Burn And 🥩 Harnessing (BASH) Deflation Economic Model

[spenc]

@shane

It would only be practical if it was baked into v1, and I’m not sure that is a good mechanism for node runners in the first place. To do this Burn and Staking in v0, it requires an entity like PNF to send POKT from the Burn Supplement to the gateways… which there will only be a max of 3 in v0 most likely. If they had to do that for potentially hundreds of nodes… that would be chaos.

I see I was thinking about this incorrectly (burning is redundant) as I actually didn’t mean to introduce another Burn Supplement for node runners, just burn part of rewards of those who’s stake is below certain USD value threshold. So node runners would be incentivised to re-stake during the price drops, otherwise their rewards would be simply reduced in order to match deflation rate.

I’ve mentioned this idea in this thread

1. Introduce a mechanism to gradually raise the average stake to $15k or 15000 POKT. Right now, we have 20700 nodes, 870M POKT staked, and 608M POKT liquid, averaging about $1600 per node. A new node costs $600 to stake and Lean Pocket reduced HW costs drastically, which ultimately means decreasing the token rarity.

Silly example: Let’s say the nodes agreed on a minimum $5000 stake. That would imply $103M worth of POKT staked, covering the entire token supply at a $0.07 price, eliminating all liquid POKT.

It may sound outlandish considering we can’t predict how many nodes would unstake or re-stake. But regardless of the outcome, the game theory principles apply. If half the nodes exited, the remaining would enjoy doubled rewards, drawing in new nodes.