Milestone 1's paper. Soon I will post Milestone 2 on the blockchain and I really hope it will be approved, allowing me to complete the entire project. Sincerely Nicola

nicoladimitri commented 1 year ago

Finally, unless I receive additional comments within next Monday April 3, I'll consider Milestone 1's paper finalised and proceed with submitting, for voting, Milestone 2's project. To conclude, I would like to confirm that Milestone 1's paper will then be submitted for publication to an international journal. For that it will need only few adjustments to make it an academic paper.
Sincerely Nicola

gsmachado commented 1 year ago

Finally, unless I receive additional comments within next Monday April 3, I'll consider Milestone 1's paper finalised and proceed with submitting, for voting, Milestone 2's project. To conclude, I would like to confirm that Milestone 1's paper will then be submitted for publication to an international journal. For that it will need only few adjustments to make it an academic paper. Sincerely Nicola

Hey @vang1ong7ang @dusmart @Hecate2 @vncoelho @igormcoelho: just mentioning all of you here to check whether you have any final comments for Nicola's paper -- which concludes this proposal (Milestone 1 out of 2).

The paper draft can be found in this comment.

Hecate2 commented 1 year ago

The paper at milestone 1, taking Neo as the kernel case, gives a quantized analysis on the intrinsic speculation potentials of two-token economy platforms, and points out that the yield rate of GAS, by holding the underlying NEO, should be limited, in order to prevent overflowing of speculation, which destablizes the platform. The safe yield rate threshold is directly related to the price ratio of two tokens, and the market average interest rate.

nicoladimitri commented 1 year ago

Thanks for your follow up comment. As said, the speculation potential will also be discussed in Milestone 2 paper, if approved.

roman-khimov commented 1 year ago

the main goal is to write an academic paper from which the NEO community may obtain useful insights

I don't see this goal reached. I've walked through the paper, noticed a little mistake on page 18 and found something to think about only on pages 24-25 (hi, #8, btw). There I've thought of what can be considered market average interest rates (that were much lower just some years ago anyway), of how NEO/GAS ratio changes over time and of how real markets are arbitraged every single second. I don't think the result is representative, at the very minimum it uses an oversimplified model.

nicoladimitri commented 1 year ago

Many thanks for your constructive comments. Below (N) indicates my reply

I don't see this goal reached. I've walked through the paper, noticed a little mistake on page 18 and found something to think about only on pages 24-25 (hi, https://github.com/AxLabs/grantshares/issues/8, btw).

(N) Thanks for pointing out the mistake. Can you kindly tell me which one is it? I also would like to add that I have not seen anywhere an economic discussion on the fundamentals of two tokens economy. If the price ratio is, I agree , the very firt step in this discussion the compound indicators, combining price and quantity, I have not seen them anywhere and I think that they can be an effective summary information to keep NEO economics under control in real time. Indeed, if I may, I would definitely suggest NEO to implement the computation of the indicators and keep them under control, as they can be very informative on the present situation, and the future development, of the platform/tokens.

There I've thought of what can be considered market average interest rates (that were much lower just some years ago anyway), of how NEO/GAS ratio changes over time and of how real markets are arbitraged every single second. I don't think the result is representative, at the very minimum it uses an oversimplified model

(N) In Milestone 1 paper the model is simplified to illustrate the issue and, I agree, it needs deeper analysis which I was planning to develop in Milestone 2. The interest rate that I consider is just a numerical example (by the way, near to reality in my country); indeed, my main goal was to expose the point. In any case, the possibility of speculative trades remains endemic and intrinsic to a two token economy such as NEO. I'm not sure how many people were aware of it though, on this I agree with you, it may be that arbitrage activity in the market would eliminate such possibility. Yet, since it is a distinguishing feature of two tokens economies, in my view NEO should seriously monitor the issue to prevent destabilizing trades.

Thanks again

nicoladimitri commented 1 year ago

To Grantshares

for your perusal, this is a short message to inform you that a revised version of the paper has just been accepted for publication in Mathematics, https://www.mdpi.com/journal/mathematics a peer reviewed international journal with a good reputation. When ready I'll be pleased to send the link to the published version of the paper. I was invited to send a paper with fees completely waived, and I'm glad to share with you that the work was considered of interest and that Milestone 1 of the project had its final accomplishment. I take this opportunity to thank again Granthares, Axlabs and of course NEO for support, and should a follow up to this contribution be of renewed interest for Grantshares I'll be extremely happy to know.
Sincerely Nicola Dimitri

csmuller commented 1 year ago

Hey Nicola, pleased to hear from you. Congratulations on the accepted paper submission 👏

nicoladimitri commented 1 year ago

Thanks Claude

Il giorno mer 30 ago 2023 alle ore 09:46 Claude Muller < @.***> ha scritto:

Hey Nicola, pleased to hear from you. Congratulations on the accepted paper submission 👏

— Reply to this email directly, view it on GitHub https://github.com/AxLabs/grantshares/issues/19#issuecomment-1698663237, or unsubscribe https://github.com/notifications/unsubscribe-auth/AVG3CGNP6DRSE3A6B762DJ3XX3VTTANCNFSM57IEM5EQ . You are receiving this because you were mentioned.Message ID: @.***>

-- Nicola Dimitri Professor of Economics Department of Political Economy and Statistics University of Siena Piazza San Francesco 7 53100 Siena - Italy tel +39 0577 232695 www.deps.unisi.it

Research Associate UCL CBT (University College London, Centre for Blockchain Technologies)

Member of the UZH Blockchain Center (University of Zurich, Switzerland)

nicoladimitri commented 1 year ago

Dear All

as a follow up to yesterday message, I'm pleased to share the link https://www.mdpi.com/2227-7390/11/17/3757 of the published paper in Mathematics, generated by the project. Editors and referees asked for a number of revisions, included the title. Eventually the paper was considered of interest for the readers of the journal, and published. Again, I'm very glad for this accomplishment and would like to renew my thanks to Grantshares for financial support, Axlabs for technical support and NEO for its interest in the project Sincerely