ECIP-? ETC emission schedule

arvicco commented 7 years ago

Some thoughts on ETC Monetary Policy, copied from https://ethereumclassic.github.io/assets/Ethereum_Classic_-_The_New_Original_Innovator.pdf

Platform token aligns economic incentives of users, miners and investors
Current Ethereum monetary policy undefined (unlimited token inflation)
ETH policy is supposed to change with a transition to PoS unpredictably
Lack of token scarcity does not support long-term investor confidence
ETC transition to a long-term PoW necessitates monetary policy decision
ETC commitment to a specific monetary policy:
- provide certainty to the market
- boost investor confidence
- creates competitive differentiator to ETH with its undefined policies

Fixing ETC Monetary Policy - Options:

Keep unlimited token inflation forever, like current ETH

Pros: keeps the status quo, encourages token spending
Cons: long-term monetization uncertain, not a good store of value/investment

Fixed final supply with Bitcoin-like reward cut-offs (halvings)

Pros: experimentally proven to work for BTC, sustainable token monetization due to scarcity
Cons: changes existing inflationary parameters, disruptive “halving” events

Fixed final supply with exponential reward adjustments (per epoch)

Pros: no disruptive “halvings”, sustainable token monetization due to scarcity
Cons: changes existing inflationary parameters

arvicco commented 7 years ago

Slack:@snaproll (sorry, can't find you on Github) started exploring ETC supply model here: https://docs.google.com/presentation/d/1jWTiJr7FmGjTyNj80-OapxDOiRGKVwmlkQ63LOnPO24/

realcodywburns commented 7 years ago

I'm a fan of not setting a cap. The supply predictions can be greatly improved over my spread sheet by using standard deviation rather than maxi-min strategy. I believe the current stdev is close to 1 sec over the last Qtr. I would like for us to put out quarterly reports regardless of the final decision. We should be able to intelligently report our average mine times, our stdev, expected growth, and other relevant things every 90 days. Oct 18th ish is the end of Qtr one

1cyrilblanc commented 7 years ago

Hey Cody,

A friend just described your above opinion as:

"It seems like he doesn't want a fixed cap indeed. But rather a dynamic cap based on usage."

Is this a fair interpretation?

realcodywburns commented 7 years ago

I think I would describe myself as a stabilise-ist. I think deflation and inflation are equally harmful. For me, the best policy would be one where the block time being as predictably close to 13 seconds as possible is the goal. The supply could then be predicted with a good deal of certainty for any time in the next few years.

I am against a coin cap because I do not think it is forward thinking. It does not account for burnt coins, frozen accounts, or rapid adaptation. Common stocks are released with a predefined number of shares, the number of shares is somewhat unimportant as a measure of scarcity. Apple is not more or less valuable just because it releases fewer shares than pets.com. The market dictates the price based on the demand for the shares and the available supply. Stocks are valuable because of their fundamentals. The day BTC was created it had all 21m coins it would ever have. Like normal securities, some of the coins were held as convertible shares to be released at set intervals to pay for the security of the chain(mining reward).

Mining is a business, and as such making money is their goal. If the total cost to mine is less than the price buying a coin in the market it makes sense to mine. This is similar to the oil and gas industry. Oil(and every other commodity) is produced without regard to the total supply, but rather the producer's marginal rate of return. The price to produce a barrel of oil in the middle east is ~$25USD, they are able to make money when the market price is $100USD or $50USD. Shale oil producers cost is closer to ~$75usd to $125usd per barrel. They will produce when oil is above their cost but close down when the price drops. This holds true for most all commodities; corn growers only grow enough corn to be profitable, at some point, they reach a point of diminishing returns as they are limited by employee payroll, water, fertilizer, taxes and other costs. The market for these commodities is sophisticated enough for forward and future contracts to dictate price 18-24 months in advance in some cases. I think of miners in the same regard as the farmer, oil producer, electricity generator, and rancher.

The largest cost for miners is electricity (mining rigs are arguably a sunk cost). In areas like China and India where electricity is cheap miners are able to produce at high prices and low prices. In areas like the US, this is not the case as it is harder to cover costs. There was a concern in July, before the halving, that the marginal miners would shut down when the block reward dropped. Time will tell if the growth of hash rate will level off or not. But at the next halving if 6.25 btc is not equal to the equivalent of 12,5 btc today the effect will be noticeable.

I would like to see a 'boring', for lack of a better term, blockchain. By aiming to minimize block time deviation, the total supply for any date could be estimated with reasonable accuracy and precision. We would essentially be paying miners a steady rate to maintain the security of the chain. Any miner can make the necessary calculations to make investment decisions if they know the block reward and price. It is possible that miners could decide to maintain reserve capacity if prices drop, ready to come online if the market price rises. It is important to note that currently, miners are 'irrational' and mine without price modeling or reserves. With a steady enough supply and predictable logical miners, forward and future contracts could be constructed for mining.

I do not see the total coin supply as a reason in itself for investors look into ETC. The demand for ETC should come from its utility. What can someone buy with their ETC today? If one would like to save(hodl) ETC is easily convertible back and forth to BTC in much the same way people use checking and savings accounts.

Hope this helps.

1cyrilblanc commented 7 years ago

No.

It does not really help.

Mind answering my question, instead?

On Saturday, 1 October 2016, Cody Burns notifications@github.com wrote:

I think I would describe myself as a stabilise-ist. I think deflation and inflation are equally harmful. For me, the best policy would be one where the block time being as predictably close to 13 seconds as possible is the goal. The supply could then be predicted with a good deal of certainty for any time in the next few years.

I am against a coin cap because I do not think it is forward thinking. It does not account for burnt coins, frozen accounts, or rapid adaptation. Common stocks are released with a predefined number of shares, the number of shares is somewhat unimportant as a measure of scarcity. Apple is not more or less valuable just because it releases fewer shares than pets.com. The market dictates the price based on the demand for the shares and the available supply. Stocks are valuable because of their fundamentals. The day BTC was created it had all 21m coins it would ever have. Like normal securities, some of the coins were held as convertible shares to be released at set intervals to pay for the security of the chain(mining reward).

Mining is a business, and as such making money is their goal. If the total cost to mine is less than the price buying a coin in the market it makes sense to mine. This is similar to the oil and gas industry. Oil(and every other commodity) is produced without regard to the total supply, but rather the producer's marginal rate of return. The price to produce a barrel of oil in the middle east is ~$25USD, they are able to make money when the market price is $100USD or $50USD. Shale oil producers cost is closer to ~$75usd to $125usd per barrel. They will produce when oil is above their cost but close down when the price drops. This holds true for most all commodities; corn growers only grow enough corn to be profitable, at some point, they reach a point of diminishing returns as they are limited by employee payroll, water, fertilizer, taxes and other costs. The market for these commodities is sophisticated enough for forward and future contracts to dictate price 18-24 months in advance in some cases. I think of miners in the same regard as the farmer, oil producer, electricity generator, and rancher.

The largest cost for miners is electricity (mining rigs are arguably a sunk cost). In areas like China and India where electricity is cheap miners are able to produce at high prices and low prices. In areas like the US, this is not the case as it is harder to cover costs. There was a concern in July, before the halving, that the marginal miners would shut down when the block reward dropped. Time will tell if the growth of hash rate will level off or not. But at the next halving if 6.25 btc is not equal to the equivalent of 12,5 btc today the effect will be noticeable.

I would like to see a 'boring', for lack of a better term, blockchain. By aiming to minimize block time deviation, the total supply for any date could be estimated with reasonable accuracy and precision. We would essentially be paying miners a steady rate to maintain the security of the chain. Any miner can make the necessary calculations to make investment decisions if they know the block reward and price. It is possible that miners could decide to maintain reserve capacity if prices drop, ready to come online if the market price rises. It is important to note that currently, miners are 'irrational' and mine without price modeling or reserves. With a steady enough supply and predictable logical miners, forward and future contracts could be constructed for mining.

I do not see the total coin supply as a reason in itself for investors look into ETC. The demand for ETC should come from its utility. What can someone buy with their ETC today? If one would like to save(hodl) ETC is easily convertible back and forth to BTC in much the same way people use checking and savings accounts.

https://camo.githubusercontent.com/0ef7edaa142dd9124eb2848799315535859458b0/687474703a2f2f626974636f696e2e736970612e62652f73706565642d6c696e2e706e67

Hope this helps.

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realcodywburns commented 7 years ago

Is this a fair interpretation?

No, I do no want a dynamic cap based on usage. For a longer explanation of why see above.

1cyrilblanc commented 7 years ago

Thank you

On Saturday, 1 October 2016, Cody Burns notifications@github.com wrote:

Is this a fair interpretation? No, I do no want a dynamic cap based on usage. For a longer explanation of why see above.

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1cyrilblanc commented 7 years ago

Can you define stabilise-ist? What is or constitutes a stabilise-ist You describe yourself as a stabilise-ist Never heard that one before

realcodywburns commented 7 years ago

stabilise-ist: one in favor of system stability. It isn't a real term.

1cyrilblanc commented 7 years ago

And your definition of stability is?

Is only one definition of stability acceptable?

If not, how do you, or your group, decide on which type of stability is most stable?

On Saturday, 1 October 2016, Cody Burns notifications@github.com wrote:

stabilise-ist: one in favor of system stability. It isn't a real term.

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realcodywburns commented 7 years ago

Stability being measured the predictability of a system.

The yellow paper is the closest I have to a system specification. But it will need to be updated at some point to remove the difficulty bomb or mathematically explain the dao fork to be accurate. But for matters of core code this defines stability.

A 13 second block time is the goal as defined in the yellow paper. The code adjusts difficulty based on that time goal. To be considered stable, more than 95% (a statistically significant amount) of blocks should be close enough to this time. A blockchain you could set your watch by.

I do not think there is a group, I am most likely alone in my conviction.

1cyrilblanc commented 7 years ago

Can you please define how you measure the predictability of a system?

On Saturday, 1 October 2016, Cody Burns notifications@github.com wrote:

Stability being measured the predictability of a system.

The yellow paper is the closest I have to a system specification. But it will need to be updated at some point to remove the difficulty bomb or mathematically explain the dao fork to be accurate. But for matters of core code this defines stability.

A 13 second block time is the goal as defined in the yellow paper. The code adjusts difficulty based on that time goal. To be considered stable, more than 95% (a statistically significant amount) of blocks should be close enough to this time. A blockchain you could set your watch by.

I do not think there is a group, I am most likely alone in my conviction.

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realcodywburns commented 7 years ago

predictability - the degree to which a correct calculation of a future state can be made.

Any user should be able to calculate the total supply of coins for a given future date based on the knowledge of 5 coins being generated ever 13 seconds. This calculation should be repeatable with a high degree of accuracy.

1cyrilblanc commented 7 years ago

I'm asking you

How do you measure predictability

I know what the definition of predictability is

How do you measure it?

On Saturday, 1 October 2016, Cody Burns notifications@github.com wrote:

predictability - the degree to which a correct calculation of a future state can be made.

Any user should be able to calculate the total supply of coins for a given future date based on the knowledge of 5 coins being generated ever 13 seconds. This calculation should be repeatable with a high degree of accuracy.

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1cyrilblanc commented 7 years ago

Cody, do you still deny that scarcity exists?

On Saturday, 1 October 2016, Cody Burns notifications@github.com wrote:

predictability - the degree to which a correct calculation of a future state can be made.

Any user should be able to calculate the total supply of coins for a given future date based on the knowledge of 5 coins being generated ever 13 seconds. This calculation should be repeatable with a high degree of accuracy.

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realcodywburns commented 7 years ago

Take the total coin supply, 84,445,202. in 13 seconds it should be 84,445,207. In 13 minutes from now, there should be 84,445,502. Basically, add 5 coins for every 13 seconds.

1cyrilblanc commented 7 years ago

Do you still contend, do you still think that scarcity does not exist? I'm questioning your sanity

On Saturday, 1 October 2016, Cody Burns notifications@github.com wrote:

Take the total coin supply, 84,445,202. in 13 seconds it should be 84,445,207. In 13 minutes from now, there should be 84,445,502. Basically, add 5 coins for every 13 seconds.

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realcodywburns commented 7 years ago

Ok.

1cyrilblanc commented 7 years ago

Not that Cody didn't answer my question about scarcity

Cody decided to not answer my question about whether or not scarcity exists.

He has stated on Twitter that scarcity does not exist.

Photographic evidence of this exists.

realcodywburns commented 7 years ago

Cyril, I'm not sure what your issue is, however, our interactions are no longer a productive use of my time. If you would like an economics tutor i suggest reaching our to your local community college. We disagree on economics, that happens in acedemia. It is the reason the study of economics. you can accept this or not, it does not influence my understanding in the least. I have muted you on twitter and if you continue to unproductively taunt here I will address it with the admins. I wish you well .

1cyrilblanc commented 7 years ago

Hey Cody thanks for telling me to go and be lectured. It's okay to not continuing talking because as I stated, your denial of scarcity in general puts your state of mind in question - you're either very confused or intentionally denying a truism for some undisclosed objective. It's cool. Suspect virtually all other relevant people know that capping total supply of etc is necessary and more a matter of when, not if

On Monday, 3 October 2016, Cody Burns notifications@github.com wrote:

Cyril, I'm not sure what your issue is, however, our interactions are no longer a productive use of my time. If you would like an economics tutor i suggest reaching our to your local community college. We disagree on economics, that happens in acedemia. It is the reason the study of economics. you can accept this or not, it does not influence my understanding in the least. I have muted you on twitter and if you continue to unproductively taunt here I will address it with the admins. I wish you well .

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elaineo commented 7 years ago

Ugh, can we restart this ECIP in a clean thread?

arvicco commented 7 years ago

@elaineo Yes, I have to agree that this issue seems to be derailed. I would advise all involved to keep the discussion civil, productive and to the point. For trolling, there is Slack#general.

arvicco commented 7 years ago

Clean issue to discuss monetary policy: https://github.com/ethereumproject/ECIPs/issues/15

ethereumproject / ECIPs

ECIP-? ETC emission schedule #8