Should we accelerate token emission? Tail emission?

This has been a request from several community members in the other polls on the Firo block reward division thread. This not a core team initiated proposal though we thought it was an interesting enough idea to seek community feedback.

If this thread gains sufficient traction, we’ll open a poll for it.

The proposal is simple, with the halving of the block time, keep the token emission the same per block which is currently at 12.5 FIRO/block. This effectively accelerates token emission.

THE PURPOSE OF COIN EMISSION

The purpose of coin emission is a way to distribute coins and bootstrap community. Emission can also be used to fund incentives of behaviour/initiatives we want to see for e.g. mining, masternodes or liquidity incentives.

While coin emission is inflation, the difference between fiat inflation which are determined by the central bank, cryptocurrency supply schedules are social contracts with the community. Some pride themselves in never deviating (such as Bitcoin) while others adjust as need be as long as there’s community consensus (see ETH and XMR).

Also there’s economic theory (Quantity Theory of Disaggregated Credit) that if coin emission is used for productive purposes it can generate a net benefit despite the inflation.

HOW DOES FIRO’S EMISSION SCHEDULE LOOK LIKE COMPARED TO OTHER COINS?

Firo’s block emission schedule currently follows Bitcoin’s schedule which is an extremely slow emission schedule.

As you can see, the coins are emitted over a very long period of time and only approaches close to complete distribution in 20+ years from its creation. It however absolutely completes distribution in 2140. This was important as Bitcoin operated in a vacuum and all the crypto and industry infrastructure had to be built around it. This isn’t the same environment we have today with most of the population being aware of the existence of cryptocurrencies, well developed exchanges, rapidly growing DEXes and professional miners.

Compare this to Monero’s emission schedule which emits most of its supply in almost 6 years and is now entering into its tail emission phase.

Ethereum also has a similarly aggressive schedule:

Piratechain’s emission is also almost completely emitted in 2 years.

PROS OF ACCELERATING COIN EMISSION

With the proposed changed in tokenomics coming to a close soon, the miners are taking a 50% hit which may affect the current ecosystem. If we don’t change the block reward per block but accelerate the block time, the miners will get the same amount of FIRO as they did currently which would sustain the

This will also greatly alleviate core team funding issues and greatly empower the community fund. While this is additional inflation, if they are dedicated towards productive uses, the net benefit it will yield might be more especially as both the community and the development team has funds to allocate.

Masternodes will also enjoy a much larger yield making it competitive with other staking programs. However the effect of this is dependent on whether masternodes will utilize these rewards to create more masternodes, contribute towards the ecosystem or just sell them. If it’s the latter, then it’s inflationary pressure.

This cuts a balance and doesn’t change the dev team’s share of the reward nor does it involve willing coins out of thin air. This also preserves the existing PoW infrastructure without resulting in even more centralization of pools. Note that despite miners dumping, even with current selling pressure, they only exert something like 10k USD sell pressure a day so it’s not fair to blame price declines on them solely.

CONS OF ACCELERATING COIN EMISSION

The inflation of Firo’s coin emission goes back to pre-halving days (though note that the high emission didn’t hurt Firo’s growth in those initial 4 years) though it is arguable that the allocation is much more fair without seed investors and now a community fund.

There is also an assumption that masternode holders are loyal Firo members who will channel their rewards to support the project. We are seeing some of these with the donations (which come from many known masternode holders) but it is far below the number of masternode holders that we have.

The 2nd drawback is that for those that believe tokenomics should never change (for eg Bitcoin maxi types), this now sets a precedent that Firo can change its tokenomics. For some, cryptocurrency rules should be set from the beginning and never changed or else it’ll be subject to politics and outside influences.

TAIL EMISSION

This was discussed in other threads but I strongly believe in the need of a small tail emission (<1% a year). The idea that miners/masternodes can be sustained purely from a fee market to me is a bit of hopium. Over the next few years (maybe in two halvings?) unless Bitcoin continues going parabolic in price, miners will soon find themselves in a tough spot.

There is a Princeton study on it.
On the instability of Bitcoin without the block reward. You can also read Decrypt’s article on it.

For the sake of counter-argument, you can read Dan Hedl’s (a well known Bitcoin maxi) opinions on why he thinks this isn’t a problem.

I think this is an excellent time to consider the tail emission and also in the future dynamic blocks.

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As I mentioned on the CFC post I speak what I see and will always be true to it.

After reading the post it makes me wonder then what’s the point of rearranging the % of rewards if then we are suggesting to do accelerated token emission?

So we are starting a poll on the basis the miners are selling but then we are doing another exercise to give it back to them :person_shrugging:

As a long (not just supporter) but actually someone with a huge skin in the project over the years have seen all sorts of ideas but none have worked (in terms of price) because that’s what even the mention ones above are. Trying to sustain the project but also see a price increase (because that’s what will sustain in). In fact over the years we are getting further down the rabbit hole.

It’s clear to me that the only thing that all the proposals we have done have benefitted only the dev team (e.i. keep getting salary) and the people that are in and out. I am yet to see any proposal or work that’s been done to benefit people like myself that’s been holding on for years or people that buy and have decided to hold. For anyone thinking of jumping in and trying to tell me it’s my fault or I was stupid that I bought high, don’t. Because at one point Bitcoin was $50, Ethereum was $50, Monero was $50, etc… if you will say Firo is none of the above projects then you are practically saying Firo is not a good project.

I also never understood why the only important thing we have is the development and all resources being funnelled to that channel only. 6 years down the road and yes we may have tech progress but nothing else to show for it. In fact we develop then Monero (and many other projects) copy and we can see progress on their end.

It’s finally time to realise that the issue is not with the miners, not with MN but with us as a project. We are failing to catch people imagination and also failing to make people believe in the project.

What I also thing is time to is really give voice to people that have a skin in the project and not just anyone. Maybe for that we should look into Dash. Why should the decision be open to people that don’t hold Firo, barely have any Firo or a just here today and gone tomorrow.

It’s time to start incentivising also people that have been with the project for years and are holding thru thick and thin.

We also must realise that development is important and expensive but marketing (which leads to adoption) is just as important and as expensive if not even more expensive.

Back in the days we were everywhere. Attending meetings, gatherings, conferences, etc… now we are nowhere but few little interviews.

I can go on for days but will end with we must see a change before is too late. A change that doesn’t constantly evolves around tech or another proposal.

It’s been done so many times so let’s try looking at other direction along side the above two.

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Yes i agree with super. For these votes need to prove ownership of firo. Its far away but decred has voting in wallet if you have a ticket which is their pos system.

So for now we should have to send a tiny amoint of firo like 0.01 to vote.

Also if firo price already struggling with liquidity then accelerating block rewards will crush the price.

How can firo team not give away their tech?

Firo needs marketing and thats with community fund. The firo dex is awesome and i dont know any other projects that have that.

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It s better to have blocktime halving together with reward halving at the same time.

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Having thought about this quite a bit since it was first mentioned a week or two back there are four main benefits I see to halving the block time and maintaining current emission rate.

  1. Greatly empowers the community by generating a more robust community fund. This is very important with our current liquidity issues and our lack of general awareness among the crypto community, as the funds can be used initially to bootstrap liquidity and help pay for marketing to gain exposure.
  2. Allows us to maintain our current powerhouse research and development team, and pay them competitive wages. This seems critical for the project, as this R&D is what sets our project apart from all the other copy-pasta privacy projects out there. Further, when the community decides to pivot to a more community driven development model this will add increased resources to the community fund for marketing, liquidity, etc.
  3. Allows us to maintain competitive block rewards for the mining community post ETH POS switch. I’m not sure how likely this is to generate an influx of new miners, but it’s been brought up by members of the community often enough that I think it’s worth mentioning. If this ends up being the case it allows us to generate more resilient secondary security against 51% attacks.
  4. Increases masternode rewards making our project more attractive to investors seeking to generate consistent returns via coin lock-up (mn or pos). The net result presumably being more masternodes, and thus greater primary security.

I personally don’t see any negatives to this proposal other than possibly creating the appearance of a lack of protocol stability. But I think, as Reuben said, any purely deflationary model is going to run into problems sooner or later, including the big boy BTC. Better to address this problem now, especially while the solution has so many added benefits for our current market position, then allow it to drag on and be a massive problem later.

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FIRO is one of the best coin in privacy class, hence, it will inevitably gain more usage as censorship and surveilance tightens up.

To sustain greater usage of FIRO in the future, we need more than 21.4 millions coins. Moderate inflation is good and provide longterm incentives for miners, MN, validators…

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What incentives?

Can you share any of them?

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I personally would like to not change emission at this moment. It would negate benefit of decreasing rewards from miners.

It will 2x increase supply, but if demand will not be 2x it can critically influence price.

So if this is needed I would give some time between establishing community fund and doing this. Let see what community fund and lower miners rewards do.

From masternodes owner point of view will be nice to have double rewards, but I am afraid it will not be good for project in current situation.

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I am for this suggestion, don’t see any problems with it. Waiting until 2140 to mine all coins are extremely conservative and is not needed for a project like FIRO. Many projects launching now have a much shorter token emission.

Seems it is some misunderstandings here, it will not double supply as mentioned above.

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There’s no increase in supply. It’s just acceleration.

You play with words.
There will be twice as many FIROs issued each day.
So twice as many FIROs to sell.
So twice as many FIROs to buy.

Who will buy twice as much FIROs?
Why, because we decide to issue twice as much FIROs every day, would the few people who agree to buy it, buy twice as much?

FIRO lacks buyers and has too many sellers: to issue twice as many FIROs each day without doubling the buying demand is to halve FIRO price.
It is suicidal to want to issue twice as many FIROs: it automatically increases the selling pressure (especially with masternodes at 50% instead of 60%).

I didn’t understand what a tail emission would be for: if FIRO is successful, I don’t see the point. Let’s leave that question to those it concerns… 140 years from now.

I’m divided on the question of the 400K FIRO in excess.

And I find Super post very relevant. We need to stop selling off FIRO and start rewarding those who have trusted FIRO for a long time: they are the ones who allow FIRO to exist again, who allow miners to be profitable without buying FIRO and who allow the development team to fund themselves. If nobody had bought the existing 13M FIROs and if nobody had kept them when its price fell by 98%, FIRO would be dead.
Ask yourself the question of who the buyers are, especially since we don’t have an important use-case. Flatter the buyers, take care of them: they are the ones who allow you to sell.

Buyers (in addition to the few enthusiasts here) will only come in two ways:

  • those who need FIRO for one or more use cases (we don’t have any use cases at the moment),
  • those who think they are making a profit (this can only go through an FIRO price increase).

In the absence of a major use case, it is necessary to bet on the possibility of making profit: this imposes an increase in theFIRO price, not its inflation (increase it’s inflation is the opposite of increase its price).

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Yes, I know. I meant more supply as in supply/demand as now if I understand correctly it is around 216k Firo from blocks and if there will be blocks every 2.5 minutes with same rewards it will come as 432k Firo a month which comes into circulation.

So i meant that I am more for option where blocks will be 2.5 minutes but will give half of what they give now, so it will be same value per month as now.

For example if new tokenomics should give masternode 2x a.month 6.25, as there will be twice amount of blocks it should give 4x 3.125 instead, not 4x 6.25

Not recently. Please step by step.

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Would appreciate if you don’t say things like me playing with words especially since it’s not even my proposal. It is not an increase in supply, it’s an increase in emission. They mean different things.

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Bitcoin is considered a success yet will be facing issues without a tail emission in a few years. Just think about how high fees need to be to support miners without decent block rewards.

I rather be ahead of the curve and deal with the problem head on than wait till we face the problem whereby it may be harder to change.

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步子迈大了小心扯着蛋…。。。。。。。。。。

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My opinion is basically this. Why kick the can down the road if it can be fixed now. I’ll add more detail in the next day or two, there is kind of a lot to unpack.

Do not be mad.
I’m not saying you’re wrong: you’re right.
But I think everyone understood and there was no confusion.

No one knows if Bitcoin will ever have an emission problem.
You can believe it, but it’s still a belief.
At the moment, Bitcoin is 13 years old and has no problem on this point. In practice, there are not even any signs to suggest that this problem will ever occur.
This problem is only theoretical.

It does not take into account, for example, the increase in level two layers: the opening and closing of LN channels will accommodate fees much higher than the purchase of a soda at the bar (this soda will have its transaction encapsulated onL LN). Who knows how FIRO will evolve in 50 years?

In practice, fees have already accounted for 43% of Bitcoin’s reward block (early 2018 Bitcoin fees). I could also quote the fees on ETH…

Both of these arguments lead me to believe that a blockchain can very well be secured with only fees (probably even more FIRO if security remains mainly provided by masternodes ans not PoW).

But, like you, it’s an opinion, not a fact.
What is a fact is that for the moment there is no problem andif it appears, will appear only in a very long time. Let’s leave this point to the people who will manage the project at that time: no need to take risks solving today problems that may never exist.

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A long term failed project, to question a long term successful project Bitcoin , to question a fake question that is not yet happen. Don’t those institutional investors of Bitcoin have world-class economists?

Firo as a privacy coin, the most important thing is must to develop our privacy technology to Top1, and let everyone knows Firo is one of the most powerful privacy coin in the world.

Constantly initiationg major changes, leaving the project without a certain long-term expectation, price keep falling.
Do the right thing step by step. Succeed first, and then carefully consider the next.

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