Emission Soft-Fork Proposal

Miners already indirectly donate a percentage of their earnings to closed source mining software developers (in the form of fees) and to pool hosters.

EnigmaPool has been running a miner funded block bounty for a while. Myself and many other miners happily donate a percentage of our earnings to encourage decentralization.

The advantages of Ergo’s programmability, and scalability can make donating to it’s security incredibly cost efficient for large dApps or sidechains.

I fear for small but dedicated miners if emissions are heavily prolonged. The everyday people that Ergo is designed for.

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Im very small miner, so my oppinion dont have same weight but I think that with current aggresive emmision ERGO will be on the edge of death during bearmarket. 50k ergs daily for such small community is too much. Price is even now holded by few rich people. When sentiment drop and price with it, you who need to sell to pay bills etc. will leave and there will stay again only rich miners who are able to hold till next cycle. Yes you are mainly care about yourself I totally got it but withot buyers will be your mining ded too, increasing price will bring attention and pump will come hand in hand.

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As there are some concerns about too aggressive nature of the proposal, here are alternative ones. Still , we consider following rules:

  • if block reward is not less than X ERG, send X-3 ERG from it to the reemission contract
  • otherwise, block reward R is less than X ERG, send R - 3 ERG from it to the reemission contract

, and consider that re-emission contract paying 3 ERG.

Then for different X we have (where X=21 described in the initial post):

  • for X = 12, 3 ERG emission will be started at block # 1756800, total reemission is 14625600 ERG, total reemission is enough for: 4875200 blocks (18.55) years

  • for X = 15, 3 ERG emission will be started at block # 1692000, total reemission is 17796000 ERG, total reemission is enough for: 5932000 blocks (22.57) years

  • for X = 18, 3 ERG emission will be started at block # 1627200, total reemission is 20772000 ERG, total reemission is enough for: 6924000 blocks (26.34) years

Now we need to talk with miners, and I am starting an EIP with concrete details, activation etc

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I have been mining ergo for 6 months and love this project so much. I just want to say thank you for this opportunity. I am in total support for the idea of extending the mining for longer I think this will widely help grow the mining community much larger and also the people behind ergo will extend and grow larger through this proposal. You have my support on this idea. I think it’s fantastic and healthy that the mining will be extended will help the little guys out more and will be a fun experience for younger people like myself who will get into computers and mining in the future. I love how energy efficient ergo is on my GPUs I have 8 rx 580s running on ergo and I’m going to save up to get some Nividia cards to get going on ergo to. More time the better :grin:

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I like this proposal, 18 years in tech is practically an eternity. Much can happen before then. Thanks for listening, I believe a compromise here will be a win for everyone. -TC

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Hi,

I want to start by saying that this proposal is very good and I am in full support of it. Thanks so much Alex for preparing it.

Proposal additions
I have some proposal additions. I propose we add another measure.

  • Taking surplus money out of circulation.

increasing confidence to for ecosystem growth

Ergo is experiencing inflation. This is not good for the ecosystem growth.

The price is a sign of market confidence. The inherent value and engineering quality is undermined in by this situation.

Over supply of currency is a contributor due to the emissions schedule. oversupply of money is never a good position. In our case it destabilises expansion and affects the future of the project. Low confidence has a knock on effect of development and growth. Sadly the mc is the result of tokenomics and not engineering quality, so needs to be patched in several areas.

Inflation reduction

The current proposal is the equivalent of turning off the tap of quantitive easing off. But because there was such an aggressive mining schedule there is now major imbalance in the economics of the project. The impact of this imbalance will be felt as demand for token does not match supply in circulation.

I believe we need a monetary reduction measures need to be put in place quite quickly to a find ways to take surplus money out of circulation.

To burn or not to burn? That is the question.

It is not possible to burn tokens on ergo, because any burnt will be put into a smart contract in turn these will be redistributed at a later date as storage rent.

perhaps this is a good reason that burning tokens on ergo is ethical.

Burning tokens:

  • Actively reduces tokens and squares the projects economics.
  • Create a reserve for future distribution when storage rent when it comes into action.

Therefore burning tokens simultaneously solves current inflation issues and future storage rent issues.

I think this approach will mofe adequately distributing the funds in relation to need and use and a more realistic ecosystem expansion.

IMO. Right now we have effectively already mined a lot of future ergo - we need a way of putting this erg back to the future cue back to the future themesong

Because of this I believe that an effort to reduce surplus should be enacted - and the equivalent to burning ergo should be seriously considered.

** Second layer token burning**

A token burn doesn’t need to happen at layer one to be effective either.

One suggestion is that some layer two dapps like ergodex and ergo auction house could be asked kindly to burn an amount of tokens whenever the service is used, this may not impact on profit and would be a small price increase.

This would mean that big projects contribute a lot more to the ecosystem than just the service they offer by reducing surpluses as they grow.

I can predict that at a certain point we will reach an equilibrium.

For example: an agreement to burn tokens as part of this could be the perfect prerequisite for using ‘ergo’ name before any dapp. the individual organisation benefits from the image of the name or brand, then this kind of action recognises and supports the ecosystems long term future growth.

Burning
I am by not any kind of major advocate of token burning. But I think its important part of monetary policy. I do think that any economic system needs to at least attempt to relate the supply of a currency at any given time to the goods and services available, else the currency becomes undervalued and incentives become imbalanced.

The ergo ecosystem has a good design. But burning tokens would Simultaneously solving our current oversupply issues, and future mining rewards v storage rent concerns.

Soft or hard policy?

I also realise this probably can’t be a hard policy. But maybe it’s a cultural policy, normalising this among certain key ecosystem dapps.

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Good idea. We need to balance things towards less inflation and longer mining rewards. Win-win for miners and holders.

Besides, a higher price will also be good for Ergo Fund value and for attracting more projects on Erg - which is necessary to switch as fast as possible to a model where transaction fees pay for mining rewards.

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Great post!

Can you elaborate on how token burning on L2 “may not impact on profit” ?

Are you saying if token burning leads to increase in price, profit may not be impacted?

Also, correct me if I’m wrong but such a L2 token burn method is outside possible scope of this proposal, or a similar proposal.

Since this is an L1 proposal, unless we “burn” a % of erg re-emissions contract by sending the % to a separate dead/ “burn” address?

Edit: also it’s not like Ergo has some crazy high Total supply number at ~97 million. Compare that with many others, 97 million is a rather conservative amount IMO.

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Are there any news regarding this proposal? Since the forum is not very active, I am wondering what’s happening behind the scenes.

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Personally, I am not a fan of burns.

Instead of burning tokens, locking them to reward miners in the future is a much better option IMO.

There is a question an open question how does a network incentivize miners after a tokens emission period?

There isn’t a clear answer for POW.

I think this would be more useful if it is ever needed.

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After about 20 years as kushti proposed, the block rewards could fall from 3 to 0.3, for example, and stay 0.3 for next 30 years. Better something than nothing. This would make the miners feel more secure and loyal to the blockchain. This is especially important because it is a POW. Miners in the future may be reluctant to mine ERG when they know that only a few years earlier the block reward was 70 and they are mining 3 ERG per block. We need to somehow motivate future miners. One way is a satisfactory block reward and the other, MUCH MORE INFLUENTIAL, way is the good development and popularity of the ERGO ecosystem that will affect the high price of ERG so that miners are profitable by mining 3 and 0.3 ERGs per block.

ETH is not profitable for mining because of the big block reward, but ETH is profitable because of the high price, good marketing, development and because the whales do not sell it.

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The difficulty bomb in Ethereum is a good example of how blockchains can become coercive. Accepting obsolete node client software so that it is always supported like in Bitcoin is something I think ERGO should follow. Forcing nodes to update could be a bad thing and cause coercive effects forced compliance is never a good thing.

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I don’t think people would give up guaranteed erg for chance at an airdrop. Most people in ergo ecosystem will want to hold erg as it is the native token.

Curving emission is great for price. It’s why bitcoin had those supply shocks every 4 years. The shock to the issuance of ergo cause low supple and the price shoots up. The price of erg at the moment is being heavily diluted with its linear emission schedule.

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We know what emission curve does. Bitcoin has emission curve, it has a halving every 4 years and that’s usually when whole market has bull run. The supply shock causes the price to shoot up. Also they are proposing this because they don’t know exactly if the storage rent will be enough at the moment. So emission curve gives it longer runway time to build.

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Thanks a lot for the response!

This is a response to Gabe, Armenio and others than have shared comments. Thanks for taking the time to reply.

I have got some further thoughts and clarifications to build on above post building on your thoughts.

Circulation ammount:
I agree that the total released into circulation is conservative. But this is over the projects lifespan. I think there is a general feeling that there are be too many tokens in circulation at this point in time specifically. This is due to the short release schedule.

History of release schedule:
Satoshi released tokens over a larger period, this is allowed a pattern of organic growth. This halved the amount every few years, which effectively built scarcity in line with growth in users over time.

In ergo the change of release schedule means there is an acknowledgement of an oversupply right now. This also means the storage rent strategy needs some time to mature. I think this is a positive thing.

Wen Storage?
I think the storage rent is fundamentally a good idea. But i can see the levels of complexity behind implementing it. The issue with the storage rent implementation seems to be that there are a lot of known unknowns.

Some of these include:

-how many people will avoid storage rent by moving tokens regularly?

-how many dead tokens will there really be?

-At what point in time and maturity of the project does this storage rent become feasible as a strategy because there are enough dead tokens in the ecosystem. how do you identify the sweet spot for the transition as we are writing right now without information from the future available now. When could we have enough data available to us to confidently implement storage rent?

-How does the crypto savviness of todays users affect ammount of dead tokens compared to early days of Bitcoin?

And so on.

There are a few options:

Having a ‘burnt’ reserve helps us confidently transition to the storage rent strategy in the future whilst navigating the worst of these known unknowns. It gives the network some security by increasing ‘dead tokens’ in the network in a planned and considered way.

I can also see some vulnerabilities in storage rent too. all it would take is for some smart developer made a ‘rent free’ wallet that automatically moves tokens to a new wallet every few years, and for this to gain popularity at a later date in network growth to undermine the system. So for a successful transition I feel like we would need some artificial method low lower unseen risks.

The cycle of token reincarnation
I proposed it being linked to dapps because it could connect to network growth. For example, being part of the dapp ecosystem would create a positive feedback loop.

-the more dapp ecosystem is used
-the more the asset gets scarce,
-the more demand for the network.
-the more that is put in storage,
-the higher probability the ecosystem can sustain itself for longer post storage rent transition.

It’s a very good mechanism for price growth, ecosystem growth and longevity simultaneously.

Burning or storing? Phoenix proposal?
I think that the word ‘burning’ has some conceptual baggage. in Ergo’s instance maybe we coin a different word for it, maybe it’s more like a Phoenix, where tokens are burnt but re-emerge handsomely at a later date.

At its heart what I’m taking about is really a process to reduce supply whilst making sure some of the tokens emitted now can be used at a later date. To think about a golden point between scarcity, overwhelming the market, and growth of users in the network.

Layer 2 v layer 1:
Agre about this discussion for layer two. I think they might be separate parts but they are essentially part of the same system, so that’s why I mention it here.

On layer one: There might be some parameter introduced, just like you suggested. For example I could see a script that sends tokens to an array of randomly generated keyless wallets purely to slowly be mined in the future, solving any concerns about storage rent. Or there might even be a very radical solution like you could just decide not to change emissions schedule at all and make 90% of all mined tokens go directly to storage. Something that might have the same effect but speed is up to storage rent transition.

But my proposal is that you make it some kind of obligation to have a burn function on dapps.

Dapp income model/profit:
When I used the word profit, I was referring to income the dapps generate when providing their service

I’m aware that each L2 dapp may have a different financial sustainability model. From what I understand a portion of the income from, say, the sigusd contract goes towards developer or some other pot.

The fees to use dapps on ergo are highly competitive and cheap already. I am proposing that maybe there is a way to charge very slightly more to include (auto or not) a token burn.

Separate discussion or no?
Just wanted to chip in and share ideas where they might be useful! Thanks again for all of the amazing work with the ergo platform.

Internal team and developers are the experts on ergo. I am really behind whatever is decided. thanks for taking some of this time to take feedback from the community and listen to some of my ideas.

I also believe that changes need to happen really fast. So whatever is best for the ecosystem.

Thanks a lot,
Louis

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(Deleted posts because the above because it was the same post, but it appeared several times)

Sounds good … good good

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As a miner, I approve of the extended emissions. This should bring the price up and allow Ergo mining to stay profitable for a long time.

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I think it needs to be taken into consideration that the mining paradigm has changed. Non-outsourceable puzzles were basically forced solo mining. They were bypassed and the chain was forked to prevent hashrate dominance, however, the underlying emission has yet to catch up with that change.

The initial goal was to create incentivized infrastructure (which EUTXO naturally needs for concurrency, as well as off-chain infrastructure) and storage rent to create eventually create a mining pool-like (small reward) system, and have the potential to hit a block solo and unlock a large reward. Mining with non-outsourceable puzzles brought in miners who had more skin in the game because rewards were irregular.

Being that we are now mining pool friendly and the underlying incentive attracts the average miner to pool, which does bring a different type of miner, I do think an adjustment to emissions to reflect the fork is a good idea.

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