increase PoS reward

[Erkan-Yilmaz]

goal: increase staking participation

currently PoS stakers get 1.5%

questions:

• side effects on GRC value after an increase ?

mentioned in hangout 22:

[grctest]

The GRC value wouldn't decrease significantly if the interest rate rose from 1.5 to say 3%, it would certainly be affected by a double/triple digit interest rate.

Perhaps a small increase in interest rate would increase staking participation.

[frank0051]

From a self-interest perspective I don't support because of this: https://cryptocointalk.com/topic/52084-question-about-interest-payment-frequency/

Haha, but in all seriousness, I would support a 3 month trial run to see if participation increases significantly, but we would need to get like a month's worth of baseline data first.

[skcin]

I don't think increasing the PoS reward will have any effect. Why would anyone stake more often you can still collect your interest at any time. The only thing this will change is the coin supply.

Besides a fixed stake reward there is another thing that could help and that is cold staking. If we could implement cold staking it would be much easier to keep staking 24/7. The best practise is to not stake on a full node because of security issues. What if we could eliminate these security issues.

The https://www.nem.io/ crypto currency has a even better system where you can stake without risk on unsecure systems. They call it delegated harvesting and it allows you to stake on a remote server without your wallet leaving your local pc.

P.S. I create an issue for this

[grctest]

Why would anyone stake more often you can still collect your interest at any time.

As reminded by @janko33bd in https://github.com/gridcoin/Gridcoin-Research/issues/106#issuecomment-274897104, POS2.0 removed coinage from the POS mechanism (offline interest building up is not a thing). Coinage is however still used in the DPOR mechanism (staking ability based on BOINC contributions increases over time even when client is offline).

So yeah, since offline interest is not being built up, the gridcoinstats.eu page (example cpid with large unstaked balance) should actually read as 'This CPID has failed to claim an estimated 934 533,54 GRC of interest' rather than "There is also an estimate of 934 533,54 GRC unclaimed for interest."

EDIT: @skcin is correct, coinage is still taken into account for calculating owed interest.

Fixed stake rewards would mean that instead of earning like 4k in a single staked block with millions of GRC, they'd earn like 15.7 GRC (in order to get that 4k they'd need to stake 24/7).

[skcin]

As reminded by @janko33bd in gridcoin/Gridcoin-Research#106 (comment), POS2.0 removed coinage from the POS mechanism (offline interest building up is not a thing).

I think that is wrong. coinage has been removed from the staking/probability part. The reward part still uses coinage to make sure you get the yearly interest. I think it is important that we do not mix up the security (probability to stake) issue with the reward issue.

So yeah, since offline interest is not being built up, the gridcoinstats.eu page (example cpid with large unstaked balance) should actually read as 'This CPID has failed to claim an estimated 934 533,54 GRC of interest' rather than "There is also an estimate of 934 533,54 GRC unclaimed for interest."

My understanding is that interest does build up. If these individuals open their wallets and stake they will be rewarded with the total interest they are owed. The only way to "destory" the interest is to send the coins to another address before they stake.

[grctest]

Very good point, @skcin, you're correct that coinage is still taken into account for owed interest. To which, no, an increase in interest would likely change very little as users who keep their coins offline (building up interest) would earn the new interest rates regardless of their participation.

Removal of coinage from interest reward + fixed pos block rewards would be required before an increase in interest rates had a serious impact. That said, an increase in interest rates could attract new users?

[janko33bd]

Yes you are right, I've implemented staking only from POS 3.0, didn't look at rewards later.

[frank0051]

Bumping top given Fed Reserve interest rate increase. Treasuries are getting more competitive and that's going to continue to keep the dollar strong. The 12 month is now standing at .96% and the 6-month is at .85%. If we compare to currencies that have dollar pegs (mainly Middle East countries) the discount rates are creeping into the 2% or higher area. If the Fed raises rates two more times this year - as forecast - GRCs get less competitive from a interest perspective.

Just sayin'...

[frank0051]

Just to memoralize an idea I put out there on: https://github.com/gridcoin/Gridcoin-Research/issues/106#issuecomment-300878994

• I am on record as supporting increasing the interest payments as the Federal Reserve hikes interest rates
• Perhaps, if there is interest (pun intended), a tiered interest system could be developed. Perhaps there is a base interest rate paid, but if you are on the network you can a "bonus" interest rate for helping secure the network.

[tomasbrod]

If it is really necessary to increase interest rate, we can pay that extra interest as fixed block reward. Moving coin*age based interest to fixed block reward was already suggested, but it was dismissed as it would break the initial agreement of paying 1.5%. By combining fixed pos block reward with coin*age interest we can solve two issues without breaking the agreement.

[denravonska]

@tomasbrod That is a really great idea!

[tomasbrod]

On the other hand I agree with @hovai in his comment and I am against increasing interest rate. And I prefer moving some % of interest from coin*age reward to fixed block reward. But please, take above as my view, Rob @gridcoin is the one to decide on the interest changes.

[ghost]

I think we should drop interest all together. Inflation will get out of control of its kept the way it is.

[frank0051]

I think we should drop interest all together. Inflation will get out of control of its kept the way it is.

ROFL! A fixed interest rate at 1.5% leads to inflation getting out of control...said no one ever....

[ghost]

1.5% might not seem much now but the larger the coin supply gets the bigger it will get. Or am I missing something?

[frank0051]

1.5% might not seem much now but the larger the coin supply gets the bigger it will get. Or am I missing something?

Its still just a constant rate that allows for growth in the money supply - period. Generally speaking, expansion of the money supply - particularly at this slow level - isn't tied to inflation. It's not exponential growth in the money supply, so it cannot get, "out of control" in the way that you're [probably unintentionally] implying. In fact, scarcity is more likely to lead to inflation (or, alternatively, the flat out dumping of the coin for another alt coin) than a steady-state increase in the money supply.

I think the earlier conversations on this issue were right: we still need something that provides incentives for the investors to stake because right now they hold an immense amount of the coinage. This for me isn't an issue of inflation (which 1.5% interest won't cause anyways - some Arab countries have interest rates in excess of 4-5% and have 2% inflation or even deflation); it also isn't a big issue of supporting BOINCing (continuing to offer POR will do so); rather, the issue at hand here is network security. I don't want to go back to do the days when the network weight is 30M when the coin has some serious value - that can lead to some scary things...