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