Let’s focus first on Elysium, Spark, Block Reward Adjustments…
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Btw, for the tail emission, please read this thread I wrote on Twitter:
An observation: Most agree that $LUNA / $UST failed because of a flawed design that they should have known about or that was ‘working as intended’. What if I told you #Bitcoin $BTC also has a flaw in its design as well because of its 21M limit?
Bitcoin’s security relies on miners securing it. Miners are paid by emissions (block rewards) and by fees. Every ~4 years, this emission halves and trends towards 0. The idea is that eventually miners will have their earnings completely in fees.
This thinking has several problems. First it assumes that fees alone would be sufficient to incentivize miners. The data shows that fees as a percent of the entire reward has been dropping. stats.buybitcoinworldwide.com/fees-percent-o… 
https://stats.buybitcoinworldwide.com/fees-percent-of-reward/
Now I understand the counter argument which is true that because of increased Segwit adoption, there is an effective increase in block space and therefore it is normal to see this drop. But let’s look at another metric: the number of daily on-chain transactions.
As we can see, despite record adoption and user numbers, the number of Bitcoin transactions which measures on-chain activity has also not been growing for the past 5 years. data.nasdaq.com/data/BCHAIN/NT… 
You may say, well this is because of the Lightning Network! Well, this doesn’t affect the problem at hand because miners don’t make any money from Lightning Network transactions: only channel opening/closing.
What is more likely is that while adoption has increased many still use exchanges to hold their coins and internal exchange transfers also serve as a kind of ‘scaling’. $ETH / alt L1s taking over the role of colored coins / OMNI USDT, etc have also has relieved this.
Bitcoin’s price has generally more than doubled after each halving so miners haven’t really felt the problem yet since while they get less coins, the USD value is still more. But this can’t be forever. There will come a point where $BTC becomes like a global commodity.
The problem with relying on fees alone is it means that the security of Bitcoin is then totally dependent on how much the blockchain is used. We have seen that there are ebbs and flows in Bitcoin transaction numbers regardless of the total market cap of Bitcoin
During frothy bull markets, transaction volumes go up, in bear markets, there’s a lot of spare capacity. However because miners currently still enjoy block rewards, they can continue mining consistently and plan in the knowledge that they will earn something.
Without block rewards, there can be massive variability in their earnings which has severe consequences on security. In fact there’s a Princeton study on it: “On the Instability of Bitcoin without the Block Reward”
Without a block reward, security is no longer tied to the amount of value secured by Bitcoin, it is tied to the amount of transactions that is transacted in Bitcoin which is a HUGE DIFFERENCE.
Some might argue, “well Bitcoin will still emit until year 2140” so we’re still good, we have time. Well even in 2030, there’s actually hardly any emissions left. It might as well be as good as 0.
Now of course, if Bitcoin’s price forever goes up, then all of this is fine, Even the small amounts of emission would be enough as long as the price increase is more than the effect of halvings. Guess what is also fine if it forever goes up? $LUNA $UST
While there might be several ways to deal with it, the simplest way would be to implement a tail emission such as what $XMR has done. This means there will forever be a steady base level of rewards that would be roughly tied to the value it secures.
The problem is the whole cult over “deflationary”, “limited max supply”, “21m coins only” and “infinite supply” which makes this difficult to implement on $BTC. Let’s debunk some of these.
Bitcoin currently is deflationary because it has increased purchasing power over time. But technically in terms of Bitcoins emitted it is still inflationary until 2140. It means as long as price goes up it is deflationary but if it stagnates then it’s inflationary.
There’s a difference between a fixed inflation rate vs arbitrary or massive inflation. Tail emissions are a fixed inflation rate. Stuff like $LUNA or $USD where new money is printed in massive amounts cannot be considered the same.
$LUNA’s printing is dictated by an algorithm in relation to the price of $UST while $USD’s printing is dictated by the Fed. Tail emission in comparison is dictated by a rule agreed upon by the community at large and can only be changed with wide consensus.
So while technically $LUNA or coins that have tail emissions like $XMR both have ‘infinite supply’ they are TOTALLY DIFFERENT THINGS. The key is not ‘infinite supply’ but the rate of inflation and who gets to determine it.
Don’t get me wrong, I want Bitcoin to succeed and have a good portion of my net worth in it. But whether I keep it there depends on whether the greater Bitcoin community will acknowledge its shortcomings and think it through themselves rather than parroting catchy shortcuts.
Don’t let market size lull you into a false sense of security as we have seen it can all come crashing down in an instant. The problem with $LUNA and $BTC is of course different but should be a warning nevertheless.
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we talk here about FIRO that is a small project compared to Bitcoin we do not have to worry about big problem, big projects will solve this. our target should only focus about bigger market share at the moment.
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If you want to increase inflation of coin money supply it will reduce price more and more and if developers and holders are disappointed with price then, more inflation would kill the project. If we think about reducing inflation by tail emission and convert to monero and Etherum pattern which mean reduce inflation now from 11% to may be 0.5% it would increase price and every one will be happy.
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Thanks for your thoughts on this. I also agree that tail emission should be considered for all blockchains, although my mind is not settled about the issue.
A minor note: “Towards Overcoming the Undercutting Problem”, which was presented at a conference this month, suggests that the problems outlined in “On the Instability of Bitcoin without the Block Reward” are not as severe as believed. However, the “undercutting” problem deals mostly with short-term block re-organizations and is a separate question from whether the value of fees alone will be able to provide for the long-term security of any given blockchain.
Regarding the effect of tail emission on the money supply and price levels, I’ve written some thoughts on the Zcash forum:
I’d say that most mainstream economists would agree with what I say above – it’s pretty standard and matter-of-fact.
I am of two minds when it comes to whether cryptocurrency protocol developers should listen more to mainstream economists. On the one hand, I want to see financial innovation thrive. Maybe there are things that we (economists) are missing in all of this, especially given that billions of Euros/USD have been willingly invested by rational(?) and sophisticated agents. On the other hand, a phrase that comes to mind is “The market can remain irrational longer than you can remain solvent”. So maybe many of these projects are deeply irrational and it is only a matter of time before they come crashing down.
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A tail emission does not increase inflation rate. It only keeps a small one at the end.
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So, it make coin supply inflation rate at low constant rate like Tron and etheruem.
I am in support for tail emission.
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Another argument in favor of tail emission is that world’s population keeps growing. Once a coin gets traction and if it is going to be used as a currency as opposed to a store of value, it seems like it should at least match the population growth if the goal is to maintain purchasing power, as opposed to having it increase or decrease, over time.
Even the historic physical stores of value (gold, silver etc) have a net increase of supply each year.
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Only time will tell if one way or the other is better, but I currently lean towards having a tail emission. It seems naive to assume that fees will cover / provide incentive for miners and MNs to secure the network. My guess is that in the long, long, long term, projects that have found the right balance in a tail emission that keeps network security, function, and development incentivized with minimal inflation will find success.
Hi, Reuben, can you explain the reason that the ‘Firo v0.14.10.0 mandatory update’ includes ‘the block time to 2.5 minutes.’ I think this proposal is not approved by the community.
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This was mentioned here: Poll on Firo Block Reward Division - #122 by reuben
Additionally in the three separate topics discussing/polling the tokenomics change, there were no objections raised.
Old (5 minute blocks):
12.5 FIRO per block x 288 blocks per day = 3600 FIRO a day
New (2.5 minute blocks):
6.25 FIRO per block x 576 blocks per day = 3600 FIRO a day
The emission remains unchanged.
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There is no acceleration of emission. Block time is adjusted for better user experience.
The rewards have been adjusted so that the emission is the same.
Please note that despite the FUD against me, it wasn’t me who started the proposal to accelerate token emission (which did not pass). It was brought up by another community member who requested for it be discussed and I found it interesting enough to casually mention it.
You can see the forum history on this.
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I might be a little late to this thread, but I just want to say I really prefer a tail emission like XMR has instead of a finite emission like BTC. I am a big fan of monero’s emission schedule, (we just successfully went into tail emission the other day!). The upsides are that it provides incentive for miners forever, and despite having “infinite supply” (over an infinite time period, mind you), inflation asymptotically approaches 0% as t->infinity.
However, with respect to the speed of the emission? I don’t really know. But a more gradual curve is better, right? I think monero’s curve was chosen so that it would have lower inflation than bitcoin over the next 50 years or something. I’m curious to see what you guys think about this. I mentioned in another thread that a really fast emission schedule is usually a sign of a premined coin: if the schedule is too fast, outsiders might be turned away or they might fork it like bytecoin->bitmonero. IDK, food for thought.
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I should add that “infinite supply” is a major BTC maxi talking point. “Normies” can’t really grasp the idea of “the selfish mining problem”, but they can grasp the idea of a limited quantity of bitcoin. This FUD is a hurdle that monero currently faces and it’s a hurdle will have to be overcome when marketing firo if we choose tail emission.
Aww, come on, you don’t want people like me to vote? I’ll have you know I own as much as 0.8439 FIRO, and counting!
But in all seriousness, I think developers, artists, community contributors, etc. should also get a vote. In an ideal world, we would use classical consensus, and have 1 Person = 1 Vote but we don’t live in an ideal world, we live in a world of sybil attacks.
Kek. So if the project fails we go just out with a bang? >:)
Hey, here’s a funny idea: what if you just made it so that the “tail emission” was some function that has such a low slope that it approximated monero’s tail emission over the next ~100 years, but you make it such that the integral of the function is actually still finite. That way, you can say to maxis that it has a finite supply. The best of both worlds! :3
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Actually I’m arguing that our emission is TOO SLOW given the current market. It is following Bitcoin’s schedule at the moment which may have made sense when Bitcoin was the only cryptocurrency. For e.g. XMR has already reached its tail emission.
However I think this boat has sailed for the moment and most people are against changing the tokenomics but I do hope that at least we can talk about the tail emission as I too am a big proponent of this.
Thanks for your clarification.
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Could alternative/extension to tail emissions be charging part of Elysium layer fees? For example instead of 0.0001 Firo fee it will be double, with half to he stored for future something similar to tail emissions.