This is an interesting approach and itâll be interesting to follow the discussion in the coming days.
A few questions:
Is there a staking minimum lock up period for Gateway staking? Or can they stake and then immediately unstake the POKT and rinse/repeat?
I assume Gateways can determine what Node-runner(s) they want to stake with and communicate with the DAO?
Turning the staking aspect into a marketing plan I would suggest caution with. PNI offered something similar with their PAYG model and the market didnât react well to it. While the deals are indeed lucrative for the end customer, it introduces a new level of complexity that many just donât want to deal with. Maybe a specific Gateway can offer a deal to those dApps that are happy to spend the time understanding Pocket and the benefits of holding etc, but if we are selling a commodity, simplicity is key imo.
I see the staking subsidy as an alternative way the DAO subsidizes Gateway fees, that I am in favour of during the Gateway bootstrapping phase. However in this case it comes with a caveat of additional staking needed by the Gateway.
This is why I suggest a 3rd party control the stake on half of the gateway. By using the DAO (and in extensions PNF) to manage the stake, the gateway does not have the ability to unstake until the proper time, which could be:
Some time or milestone after v1
After the gateway hits a relays per day milestone (say like 10B). This way the gateway is incentives to grow the relays they send to POKT. If they have alternative services that donât use the POKT protocol, this provides incentives to favor the POKT protocol, because staked tokens will start to be unlocked.
If the DAO/PNF is the managing party of the stake, then the DAO/PNF decide what node runners, not the gateways.
I personally have never seen marketing around crediting POKT tokens to customers from PNI or from PNF. After doing some digging just now I found this:
To be fair, this does sound confusing because no one, even within the POKT ecosystem, knows how app staking will work in v1. There is no economic plan for v1 yet, so any messaging around âstaking for relaysâ will be confusing and could even be inaccurate.
The messaging Iâm talking about was shared in my post.
That is saying exactly how much they are saving each month through POKT crediting. Itâs not confusing and straight forward. By stating that unstaking will only be available after a milestone, should be really straight forward as well.
Yes, it will still be deflationary with a lower POKT price. This is what happens when I set it to 1.5C.
It would only be practical if it was baked into v1, and Iâm 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.
Not sure it is a good mechanism to have in the first place, but could be considered when v1 economic research is underway.
I added a new page called âImmediate Inflation Reductionâ. This page has B23 modified to follow the path of ARR, where inflation never goes above 4.98%. If being sub 4.98% inflation is an immediate need, like ARR, the Immediate Inflation Reduction drops inflation immediately but has l the extra benefits and balance of the BASH system.
Both still hit deflation by 10B and scales indefinitely.
I see I was thinking about this incorrectly (burning is redundant) as I actually didnât mean to introduce another Burn Supplement for node runners, just burn part of rewards of those whoâs 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.
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: Letâs 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 canât 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.
I do not believe a mechanism like that would be possible in v0 for sure.
However, the concept of adding staking pressure on the node side is worth considering in the v1 economics. Iâm not sure how feasible it would be to tie it to the price of POKT though. That would mean there would have to a serious oracle element baked into v1 that can determine price. Not sure how feasible it would be to achieve that.
Itâs also important to note that Iâm not sure any node staking requirements will result in significant consistent buy pressure, since nodes generate POKT. Any staking pressure on the node side would just encourage locking up POKT rewards they have already generated, most of the time.
Open to flushing out the concept under another v1 thread when itâs time
Thanks @shane for creating all this. It is always interesting to see how the builders in our community imagine POKT economy.
Please take my comments as constructive feedback, you always tend to think that what I write is much more negative than it is
This will be quite longâŠ
Some clarification on MINT flags:
Supply reduction before 10B is guaranteed unless the parameters are changed to continue bootstrapping after 10B relays. The same happens to this proposal if the parameters are changed. MINT should be green or BASH should be yellow.
If you believe that it can account for POKT price, why not green? It is easy to see in the spreadsheet and MINT playground.
The buy pressure incentive is lower in this proposal (in the long term), as the GFPR (named Gateway Burn Per Relay here) is only 2x the current one and we propose values that are higher than this. In the short term it would be higher (I think) but it is lower overall. Anyway, Im not even sure if the actual GFPR is 2x, but rather the same as before but we are only minting moreâŠ
General Notes
It is not clear to me why this proposal creates more buy pressure. As I understand it, it will double the RTTM to make room for the additional burn supplement. That additional minting will be staked for the gateway? not sure how this is working exactlyâŠ
It would be very helpful if you adjust the format to MINT and ARR. Specifically the sections. It is not easy to find how many parameters are required and how will they change with this proposal, it makes overall comparison harder to do.
You use Gateway Burn Per Relay (GBPR) instead Gateway Fee Per Relay (GFPR) a term that was created in the burn proposal. I would use the same name to avoid confusion. I understand that it has almost the same use.
Please try to avoid using âinflation/deflationâ for supply growth/attrition. This can get very confusing when mixed with price drops (often also referred as âinflationâ by the community).
Im not sure on the meaning of :
I understand that BASH is tied to the price of POKT through the GFPR that is one of the control variables of the proposed method. BASH was designed (âhardcodedâ) to create supply attrition at 10 B relays by day. I donât know why it is a weakness of ARR to produce attrition before this mark. There is nothing special around this number of relays.
The gateways stake seems will need that PNF is made responsible of all the stake on behalf of the portals, this has other complexities (legal ones I think)., maybe Iâm wrong but people from the USA might have better understanding of this.
This is a valid point. The strategy seems similar to PNI with apps and it was not well understood/received (as far a s I know).
However I wont argue around this point, it all depends on how it is communicated.
Conclusions (I put them first so you can skip Greece)
The mechanism of staking may or may not create additional buy pressure, Iâm not convinced that it would happen. After reading the explanation and going through the spreadsheets Iâm still hesitant to say that it will create any buy pressure.
I think that the proposed method tries to create a simple curve in the supply growth chart, something understandable (linear), but it fails to take into account the effects of this linealization (complex USD incomes curves). I believe that the income curves are more important to kept simple than that of the supply growth, as investments rely on them.
The original model (âDeflation Focusedâ) is very sensitive to price changes in the low relays zone (actual state of the Pocket Network), resulting into high growth rates (~25%) at POKT prices of USD 0.015 and 1.2 B relays per day. For this reason I think it is not viable.
The introduced limiting of the supply growth (âLow Inflation Focusedâ mode) fixed the previous matter but introduced an explicit misalignment between ecosystem growth and servisers gains. Servicers earn more as the number of relays goes down and the price up, or (after 10B relays) the servicers earn less if the number of relay goes up and the price goes up. This is what we try to avoid in MINT. I think that we should all push to the same goal.
And finally (but not less important to me), the model relies in a series of operations that I fear that are not well defined (many hard-coded values without explanation). This results in difficulty to understand and tune the model and also in unforeseen effects (as shown previously).
Welcome to GreeceâŠ
I went through the provided spreadsheet and reconstructed the mathematical model that was created.
While the model make use of current division of rewards between DAO, validators and servicers:
S_DAO = 10%
S_Validators = 5%
S_Servicers = 85 %
They need to be modified in the blockchain. Their actual values now depend on a new parameter, the Burn Supplement:
S_Burn Sup = 50%
This parameter actually rules over the others, defining their in-chain values:
DAO share modification:
Validators share modification:
Servicers share modification:
The model is in fact driven by the total POKT burnt by month, which is calculated by means of:
This value is derived by projecting to months the number of daily relays (30.4 * R_{B by day}), multiplying by the GatewayBurnPerRelay (GBPR) and converted to POKT using delta (POKT price in USD).
The GBPR was set to twice the original GFPR, probably to make-up for the changes in the rewards divisions and to make room for the burn supplement: GBPR = 2 GFPR = 0.0000017
The POKT price is delta = 0.031 (inverse of epsilon in MINT)
Using this amount of POKT to be burned by day the model proposes two ways of calculating the total POKT to be minted in a month:
Here the POKT minting is tied to the POKT burned by month (function of the POKT price) and the number of relays if the number of daily relays is below 10 B. Once the threshold of 10 B relays is reached, the model changes and apply a linear function, controlled by the number of daily relays and with a floating bias controlled by the POKT price (the total burnt by month).
Here the linear behavior of the POKT minted after the 10 B daily relays mark is kept constant, the change is introduced for the low relay counts.
With less than 10B daily relays, the model seeks to achieve 5% supply growth at approx. 0.1B relays and then decay linearly to (almost) zero in the 10B mark.
This mode also requires the monetary base at the time of implementing, which is: M_B = 1626069.513
Both âmodesâ have a large number of parameters that are unaccounted in the proposal. They seem to be chosen to reach the described goals, but they are difficult to classify (functionally).
Once a given mode is selected, the model calculates the Relay To Token Multiplier (RTTM) that satisfy the conditions (similar to SER concept):
Then the earnings of each actor can be calculated as:
Burn Suplement Minting
Total to be minted by month for each Participant
Projections and Plots
In order to judge this model using the same tools as MINT, I created the same plots that were created for that proposal.
The âDeflation Focusedâ Mode
This mode has an evident weakness, that is that it creates a rapid supply increase rate in the current number of relays when the POKT price is 1/2 or lower than the current:
The fuchsia lines correspond to POKT prices of ~0.015 USD and ~0.009 USD respectively (the lower the price the higher the supply growth). The dashed blue lines ar higher POKT prices. The bold line is the current POKT price.
These supply growth rates are regarded as high by many (myself included).
For this reason the author created the second mode, which we will analyze further.
The âLow Inflation Focusedâ Mode
This mode introduced a modulation of the POKT to be minted that ensured a bounded supply growth.
The supply growth rates are now bounded and decaying linearly:
Note that now the POKT price changes do not affect the minting. This happens due to tying the mint to the POKT price in the total POKT minted by month calculation.
This is nice, however if we analyze the income of the servicers and gateways we see some unexpected behavior:
The servicers will actually earn more if the number of relays remain low and the price go up (dashed dark blue lines). This create total misalignment with the rest of the ecosystem.
If the ecosystem is above 10B daily relays, the servicers earn less if the prices goes up (dashed line, dark blue).
There is a big discontinuity at 10B daly relays, which is larger when the POKT price is larger. This discontinuity is too big, 9.99999 B relays and 10 B relays are almost the same but they have large earning difference (I suspect that this is due to a hardcoded 0.1 around there).
If the number of relays is below, the servicers earn more if the price goes up, and this is boosted in lower number of relays.
Moreover, today the servicers earn ~2K USD per day, that amount wont be reached until ~11 B daily relays.
Finally, the servicers income grows lineally and much faster than the rest of the ecosystem actors (DAO, servicers and validators).
Very much appreciate the feedback @RawthiL. Iâll try and address each point
I have to admit, I donât understand how everything is working with MINT, so my apologies if I misunderstand something Iâm more of a dynamic spreadsheet guy, where I can try and follow how everything works under the hood⊠which you are more of a python guy. While it has a price input, it doesnât seem to balance other parameters automatically from what I can tell. It take a lot of manual changes to account for price, which Iâm not sure how to do (hence the yellow). With BASH, changing the price updates all parameters accordingly and maintains the best balance possible (which is what I meant with green).
Right now for MINT, I would just be trusting that others understand how it works, which is why I wanted to see if I can take parts of your model and make it into something that I do fully understand. However it doesnât produce workable outcomes when I use the spreadsheet, so Iâm just going on what the spreadsheet shows.
Yeah, they are the same thing, but I found when trying to explain BASH in my post, Iâm constantly having to switch between saying âburnâ and âfeeâ, which can be confusing for some folks. So to make everything clear I just stuck to only using one term, which was burn since that is what it is.
By requiring gateways to burn and stake it doubles the amount of POKT they have have each month, when compared to ARR, as I explained in this section. Requiring more POKT per month fundamentally would effect buy pressure. At 10B relays gateways would need to have 19M POKT in hand each month⊠which no gateway will have for more than 1 month, even if they have a staking business.
For me, it is safe to say 19M would create significantly more buy pressure than 8.5M.
This is a fundamental flaw with MINT right now. As I mentioned in my comment before, the MINT model doesnât work for gateways at all.
MINT does get to 0% Annual Emissions Rate at 10B relays, but at a GFPR that is completely impossible for gateways IMO. The cost per relay is almost as much as what PNI charges customers. It would make sense for gateways to use their own hardware (or even ANKR) instead of the POKT protocol.
Every other RPC market is designed where if you bring more relays, you get a discount. MINT proposes the opposite that if you (or some other gateway) brings more relays, each relay gets more expensive. For me that concept itself is a no go.
Relays need to stay at $.00000085 to be competitive to running off of your own infra. POKTâs economic model needs to take the game theory of gateways into account, and BASH and ARR are designed to do that.
For contrast, this is BASH with 10B relays and 20B relays while still being deflationary, grown node rewards, requiring double the buy pressure, and consistent (and reasonable) USD costs for gateways.
Wow⊠this section makes me look really smart! Iâve never seen one of my spreadsheets âin the greekâ
Seriously, great job breaking it down the mathematics. Though I may get lost in it, it is great to know that someone is really breaking things down.
Where are you seeing large discrepancies or large earning differences between 9.99999B relays and 10B relays? Please show screenshots, because that is not what is in the model from what I can see.
From what I can see, BASH perfectly hits itâs goals without any radical changes, regardless of where POKT price or relays go. Please show screenshots of the spreadsheet because I believe your python scripts are wrong.
Yep, the whole thing is hard coded to hit specific goals. I went into it with these goals
Deflationary by 10B relays a day Relay growth can expand node ecosystem Consistent USD cost per relay for gateways (very important) Accounts for POKT price Direct buy pressure incentive Staking Incentive
Just like SER and ARR have hardcoded elements to them, so does BASH. However BASH took many of itâs design ques from PNF (their desire to hit sub 5% Annual Emissions Rate ASAP, be deflationary at 10B, and constant USD price per relay), while adding other goals that I feel are worth taking into consideration (POKT price, growing nodes, additional buy pressure).
V1 is the opportunity to limit the amount of hard coded goals needed, but for POKT in this market, the itâs very important to account for as many elements as possible⊠hence my attempt at BASH.
Take note, that I amended my comment above since you last saw it regarding MINT. It had a GFPR max that was not being honored with a calculation. My main point that GFPR is significantly too high IMO still stands, but Iâve corrected the information
Much thanks for screenshots You are absolutely correct that at 10.00000001 (not 9.99999) there is a bump I did not notice because the train is switching tracks. The pre 10B track is focused on getting to deflation by 10B with minimal hit to the servicers, while post 10B then on growing servicers while still maintaining a deflationary projection.
However, the transition should be fluid, so I updated cell B23. Now it works without any jumps.
So, the gateway will have to buy twice the amount of POKT (compared to current situation), but it can choose to stake half of it instead of burning the 100%.
So, it will burn half of it, by sending it to PNF, the same as today, but the other half can be staked (through some mechanism, not the point anyway). If the portal locks this other half, then the PNF will use the burn supplement funds to burn that other half of the tokens?
I do not agree this, that number is derived from a very specific situation of the Single-Portal Pocket network, it does not have to rule the economics of the protocol.
Anyway, maybe Iâm getting this wrong, but doubled that value: GBPR = 2 x GFPR = 2 x 0.00000085 = 0.0000017
So, even if the portals are only burning half of that, the immediate price they have to pay is doubled, because they have to buy for burning and staking. No matter that they will recover that in the future.
Yes, the initial parameters of MINT are probably not accurate, Iâm working to get correct data and updating them. I will ping you from the MINT post when I have an updated parameter set (and a new spreadsheet page).
I see that you change the condition in the âLow Inflation Focusedâ mode:
with G_max = 0.0498 (max growth allowed) and R_attr = 10 Billon relays per day, the target of supply attrition.
The condition is just measuring both behaviors (prior and post 10B), so I can imagine that the hardcoded numbers are actually named now (0.052 and 10 in the previous post, wonder why you were aiming at 5.2% supply growth).
The discontinuity is gone but the problems here remain (mentioned in the original reply):
The âDeflation Focusedâ has the same discontinuity, and this condition wont fix the problem. If you plan to keep it as an option you should also update that condition.
Exactly. The process is not really different than it is today. Instead of a gateway only sending a burn transaction to PNF, they will also send a stake transaction to PNF. Implementing this at itâs core is super simple.
You are correct that is requires gateways to have double the amount of POKT on hand each month⊠however only half of that POKT is a sunk cost, while the other half can generate rewards for them. If the sunk cost of gateways is too high, the game theory would lead to gateways deploying their own infra. Staking is a way to increase POKT demand without being a sunk cost. With POKT being at an ATL, there could be significant upside for gateways to hold POKT now, and this mechanism makes it straight forward.
Also, app staking has always been considered a part of v1, so this is emulating the stake side during v0 and would allow apps (or in this case gateways) to more easily transition into v1 (if there is a staking requirement). Since we donât know what the economics will be like yet, this could be a good practice to have in the meantime.
Could you please show me on the spreadsheet what problem you are referring too? Apologies, but Iâm not tracking what you are talking about.
Deflation Focused does not seem to be as popular as Low Inflation Focused which hits all of PNFâs goals. Unless there is a real desire for the Deflation Focused one, Iâm just going to focus on perfecting the Low Inflation Focused model.
Iâve re-orded the pages so Low Inflation Focused is the default.
Fixed B23 to create a fluid reward transition post deflation thanks to feedback from @RawthiL (See comment here)
Added a Goals panel at the bottom which can be adjusted. Once deflation has been archived, The Post Deflation Accelerant Curve determines if it is best to focus on faster deflation or growing the Servicers, Validators, and the DAO economy. Adjusting this variable will adjust how fast deflation accelerates.
Also, I have made the Low Inflation Focused page the default as that page is what meets more of PNFâs goals. I will not be updating the Deflation Focused page unless there is desire in the community.
You see how you are getting close to the five questions that I use in the MINT playground? You added the PDAC, which is the Protocol Share⊠But lets not discuss this here.
I will break down two scenarios, a possible one and a great one (but terrible for BASH)
Pocket Success!
In this scenario I compare the current state of the network with one where the POKT price gets to ~3x . Both of them with current number of relays and ~3x number of relays
This is the earnings and payments graph that governs this experiment. The colored arrows signal where each spreadsheet screenshot was taken (color of spreadsheet marks correspond to points in the curve).
Fantastic comment! Thank-you for using the spreadsheet I can address them specifically.
The scenario you are creating is:
Green Scenario - POKT price 3x and relays do not increase
Blue Scenario - POKT price 3x and relays relays hit 3B
Pink Scenario - POKT price 3x and relays drop by 60%
First, off, I do not believe those are realistic scenarios with POKT skyrocketing to 3x without meaningful gateway activity. It seems the entire POKT ecosystem believes that meaningful buy pressure will only come from gateway adoption, and these scenarios are the opposite of that.
However, say that POKT does hit a new price trajectory, without the help of gateway traffic, BASH already can follow the path of ARR and increase services rewards on the way to deflation. First lets see how ARR does.
With ARRâs original 38C projection, it will start to hit deflation by 10B relays (similar to the default Goal in BASH).
However if the price were to essentially 3x to the 10C, as you are proposing, then ARR no longer hits deflation at 10B. It instead will have 3.07% inflation. Deflation would instead be hit by 26B relays a day.
This is because with ARR the deflation point always changes according to price. If the price of POKT doubles, it hits deflation with double the relays⊠and if the price of POKT is cut in half, it takes half as many relays. This exact thing can be done with BASH.
With BASH, if the price of POKT does a 3x increase, and you want to favor servicers with more rewards and not hit deflation by 10B, then you can change the Deflation Goal to 26B to be on par with ARR.
MINT on the other hand is able to make sure servicers always get increase rewards in a cleaner way, but it does it:
With unrealistic and unstable GFPR With uncapped inflation (meaning it does not have a 4.98% cap as PNF has suggesting).
The âDeflation Focusedâ model of BASH does act similar to MINT where it doesnât have an inflation cap. However, from what Iâve gathered, folks want to hit PNFâs goal of sub 5%. If the community doesnât care about capping inflation and just cares to hit deflation by a set number of relays, then the other model does that.
Iâm not entertaining the other model at the moment, while the community push seems to be hitting sub 5%.
lol⊠well that will only help if POKT would 3x. If doesnât skyrocket, then you are just missing out on rewards
lol⊠if we hit 1.15 USD, then we donât need to worry about deflation at all⊠just set deflation goal to 6 trillion and ride that reward train
BASH is about setting specific goals in terms of an emissions cap, deflation, and maximum buy pressure (burning and staking). If the price of POKT falls, then each goal can still be met WITHOUT over diluting servicers. If the POKT price were to suddenly increase substantially, and we want more rewards to go towards servicers, then the deflation goal simply needs to be moved from 10B.
Thank you @shane for all of your awesome work on this.
Notwithstanding your extremely helpful contribution to our collective knowledge, I do not support BASH (at least for now) for the following reasons:
Time is of the essence. We need to reduce inflation now to give confidence to those outside of this community that we care about economic sustainability. Otherwise, we will fail to bring in new contributors, and attention towards this project and POKT itself will continue to wane. The gateway parameters need much more thought and debate. Portal staking is going to happen in v1 and we are just about to kick off a 6 month research workstream, including some outside experts, so we can ensure the adaptability, dynamism and sustainability of Pocketâs economy. Whatever we do now, will most likely change pre v1. So if you agree with the inflation cut, why not agree to that now and then we can work on parameterising the gateway fee in a step-wise fashion by working on it in parallel and putting it up for a future proposal in a monthâs time, or however long it takes?
Additional complexity. In addition to the point about the necessary debate around gateway incentives, there are also some new parameters included here that we need to understand more deeply. While I really appreciate how much more simple this proposal is to grok than MINT (which, for the record, is also a very impressive contribution), there are clearly some edge cases that we need to understand better before pushing this to a vote.
Thanks for the feedback and I understand your points.
So⊠actually BASH provides a balanced version of ARR already, without staking. If you do not want to activate the staking requirement for gateways, and instead do that down the road, then it is already in BASH, while still providing balance to where ARR is lacking.
Balanced ARR
To show you what I mean, I created a page that only focuses on buring, with the staking elements turned off.
To take out the staking on BASH, I simply set the GFPR to $0.00000085 (which is the same as ARR) and set the Stake Ration to 0%. This means that gateways have to pay the full GFPR and there is no Burn Supplement.
Now let me show you how BASH accomplishes ARRâs goals better than ARR, even without the staking elements of BASH.
If POKT price falls below 38C, (which it already has) then ARRâs minimum servicer allotment of $250k get exponentially eroded by the time we hit 10B relays a day. Look at what ARR would produce if POKT hits 2C⊠only $114k for servicers
However, as you can also see on the left, BASH keeps the ecosystem as balanced as possible. Instead of having a -4.55% Emissions (which is far more than what we need in the short term), BASH properly balances the inflation so we still hit deflation at 10B relays a day, but with $219k still supporting servicers. This is because ARR is not balanced for lower POKT prices. Already today, if it were to pass, it would cut servicers much more than it advertises in the proposal itself.
BASH is the balance to that. It accomplishes all the goals of ARR, but in a balanced manner (even with staking turned off). If the price of POKT hits 15C then the servicer budget is only $86k with ARR, which is 1/3 ARRâs advertised servicer budget. BASH stays at $219k even with the price drop.
Complexity
While BASH has more algorithms, I would not say it adds any additional complexity (especially with the staking turned off for a later date). I would argue ARR is much more complex, not because of static 255k POKT per day it mints, but because it creates an unbalanced ecosystem that is dramatically effected by sways in price. Price drops exponentially hurt other ecosystem participants in an uncontrolled manner.
Adding balance in this case makes for a more involved spreadsheet, but it can provide a much more stable environment for the ecosystem.
ARR will require many more proposals in the future to create balance. Once relays hit over 10B, and POKT becomes deflationary, ARR is designed to just keep feeding deflation without providing any balance for other ecosystem participants. BASH provides balance that scales to infant relays past 10B.
My Ask
What are you thoughts on the Balanced ARR page of BASH, where the staking elements are entirely turned off for a later date?
We could propose BASH for the better balance and ecosystem predictability (while hitting all the goals of ARR), and hold off on the staking elements for now. What would you say to that?
This would just be a matter of submitting the BASH proposals with parameters that do not include staking (as they are in the Balanced ARR page).
ARR doesnât include a minimum servicer component of $250k. ARR is solely about reducing the RTTM to target 220k of POKT per day in daily issuance as per the following extract:
I think there is a misunderstanding in the quote above.
-7.7% deflation is a good thing for all of Pocketâs stakeholders. And is much better than 0% inflation/deflation. Deflation reduces our supply and naturally means that protocol revenue is high. A deflationary scenario where Pocketâs economy is burning more POKT than it is minting - in a manner that sufficiently incentivises all stakeholders, and accounts for the growth needs of the network - means that Pocketâs economy is healthy and sustainable. Provided these conditions for sustainability and growth are met, there should be no such thing as an âoverburnâ.
Furthermore, capping protocol revenue at a number that matches minting would actually mean our protocol revenue nets out to $0. As per:
All holders of POKT will benefit from a reduced supply, including node runners, as it is likely that their node rewards will go up as each unit of POKT they receive for the work will be more valuable (unless there is a USD cap, which is a separate conversation, and explicitly not part of the ARR proposal).
Iâm not sure where youâre getting these numbers from in the quote above? If the price of POKT goes up to 15c, then daily node rewards will be 220k POKT * $0.15 = $33k per day / $990k per month / $12m per year
This will likely be too high unless weâre talking about many more relays than 10B, but at those price levels, itâs a good problem to have. And when we make such decision - hopefully proactively, as opposed to reactively - we will be armed with much more data and consensus from the community.
As mentioned in my previous comment, we have much bigger problems if POKT falls to 2c. And neither BASH, ARR or MINT can fix such problems alone.
I largely agree that even the reduced inflation rate proposed by ARR is likely more than we need at this point in time in Pocketâs growth journey, but I am very wary of attempting to lock in a floor for node rewards right now.
What we do know is that inflation needs to be cut. How much we should cap node rewards to is more uncertain, and the decision was made when drafting ARR to push this decision further down the line. We are also not sure how much consensus there is around a USD cap on node rewards yet. And it will be hard to push for one without the results from the node runners survey and deeper market analysis, which will likely take at least another month to get all the data, analyse it and publish it.
I disagree mainly because ARR shouldnât be seen as a holistic solution to every problem in Pocketâs economics.
It sounds like you agree with the need to reduce inflation. So I think we should start there, as it feels like there is consensus around it. Voting for ARR doesnât mean voting against the additional parameters proposed by BASH, or MINT. Itâs simply a vote to reduce inflation. And to continue the conversation about everything else, such as:
whether or not a USD cap on node rewards is desirable, and if so, what that cap should be
the gateway fee, and how that should rise with relays, as well as the quality of Pocketâs overall service, along with the need to incentivise new gateways to join the network and drive demand
experimenting with a staking component for gateways (as will be the case for v1)
increasing minimum node stakes
any other bright ideas!
I agree that ARR will require more proposals in the future. Still, I actually believe that doing things in a step-wise fashion that everyone understands is much more preferable than trying to design the perfect complex system upfront when there are still so many unknown variables to work through, such as gateway incentives, the USD cap, staking, and so on.
And I will be much more comfortable agreeing to more complex changes if 1) they will contribute to our understanding of the economics for v1 and 2) we have sufficient data and analysis to justify them, including from the third party expert that is to start work soon on helping to define the minimum viable parameters for Pocketâs economic design in v1. (this last part is something that I hope that you @shane and @RawthiL, amongst other notable community economists, will play a significant role in)
In closing, ARR is simply a vote from the community on whether or not we should bring inflation down to c.4.98%. We are leaving the door open for all of the other interesting mechanisms and parameters proposed by BASH and/or MINT, and simply ask that we do this in a step-wise fashion. Cut inflation now, and buy more time for everything else.
Iâm more of a dynamic spreadsheet guy, where I can try and follow how everything works under the hood⊠which you are more of a python guy. While it has a price input, it doesnât seem to balance other parameters automatically from what I can tell. It take a lot of manual changes to account for price, which Iâm not sure how to do (hence the yellow). With BASH, changing the price updates all parameters accordingly and maintains the best balance possible (which is what I meant with green).
Deflationary by 10B relays a day
You are absolutely correct that at 10.00000001 (not 9.99999) there is a bump I did not notice because the train is switching tracks. The pre 10B track is focused on getting to deflation by 10B with minimal hit to the servicers, while post 10B then on growing servicers while still maintaining a deflationary projection.
ïč 
have yet to play with your spreadsheets but I love the idea. 
With unrealistic and unstable GFPR
