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AN ANALYSIS OF THE TWO-TOKEN NEO ECONOMY #9

Closed grantshares-dapp[bot] closed 2 years ago

grantshares-dapp[bot] commented 2 years ago

Abstract

The project will take place in 12 months and will consist of a scientific paper called: “An analysis of the two tokens NEO economy”. In the paper I intend to discuss the economic fundamentals of the interesting “two token” 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 smart contracts.

Proposal Information

The paper that I plan to write is an academic work in which I intend to analyse the main economic forces driving the evolution of NEO tokens and Gas holdings in the NEO platform. As other papers in the area that I wrote already (see below), the content will focus on economic issues but the style will also be accessible to non-economists. Again, as I did for other recent papers, I will try to publish the article in peer reviewed international journals.

Description

The theoretical framework that I plan to use in the paper “An analysis of the two-token NEO economy” is “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 executing 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 and 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-token system particularly interesting to investigate for two main reasons. 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 token 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

Specify deliverables in detail, including the following info for each:

Also, provide a roadmap overview for the deliverables.

The proposed roadmap refers to after the possible approval of the research project Month 4 first sketch of the model (First milestone) Month 8 first draft of the paper plus a talk (if requested) (Second milestone) Month 12 final version of paper (Third milestone)

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 delivarbles could be verified by the community Month 4 (First milestone) I will send some pages with the sketched model Month 8 (Second milestone) I will send a first, provisional, draft of the paper and, additionally, I could give a talk (webinar) to the community on it Month 12 (Third milestone) I will send the final version of the paper.

Budget Plan

As I will work on my own, and the project is theoretical, the budget reflects the time that I expect to need to write the paper, which is about 50 days. Since for consultancy I’m paid, on average, about 600€ per day, the requested overall budget is about 30.000€, namely about 3750 NEO tokens. My proposal is to pay the sum in 4 instalments of 985 NEO Tokens each. The first is upon approval of the project (Month 0), and the remaining three upon approval of each milestone.

About You / Your Organization

I am full Professor of Economics at the Department of Economics and Statistics of the University of Siena (Italy) www.deps.unisi.it. My CV, https://docenti-deps.unisi+.it/nicoladimitri/curriculum/ contains the relevant professional information. The University of Siena is one of the oldest in Italy and worldwide, tracing back to 1240. It typically occupies high positions in national university rankings. In particular, the School of Economics https://www.sem.unisi.it/en has traditionally been considered a reference in Italy, with an international vocation and visibility.

Short-Bio

BA Statistics, Msc Statistics, Ph. D. Economics, is Full Professor of Economics at the University of Siena (Italy). He is Life Member of Clare Hall College Cambridge (UK), currently Research Associate at the Center for BlockchainTechnologies, University College London (UK), member of the Blockchain Center of Zurich University (CH). He was formerly Italian Delegate for the 7th EU Framework Program (Cooperation-SSH), Deputy Rector and Department Head of the Economics Department at the University of Siena and Corvers Chair of Innovation Procurement at the Maastricht School of Management (NL). He collaborated with few blockchain platforms. His academic interests and professional experience are in cryptocurr+encies, blockchain, auctions and market design, game and decision theory, contracts, the economics of innovation. He has published several papers in international journals and contributed, as editor and author, to various books. He is Associate Editor of the journals "Frontiers in Blockchain" and "IET Blockchain"

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?

Above I highlighted the more relevant publications for this project. My CV contains all the remaining information, except for some collaborations with blockchains which have not been included yet in the CV.

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" : "3750"
  } ],
  "call_flags" : 15
} ]

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

lllwvlvwlll commented 2 years ago

Do you have any thoughts on where an article like this could be published?

We have sponsored academic work in the past and it has usually resulted in improvements within our ecosystem that are very beneficial. Usually those endeavors are more narrowly scoped and have focused on computer science/engineering topics (typically associated with the consensus protocol).

As a council member, having a representative dynamical system model for the ecosystem economics would be valuable when discussing proposals.

I do have some concerns about whether there is enough data for a useful model to be produced. Please also be aware that there is no longer a 100M boundary condition on GAS.

igormcoelho commented 2 years ago

I agree with @lllwvlvwlll that it's a challenging issue to narrow down scope of scientific contributions to the point where it becomes practical and directly beneficial to the community. The proponent has strong CV and the topic is indeed interesting, that's a positive aspect. As a researcher, I find myself divided, as I know this is very important to include research-based proposals, but I also do feel we (as grantshares community) do not have solid mechanisms at this moment to judge this proposal, from a pure scientific/research-based approach. Typically, a committee of experienced researchers manage such decisions, and typically with a flexible budget big enough to handle the inherent uncertainties of any research endeavor. Research is always a long-term vision, and that also requires long-term commitment to the project itself. I believe that, at this moment, it is much easier for the grantshares community to evaluate other kinds of proposals, such as for community growth, tooling, and novel popular blockchain-based applications.

gsmachado commented 2 years ago

Hello @nicoladimitri, I hope you're receiving notifications of comments posted in this thread 👆

nicoladimitri commented 2 years ago

Yes I did receive the notifications many thanks. I'll be sending a reply to the comments either today or tomorrow. Sincerely Nicola Dimitri

Il giorno mer 13 lug 2022 alle ore 11:43 Guil. Sperb Machado < @.***> ha scritto:

Hello @nicoladimitri https://github.com/nicoladimitri, I hope you're receiving notifications of comments posted here ☝️.

— Reply to this email directly, view it on GitHub https://github.com/AxLabs/grantshares/issues/9#issuecomment-1183004409, or unsubscribe https://github.com/notifications/unsubscribe-auth/AVG3CGJOZCQDWYFZPELEYCDVT2FTBANCNFSM52ZBZGMQ . 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)

gsmachado commented 2 years ago

@nicoladimitri just as a side note: all your replies (even if you send them through email, replying to notifications) are public on GitHub. Check this URL: https://github.com/AxLabs/grantshares/issues/9#issuecomment-1183027483

nicoladimitri commented 2 years ago

Thanks

Il Mer 13 Lug 2022, 12:47 Guil. Sperb Machado @.***> ha scritto:

@nicoladimitri https://github.com/nicoladimitri just as a side note: all your replies (even if you send them through email, replying to notifications) are public on GitHub. Check this URL: #9 https://github.com/AxLabs/grantshares/issues/9

— Reply to this email directly, view it on GitHub https://github.com/AxLabs/grantshares/issues/9#issuecomment-1183067178, or unsubscribe https://github.com/notifications/unsubscribe-auth/AVG3CGPHHDSZJAIBZFVUGBLVT2NFDANCNFSM52ZBZGMQ . You are receiving this because you were mentioned.Message ID: @.***>

nicoladimitri commented 2 years ago

FIRST MANY THANKS FOR YOUR COMMENTS. BELOW I REPLY IN CAPITALS Do you have any thoughts on where an article like this could be published? BASED ON PREVIOUS PUBLICATIONS OF MINE IN THE AREA, I BELIEVE IT COULD POTENTIALLY ATTRACT THE ATTENTION OF MORE THAN ONE JOURNAL. INDEED, AS YOU CAN SEE ON MY CV, I PUBLISHED ON THE FOLLOWING, DIFFERENT, SPECIALISED JOURNALS: LEDGER, FRONTIERS IN BLOCKCHAIN, FINTECH, INFORMATION, ACM DISTRIBUTED LEDGER TECHNOLOGIES. OF COURSE, THERE MAY BE OTHER, MORE GENERAL, JOURNALS THAT MIGHT ALSO BE INTERESTED IN SUCH A PAPER.
We have sponsored academic work in the past and it has usually resulted in improvements within our ecosystem that are very beneficial. Usually those endeavors are more narrowly scoped and have focused on computer science/engineering topics (typically associated with the consensus protocol). THANKS FOR MAKING THE POINT. I DID WORK ON PROOF-OF-STAKE BASED CONSENSUS MYSELF, BUT AS OF NEO I WAS PARTICULARLY INTERESTED IN INVESTIGATING THE TWO TOKEN ECONOMY, HOW IT MAY WORK AND EVOLVE. TO MY KNOWLEDGE, THERE IS NO WORK IN THE LITERATURE WITH A SPECIFIC (ECONOMIC) FOCUS ON TWO TOKEN ECONOMIES. IN REAL LIFE, ECONOMIES MAY EXPERIENCE PERIODS WITH “TWO CURRENCIES” WITH PRICE HYPERINFLATIONS. INDEED, IT IS WELL KNOWN THAT SOME LATIN AMERICAN ECONOMIES, WHEN DID EXPERIENCE HYPERINFLATIONS IN THE DOMESTIC FIAT CURRENCY, INFORMALLY USED ALSO A SECOND, MORE STABLE, CURRENCY TO EXPRESS PRODUCT PRICES (TYPICALLY THE US$). BUT THE NEO TWO-TOKENS ECONOMY IS DIFFERENT FROM THESE EEXAMPLES AND THIS IS WHY I FOUND IT INTERESTING TO WORK ON AND, HOPEFULLY, TO BE OF SUPPORT FOR THE PLATFORM POLICY MAKING.
As a council member, having a representative dynamical system model for the ecosystem economics would be valuable when discussing proposals. I’M NOT SURE IF YOU ARE ASKING TO PROVIDE (AT LEAST) A SKETCH OF THE “REPRESENTATIVE AGENT” THAT I WOULD HAVE IN MIND TO ADOPT. IN ANY CASE, BELOW I DO SO. BROADLY SPEAKING, IT SEEMS TO ME THAT THE WAY THE NEO(N) AND GAS TOKENS(G) ARE CONCEIVED CAN BE CAPTURED, AS A VERY FIRST APPROXIMATION (FOR A GENERIC USER), BY A SIMPLE UTILITY FUNCTION OF THE FOLLOWING TYPE
U(N,G)=V(G)+dW(N) WHERE 0<d<1 IS THE DISCOUNT FACTOR AND V AND W ARE INCREASING AN CONCAVE “WELFARE” FUNCTIONS FORMILIZING THE UTILITY FOR THE USER OF HOLDING GAS AND NEO TOKENS. THAT IS, THE USER WILL DEMAND GAS MORE FOR SHORT TERM OPERATIONS (TRANSACTIONS/SMART CONTRACTS) WHILE DEMAND FOR NEO TOKENS WOULD PERHAPS MORE RELATED TO LONGER TERMS GOALS. THE ABOVE IS ADMITTEDLY VERY SIMPLE, PERHAPS, A RICHER FORMULATION COULD BE U(N,G)=V(N,G)+dW(N,G) TO CAPTURE THE IDEA THAT BOTH NEO AND GAS TOKENS ARE OF INTEREST FOR THE USER IMMEDIATELY AS WELL AS IN A LONGER TERMS PERSPECTIVE. THE UTILITY FUNCTION OF THE REPRESENTATIVE AGENT WILL ALLOW TO COMPUTE THE DEMAND FUNCTION FOR NEO AND GAS TOKENS, TO FOUND ON ECONOMIC BEHAVIOUR AND PREFERENCES THE SYSTEM EVOLUTION. THE PECULIARITY OF THE TWO-TOKENS NEO ECONOMY IS THAT DEMAND OF GAS TOKENS IS SOMEWHOW “NESTED” INTO THE DEMAND FOR “NEO TOKENS RATHER THAN BEING INDEPENDENT OF IT. THEREFORE, NEO TOKENS WOULD PERFORM TWO FUNCTIONS: GOVERNANCE AND FUNCTIONAL OPERATIONS, THE LATTER THROUGH GAS TOKENS.
I do have some concerns about whether there is enough data for a useful model to be produced. Please also be aware that there is no longer a 100M boundary condition on GAS. THANKS FOR THE POINT. THIS PAPER IS EXPECTED TO BE THEORETICAL, THAT IS TO LAY THE GROUND FOR EMPIRICAL ANALYSIS AND, HOPEFULLY, SUPPORT POLICY MAKING.
I HOPE THIS HELPS. THANKS AGAIN

nicoladimitri commented 2 years ago

FIRST MANY THANKS FOR YOUR COMMENTS. BELOW I REPLY IN CAPITALS

I agree with @lllwvlvwlll that it's a challenging issue to narrow down scope of scientific contributions to the point where it becomes practical and directly beneficial to the community. THANKS FOR THIS. MY APPROACH WOULD BE ONE OF THOSE TYPICALLY ADOPTED IN ECONOMICS. INDEED, THERE COULD BE TWO MAIN PERSPECTIVES TO INVESTIGATE A PHENOMENON. FIRST YOU CONCEPTUALIZE, MODEL, THE PHENOMENON TO FOCUS ON WHAT YOU THINK ARE THE MAIN FORCES AT STAKE, AND THEN YOU TEST THE THEORY WITH DATA (WHEN AVAILABLE). ALTERNATIVELY, YOU DO THE OTHER WAY ROUND. START FROM SOME “FACTS” EMPIRICALLY OBSERVED AND CONSTRUCT AN EXPLANATION, A THEORY, CONSISTENT WITH THE DATA. IN THE PAPER I PROPOSE TO START WITH THE FORMER APPROACH.
The proponent has strong CV and the topic is indeed interesting, that's a positive aspect.

THANKS FOR THIS

As a researcher, I find myself divided, as I know this is very important to include research-based proposals, but I also do feel we (as grantshares community) do not have solid mechanisms at this moment to judge this proposal, from a pure scientific/research-based approach. I SEE YOUR POINT BUT I HOPE THAT MY RECORD OF PUBLICATIONS IN THE AREA, AND CV IN GENERAL, MAY SERVE AS ELEMENTS TO INDICATE WHAT THE RESEARCHER CAN, OR CANNOT, DO SUPPORTING YOUR DECISION.
Typically, a committee of experienced researchers manage such decisions, and typically with a flexible budget big enough to handle the inherent uncertainties of any research endeavor. Research is always a long-term vision, and that also requires long-term commitment to the project itself. AGREE ON RESEARCH AS A SOURCE OF UNCERTAINTIES. HOWEVER, MY PROJECT BEING THEORETICAL DOES NOT REQUIRE MAJOR RESOURCES, EXPENSES IN INFRASTRUCTURES ETC. SO, UNCERTAINTIES ON THE BUDGET ARE QUITE LIMITED I WOULD SAY.

I believe that, at this moment, it is much easier for the grantshares community to evaluate other kinds of proposals, such as for community growth, tooling, and novel popular blockchain-based applications. THIS IS OF COURSE UP TO THE COMMUNITY TO DECIDE. HOWEVER, IF I MAY, I THINK THAT MY PROJECT COULD IN PRINCIPLE HELP THE COMMUNITY TO HAVE AN ECONOMIC OVERVIEW ON THE PLATFORM EVOLUTION, RIGOROUS BUT ACCESSIBLE. THE ANALYSIS WOULD THEN PROVIDE TESTABLE PROPOSITIONS THAT COULD BE CONFRONTED WITH DATA, AND ADOPTED OR REJECTED, AGAIN, THE FINAL GOAL, IS FOR THIS TO SUPPORT POLICY MAKING. HOPE THIS HEPS. MY RENEWED THANKS NICOLA DIMITRI

igormcoelho commented 2 years ago

FIRST MANY THANKS FOR YOUR COMMENTS. BELOW I REPLY IN CAPITALS

Dear prof Nicola, please don't use capital letters on github discussions. We can use symbol ">" in the beginning of phrase to "quote" past discussions (see above), which is simpler and more readable. I'll wait for more voices from the community, before I come back again to this issue for another round of discussions.

nicoladimitri commented 2 years ago

Many thanks for this. Sincerely Nicola Dimitri

Il giorno gio 14 lug 2022 alle ore 02:51 Igor Machado Coelho < @.***> ha scritto:

FIRST MANY THANKS FOR YOUR COMMENTS. BELOW I REPLY IN CAPITALS

Dear prof Nicola, please don't use capital letters on github discussions. We can use symbol ">" in the beginning of phrase to "quote" past discussions (see above), which is simpler and more readable. I'll wait for more voices from the community, before I come back again to this issue for another round of discussions.

— Reply to this email directly, view it on GitHub https://github.com/AxLabs/grantshares/issues/9#issuecomment-1183828358, or unsubscribe https://github.com/notifications/unsubscribe-auth/AVG3CGNEWJZXLD5767RAG3DVT5QCZANCNFSM52ZBZGMQ . 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)

csmuller commented 2 years ago

@nicoladimitri Thank you for your detailed answers to @igormcoelho and @lllwvlvwlll. As Igor said, use the ">" character at the beginning of a line to quote text/questions and then write your answers in lowercase letters. You can use the "Preview" button on the top of the text input here on GitHub to check on the formatting of your comment. You can also edit comments you already posted at any time.

For me as a non-researcher and a layman in economics I have little insight into the quality and representative character of the theoretical research proposed here. So far, I derive two gains that this paper could bring to Neo:

On the other hand, I think theoretical models usually have a lot of assumptions and constraints that might make them irrelevant in reality because circumstances change especially in such a dynamic environment like cryptocurrencies and blockchain. Thus, I very much lean towards evaluating things experimentally. But I have to agree that such a model can be valuable as a basis to take action when no empirically acquired knowledge is available.

nicoladimitri commented 2 years ago

@nicoladimitri Thank you for your detailed answers to @igormcoelho and @lllwvlvwlll. As Igor said, use the ">" character at the beginning of a line to quote text/questions and then write your answers in lowercase letters. You can use the "Preview" button on the top of the text input here on GitHub to check on the formatting of your comment. You can also edit comments you already posted at any time.

Thanks for this

For me as a non-researcher and a layman in economics I have little insight into the quality and representative character of the theoretical research proposed here. So far, I derive two gains that this paper could bring to Neo:

  • Help in decision making when it comes to setting chain parameters (i.e., decisions by the Neo Council members) or even the general mechanism design of Neo. I assume the paper will be able to point out incentives for Neo holders, what actions those incentives will favor, and what states such actions will cause. Indeed, this is what I intend to investigate
  • Give credibility and faith in Neo's dual token system. I.e., I think it can improve public perception of Neo.

This is the ambition

On the other hand, I think theoretical models usually have a lot of assumptions and constraints that might make them irrelevant in reality because circumstances change especially in such a dynamic environment like cryptocurrencies and blockchain. Thus, I very much lean towards evaluating things experimentally. But I have to agree that such a model can be valuable as a basis to take action when no empirically acquired knowledge is available.

I fully agree that theoretical models are based on assumptions which, sometimes, may be restrictive. But, as we know, even if the underlying assumptions were particularly restrictive, in my view they may still offer two main advantages. Under those assumptions the narrative becomes precise and testable, when data are available. Moreover, in any case they represent a benchmark to refer to. As an example, in my recently accepted paper for the journal ACM in Distributed Ledger Technology some of the main results of the model represent a benchmark which, for this, were considered of interest by the journal reviewers and editors.

gsmachado commented 2 years ago

@nicoladimitri, and all in this thread...

We had a Twitter Spaces yesterday about cNEO ([1] [2] [3]), which is a wrapper solution to NEO/bNEO that auto-compounds GAS rewards into more bNEO, to be used as a building block for both DeFi applications.

During the Twitter Spaces we briefly discussed the implications/effects of cNEO on the dual-token model in the Neo Blockchain. Like, on a large scale, would the adoption of cNEO imply that GAS price would drastically go down and NEO/bNEO would go up? If that happens, would that cause some imbalances in the Neo Governance (in terms of parameters, etc)? And, what are the risks for the whole network?

I wonder if this proposal is aware of such cases and consider the implications of real-world (and practical) situations like this, at all.

Well, I'm just brainstorming out loud to check if this proposal would actually provide benefits to evaluating real-world cases we currently have. 😄

nicoladimitri commented 2 years ago

Il giorno gio 4 ago 2022 alle ore 15:15 Guil. Sperb Machado < @.***> ha scritto:

@nicoladimitri https://github.com/nicoladimitri, and all in this thread...

We had a Twitter Spaces yesterday https://twitter.com/GrantShares/status/1554832730201808901 about cNEO ( [1] https://grantshares.io/app/details/94a497fac070e96726bd5f4aa71d524b [2] https://github.com/AxLabs/grantshares/issues/6 [3] https://grantshares.io/app/details/7120851e8b0aa64bdb13e12d4a46cf5d), which is a wrapper solution to NEO/bNEO that auto-compounds GAS rewards into more bNEO, to be used as a building block for both DeFi applications.

During the Twitter Spaces we briefly discussed the implications/effects of cNEO on the dual-token model in the Neo Blockchain. Like, on a large scale, would the adoption of cNEO imply that GAS price would drastically go down and NEO/bNEO would go up? If that happens, would that cause some imbalances in the Neo Governance (in terms of parameters, etc)? And, what are the risks for the whole network?

I wonder if this proposal is aware of such cases and consider the implications of real-world (and practical) situations like this, at all.

Well, I'm just brainstorming out loud to check if this proposal would actually provide benefits to evaluating real-world cases we currently have. 😄

Thanks Guil for the very interesting point. I believe cNEO was approved after I submitted my proposal. I just noticed the title of the project but did not explore the content of the proposal which is indeed very interesting from an economic perspective. If my understanding is correctly, cNEO will optimize gas consumption, which means that the number of GAS units per transaction will now decrease. As a consequence, given that the supply of GAS per block is fixed by the platform (5 GAS units), at a very first sight I can envisage two potential changes (if any) i) Either the supply of GAS units in the exchange market may increase and/or ii) the number of smart contracts implemented in the platform will increase. Economists would say that which of the two, if any, will prevail depends on the users’ preferences. That is, simply, if users’ welfare will increase more by raising the number of implemented smart contracts (currently or in future) or by selling the redundant GAS units in the market.

If I may, I would like to dwell shortly on these two possibilities, starting with the first.

i) If users would introduce additional GAS units in the market, namely increase the supply of GAS units, the current price of GAS ( at h 9.15 am CET of 5 August 2022) from about 3$ per GAS unit would be bound to decrease below 3$, unless there would be a concurrent increase in demand for GAS units. This could happen, for example, when some users prefer to sell the redundant GAS units while others prefer to increase the number of implemented smart contracts and in so doing increase their demand of GAS. If a decrease in the GAS price is undesirable for the platform then a reduction of the GAS introduced per block (from the current 5 units to less than 5) could be considered. If the GAS price decreases, unless an analogous decrease takes place in the price of NEO tokens, currently (still at 9.15 am CET of 5 August 2022) about 11.47$, the price ratio NEO/GAS is bound to increase. This, within certain limits, may not necessarily be a problem and, in fact, a decrease in price of the GAS units may even increase demand for NEO tokens (because now GAS units are cheaper and it becomes relatively more convenient, than before, to use the NEO platform) hence increasing the price of NEO tokens, further raising the ratio NEO/GAS. However, if the price ratio NEO/GAS would become much higher this may, perhaps, convey to the (potential new) users some controversial messages. For example, either the number of implemented smart contracts is low, maybe because the platform became for some reason less attractive, and so lots of GAS units have inundated the market. Or perhaps because the platform became very attractive and there is a relatively larger request for Neo tokens.

ii) Going now to the second scenario, if instead users would prefer to increase their number of implemented smart contracts (currently and/or in the future) the GAS price may increase, since the supply of tokens in the market would now be reduced. If this is perceived by the users as a signal of attractiveness of the platform then NEO tokens price may also increase, perhaps keeping roughly at the same level the price ratio NEO/GAS.

To summarise, the number of possible reactions by the market, and so envisaged scenarios, can be large and certainly needs accurate thinking and analysis. This were just some very introductory thoughts that need much more elaboration. If approved, all this could clearly be part of the project.

gsmachado commented 2 years ago

@nicoladimitri sorry if we're a bit annoying with the format of your comments, but knowing how to operate the tooling properly is somehow important. 😄

Check how we all see your comment on desktop version:

Kapture 2022-08-05 at 12 01 23

Also, on mobile, people can't see your comment at all:

image

Basically, what you wrote is hidden here on GitHub! I believe it's because you replied through email and your email client interfered with the format.

About the content of your comment: let me reply in the following comment.

gsmachado commented 2 years ago

About what you wrote:

To summarise, the number of possible reactions by the market, and so envisaged scenarios, can be large and certainly needs accurate thinking and analysis. This were just some very introductory thoughts that need much more elaboration. If approved, all this could clearly be part of the project.

That's great to know. Thanks. And I agree that these are just introductory thoughts, yes. I feel that the goal of this proposal is to formalize some params and come up with some models to study economic tendencies for certain scenarios. Besides that, I think @77696c6c could even give you some other insights into cNEO properties and functions -- this would help to better build these models.

Anyway, would like to see the opinion of @vang1ong7ang about this proposal (and what others already said) and what @nicoladimitri mentioned in this comment.

nicoladimitri commented 2 years ago

Many thanks Guil for your comments and apologies for the "difficult to read" comment of mine which, for convenience, I replicate below. Sincerely Nicola

Thanks Guil for the very interesting point. I believe cNEO was approved after I submitted my proposal. I just noticed the title of the project but did not explore the content of the proposal which is indeed very interesting from an economic perspective. If my understanding is correctly, cNEO will optimize gas consumption, which means that the number of GAS units per transaction will now decrease. As a consequence, given that the supply of GAS per block is fixed by the platform (5 GAS units), at a very first sight I can envisage two potential changes (if any) i) Either the supply of GAS units in the exchange market may increase and/or ii) the number of smart contracts implemented in the platform will increase. Economists would say that which of the two, if any, will prevail depends on the users’ preferences. That is, simply, if users’ welfare will increase more by raising the number of implemented smart contracts (currently or in future) or by selling the redundant GAS units in the market.

If I may, I would like to dwell shortly on these two possibilities, starting with the first.

i) If users would introduce additional GAS units in the market, namely increase the supply of GAS units, the current price of GAS ( at h 9.15 am CET of 5 August 2022) from about 3$ per GAS unit would be bound to decrease below 3$, unless there would be a concurrent increase in demand for GAS units. This could happen, for example, when some users prefer to sell the redundant GAS units while others prefer to increase the number of implemented smart contracts and in so doing increase their demand of GAS. If a decrease in the GAS price is undesirable for the platform then a reduction of the GAS introduced per block (from the current 5 units to less than 5) could be considered. If the GAS price decreases, unless an analogous decrease takes place in the price of NEO tokens, currently (still at 9.15 am CET of 5 August 2022) about 11.47$, the price ratio NEO/GAS is bound to increase. This, within certain limits, may not necessarily be a problem and, in fact, a decrease in price of the GAS units may even increase demand for NEO tokens (because now GAS units are cheaper and it becomes relatively more convenient, than before, to use the NEO platform) hence increasing the price of NEO tokens, further raising the ratio NEO/GAS. However, if the price ratio NEO/GAS would become much higher this may, perhaps, convey to the (potential new) users some controversial messages. For example, either the number of implemented smart contracts is low, maybe because the platform became for some reason less attractive, and so lots of GAS units have inundated the market. Or perhaps because the platform became very attractive and there is a relatively larger request for Neo tokens.

ii) Going now to the second scenario, if instead users would prefer to increase their number of implemented smart contracts (currently and/or in the future) the GAS price may increase, since the supply of tokens in the market would now be reduced. If this is perceived by the users as a signal of attractiveness of the platform then NEO tokens price may also increase, perhaps keeping roughly at the same level the price ratio NEO/GAS.

To summarise, the number of possible reactions by the market, and so envisaged scenarios, can be large and certainly needs accurate thinking and analysis. This were just some very introductory thoughts that need much more elaboration. If approved, all this could clearly be part of the project.

vang1ong7ang commented 2 years ago

I believe the economic model of neo network is absolutely a necessary research topic.

Neo is the earliest dual token model platform and probably(🌚) the only few survivals after the LUNA-UST disaster. (NEO-GAS is totally different to LUNA-UST but there was discussions of building GAS as a kind of stablecoin). Among neo community and developers, there were disputes on this dual token model, too.

I believe the economic model determines the effectiveness of neo governance, and the stability of the neo network once the network is correctly implemented. Neo's cybersecurity relies on basic BFT assumptions, then the honesty, wisdom, and rationality of governance token holders. In my opinion, the unique dual-token model is an meaningful innovation and attempt but still lacks rigorous analysis.

When building the project NeoBurger, we avoided aggressive voting strategies, to be honest, because we never want to be harmful to neo network and communities because of the excessively greedy profit-seeking strategy. BUT, as a stable enough economic model, we should ensure neo is able to tolerance this kind of (rational) behaviors.

reward coefficients are constants while actually they can be changed by moving candidate’s rank up or down; (actually moving candidates into or out from consensus nodes or council members is a dangerous operation for the entire network if the candidates are not prepared well) see more

So essentially I support this type of research. But I have no idea on funds because of I know little about the research plan or if @nicoladimitri can share a bit more points. And probably it's good to invite @igormcoelho or @vncoelho to participate to discuss or review or show their opinion because they are the most experienced academic researchers on neo. Me would also be interested in this topic and willing to discuss more with @nicoladimitri on the potential opinions and analysis methods and i can share my observations and the history i know. can dm me any time on telegram <@vang1ong7ang> or email vang1ong7ang@gmail.com or schedule a call if too much details bothers here.

nicoladimitri commented 2 years ago

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First many thanks for your constructive comments

>I believe the economic model of neo network is absolutely a necessary research topic. Neo is the earliest dual token model platform and probably() the only few survivals after the LUNA-UST disaster. (NEO-GAS is totally different to LUNA-UST but there was discussions of building GAS as a kind of stablecoin). Among neo community and developers, there were disputes on this dual token model, too.

I’m pleased that you highlight the interest and importance of an economic analysis of NEO (regardless of the proposer). As a matter of fact, I am currently involved in a project on a dual currency platform and a number of interesting, sometimes unexpected, outcomes emerge. Two token communities are uncommon in standard economies, and for this reason (to my knowledge) there is no received economic literature.

Perhaps this is not the right place to enter into a discussion on this. However allow me to observe that one of the interesting aspects of two tokens, when both are traded in the market, is that their values may convey different messages. For example, the price ratio NEO/GAS (in $) since a year ago has gone from about 4,86 to the current 3,94, decreasing by almost 1 point. Because both prices diminished over the year, the GAS price decreased relatively less than NEO price. This may mean that despite the reduction of the NEO price, from 45.1$ to 11.81$ the platform have perhaps increased its attractiveness since the GAS price did not diminish by the same extent.      

   
   
   
   
   

> I believe the economic model determines the effectiveness of neo governance, and the stability of the neo network once the network is correctly implemented.
Neo's cybersecurity relies on basic BFT assumptions, then the honesty, wisdom, and rationality of governance token holders. In my opinion, the unique dual-token model is an meaningful innovation and attempt but still lacks rigorous analysis.

As above, I fully agree on the dual token being an innovation as well as on the fact that an economic analysis is needed, precisely because there is no received literature.  

 

>When building the project NeoBurger, we avoided aggressive voting strategies, to be honest, because we never want to be harmful to neo network and communities because of the excessively greedy profit-seeking strategy. BUT, as a stable enough economic model, we should ensure neo is able to tolerance this kind of (rational) behaviors.</o:p>

>reward coefficients are constants while actually they can be changed by moving candidate’s rank up or down; (actually moving candidates into or out from consensus nodes or council members is a dangerous operation for the entire network if the candidates are not prepared well) see more

Thanks for sharing this point which is interesting and extremely relevant for the economic modelling of the platform. </o:p>

>So essentially I support this type of research.

I’m very pleased of the interest and support

>But I have no idea on funds because of I know little about the research plan or if @nicoladimitri can share a bit more points. And probably it's good to invite @igormcoelho or @vncoelho to participate to discuss or review or show their opinion because they are the most experienced academic researchers on neo. Me would also be interested in this topic and willing to discuss more with @nicoladimitri on the potential opinions and analysis methods and i can share my observations and the history i know. can dm me any time on telegram <@vang1ong7ang> or email vang1ong7ang@gmail.com
or schedule a call if too much details bothers here.

Thanks also for this. I’d be extremely happy to coordinate for an online meeting with all those interested, to discuss more of my research plan and to know more from you and the other researchers on NEO. </o:p>

As for timing, until the end of August I’m quite flexible for meetings except for August 16.From September onward I’ll start having exams here in Siena and in October start teaching; but I’m sure we can easily coordinate on a date. </o:p>

I look forward to receiving proposals on this.

First many thanks for your constructive comments

I believe the economic model of neo network is absolutely a necessary research topic. Neo is the earliest dual token model platform and probably() the only few survivals after the LUNA-UST disaster. (NEO-GAS is totally different to LUNA-UST but there was discussions of building GAS as a kind of stablecoin). Among neo community and developers, there were disputes on this dual token model, too. I’m pleased that you highlight the interest and importance of an economic analysis of NEO (regardless of the proposer). As a matter of fact, I am currently involved in a project on a dual currency platform and a number of interesting, sometimes unexpected, outcomes emerge. Two token communities are uncommon in standard economies, and for this reason (to my knowledge) there is no received economic literature. Perhaps this is not the right place to enter into a discussion on this. However allow me to observe that one of the interesting aspects of two tokens, when both are traded in the market, is that their values may convey different messages. For example, the price ratio NEO/GAS (in $) since a year ago has gone from about 4,86 to the current 3,94, decreasing by almost 1 point. Because both prices diminished over the year, the GAS price decreased relatively less than NEO price. This may mean that despite the reduction of the NEO price, from 45.1$ to 11.81$ the platform have perhaps increased its attractiveness since the GAS price did not diminish by the same extent.

I believe the economic model determines the effectiveness of neo governance, and the stability of the neo network once the network is correctly implemented. Neo's cybersecurity relies on basic BFT assumptions, then the honesty, wisdom, and rationality of governance token holders. In my opinion, the unique dual-token model is an meaningful innovation and attempt but still lacks rigorous analysis. As above, I fully agree on the dual token being an innovation as well as on the fact that an economic analysis is needed, precisely because there is no received literature.

When building the project NeoBurger, we avoided aggressive voting strategies, to be honest, because we never want to be harmful to neo network and communities because of the excessively greedy profit-seeking strategy. BUT, as a stable enough economic model, we should ensure neo is able to tolerance this kind of (rational) behaviors. reward coefficients are constants while actually they can be changed by moving candidate’s rank up or down; (actually moving candidates into or out from consensus nodes or council members is a dangerous operation for the entire network if the candidates are not prepared well) see more Thanks for sharing this point which is interesting and extremely relevant for the economic modelling of the platform. So essentially I support this type of research. I’m very pleased of the interest and support But I have no idea on funds because of I know little about the research plan or if @nicoladimitri can share a bit more points. And probably it's good to invite @igormcoelho or @vncoelho to participate to discuss or review or show their opinion because they are the most experienced academic researchers on neo. Me would also be interested in this topic and willing to discuss more with @nicoladimitri on the potential opinions and analysis methods and i can share my observations and the history i know. can dm me any time on telegram [@vang1ong7ang](https://github.com/vang1ong7ang) or email vang1ong7ang@gmail.com or schedule a call if too much details bothers here. Thanks also for this. I’d be extremely happy to coordinate for an online meeting with all those interested, to discuss more of my research plan and to know more from you and the other researchers on NEO. As for timing, until the end of August I’m quite flexible for meetings except for August 16.From September onward I’ll start having exams here in Siena and in October start teaching; but I’m sure we can easily coordinate on a date. I look forward to receiving proposals on this.

grantshares-dapp[bot] commented 2 years ago

🚫 This proposal was cancelled (closed discussion) on request of the proposal's owner.

gsmachado commented 2 years ago

Following some discussions with @vang1ong7ang, @igormcoelho, and @vncoelho, I suggested the following to this proposal:

Given that GrantShares doesn’t have a mechanism for milestone-based release of tokens, and @nicoladimitri is requesting the payment in 4 installments of 985 NEO, I kindly suggest @nicoladimitri to proceed as follows:

  1. Withdraw the current proposal (already done).
  2. Break the current proposal into 2 different proposals. Name the first as “An Analysis of the Dual-Token Neo Economy - Milestone 1”, and the second as “An Analysis of the Dual-Token Neo Economy - Milestone 2”. For each proposal, request 1875 NEO tokens.
vang1ong7ang commented 2 years ago

Following some discussions with @vang1ong7ang, @igormcoelho, and @vncoelho, I suggested the following to this proposal:

Given that GrantShares doesn’t have a mechanism for milestone-based release of tokens, and @nicoladimitri is requesting the payment in 4 installments of 985 NEO, I kindly suggest @nicoladimitri to proceed as follows:

  1. Withdraw the current proposal (already done).
  2. Break the current proposal into 2 different proposals. Name the first as “An Analysis of the Dual-Token Neo Economy - Milestone 1”, and the second as “An Analysis of the Dual-Token Neo Economy - Milestone 2”. For each proposal, request 1875 NEO tokens.

how about break it into 4:

For each proposal, request 937.5 NEO tokens.

nicoladimitri commented 2 years ago

Dear Wang

many thanks. I have already split the project into two sub projects but I would have no problem to remove them and split them again into 4 milestones. I believe there are no problems but let's wait for Guil's view on this, before proceeding. Thanks again Sincerely Nicola

Il giorno mar 23 ago 2022 alle ore 01:55 vang1ong7ang < @.***> ha scritto:

Following some discussions with @vang1ong7ang https://github.com/vang1ong7ang, @igormcoelho https://github.com/igormcoelho, and @vncoelho https://github.com/vncoelho, I suggested the following to this proposal:

Given that GrantShares doesn’t have a mechanism for milestone-based release of tokens, and @nicoladimitri https://github.com/nicoladimitri is requesting the payment in 4 installments of 985 NEO, I kindly suggest @nicoladimitri https://github.com/nicoladimitri to proceed as follows:

  1. Withdraw the current proposal (already done).
  2. Break the current proposal into 2 different proposals. Name the first as “An Analysis of the Dual-Token Neo Economy - Milestone 1”, and the second as “An Analysis of the Dual-Token Neo Economy - Milestone 2”. For each proposal, request 1875 NEO tokens.

how about break it into 4:

  • An Analysis of the Dual-Token Neo Economy - Start
  • Milestone 1
  • Milestone 2
  • Milestone 3

For each proposal, request 937.5 NEO tokens.

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