Tokenomics and Funding: Division of Block Reward Discussion and Community Matching Fund

Firo Improvement Proposals
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Well any big decision goes through rounds of community approval through several public meetings and forum discussions which are open for all to participate. In any case, our releases are all open sourced.

There’s no official voting. It is generally a community wide decision same like Monero which is then implemented by core team. Where community consensus isn’t very clear, generally no change is made.

Even if government controlled all masternodes, the privacy is provided by math/cryptography and a masternode gets no additional information about it. If a government controlled all masternodes they would have control of the network of course (just like if miners took over the entire chain) but they still can’t break the privacy.

The use case is a privacy coin but we’ve been recently bridging out into privacy infrastructure where we provide privacy for other chains (Elysium tokenization layer with DotOracle bridge for example).

Most of the masternodes run on cloud hosting as far as we can tell but are distributed in geographic location though we would like to see more host diversity. Note having high node requirements that cost a lot (with redundant internet connections which I don’t know why you need it) also breed a new type of centralization since it’s out of reach of many. It’s a bit hard to impose bare metal requirements and unclear how you would do it in a decentralized manner though through my discussions you can probably have some sort of ‘hardware id’ but then there’s a question of privacy as well.

The benefit of miners is that they can operate out of anywhere with internet/computing power but it also means that the chain (especially for GPU algorithms) can be 51% attacked unless you’re Eth. We have seen these attacks in countless GPU chains Beam, Grin, Horizen just to name a few. If masternodes fail, then checkpoints won’t happen and the chain defaults to Nakamoto consensus.

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If rewards will be cute to 20% and all miners will leave I will be happy to mine with such low difficulty :slight_smile:

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Is the consensus based on peoples opinion in this tread, since there is no voting.

Have you considered that currently both POW and privacy tech is frowned upon.

POW uses a lot of power which is wasted (even though it is mostly BS)
And privacy tech is for criminals?

And that might be why you do not see price discovery?

Have you considered that if and when Eth Goes POS, the hashrate will come, and with that interest in other POW projects?

The FLUX dev team says they are working on proof of useful work, for the entire crypto space.
Personally i think this will make POW have a rebirth. Since the wasteful aspect is changed to mining for the advancement of science and technology and the betterment of the human race. What will not benefit from this for sure is BTC.

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First and foremost I would like to thank everyone who has been posting their viewpoints, and also for everyone conversing with each other civilly - especially given the number of replies! It makes me proud to be part of this community. I do, however, feel like all of us keep getting a bit off track from what is really being discussed in some instances. The primary focus of this thread is to do with the distribution/allocation of the block reward with a pretty specific intent to create a community fund, and I feel in some instances we’ve been getting a little lost on sidetrack discussions that don’t really have to do with the proposal at hand.

The key points of this discussion are that miners are potentially being overpaid now that Masternodes are the primary security for the Firo blockchain. There seem to be a lot of opportunistic miners who have started mining Firo and ultimately sell a lot of Firo. Firo has a lack of participation from the community, and therefore the creation of the community fund would allow for greater community participation where the community would be able to effectively vote for proposals via funding, and the community fund would match accordingly. Finally, as part of this proposal, we could potentially increase masternode block reward percentage to not only incentivize but also to keep our Masternodes from the next halving from dropping out.

I am very much oversimplifying - if you need a recap, you should really be reading Reuben’s initial post because it not only gives you point form for an overview of both goals and intended results, but it also explains in detail and provides links to other resources to help explain. Nonetheless, nothing in this proposal nor in his interviews does Reuben vilify miners. On the contrary, Reuben is quite an advocate for PoW as is the project as a whole.

So, as it stands, I think that the community fund is the first step towards Firo becoming truly decentralized. I am not speaking for the team, and I am sure that they appreciate the offer of the increase in dev fund, but to be completely frank I think this is in the opposite direction of what Firo needs. Firo is a community coin, and if we truly want a decentralized community coin, this means that the community must start taking on the mantle for the future of the project. Many of you in the community have already done fantastic work and have taken steps to help the project as a whole - in fact, it is because of the help from the community that Firo is now on TradeOgre the only reason we’re on TradeOgre now is because of the community! The community fund strikes me as the natural next step for this. I think some people here are dismissing this far too quickly, and potentially even wanting to increase the dev fund in its’ stead. However, my counter-argument is that with the community fund and the community stepping up, then potentially the dev fund can go back to being specifically for funding development and the additional funds would not really be necessary. As Reuben stated previously, if all things go well, then perhaps the dev fund could be phased out altogether. Regardless, such a thing requires steps - one at a time, no matter how small.

Unfortunately, creating a community fund requires the reallocation of the block reward. The arguments put forth by both Reuben and many of the individuals here in the promotion of decreasing PoW reward to fund this are well thought out and compelling. Contrary to what quite a few people have tried to implicate, an increase in MN reward does not make Firo a PoS coin - it is still PoW, and there are still roles that PoW plays in the Firo system. However, PoW is not in the same position as it was before, and the MNs have taken on quite a few responsibilities and not just security. Considering that MNs are our first line of security, and a lot of our infrastructure (and future infrastructure) relies on MNs it would only make sense that rewards be increased to incentivize them and to protect Firo for the next halving. This also has the potential of also increasing the value of Firo which is beneficial for anyone involved in Firo from MN operators, to miners, and to holders.

From my viewpoint, I haven’t really read a very compelling counter-argument for why mining rewards should remain unchanged, and to be quite frank, nor one that justifies why mining should receive as much as the masternodes. A major misunderstanding that seems to be happening, as well, is assuming that right from the get-go that reduced reward directly equals “no profit”. Certainly, if all miners stayed then I suppose this would end up being true, but as numerous miners have already stated (confirming what Reuben had been saying all along to boot) once a coin is unprofitable they will simply move to another coin to mine that is profitable. Once the difficulty drops and there are fewer miners, then the coin will reach an equilibrium where it is either as profitable as it is now or potentially even more profitable. Not to mention if the value of the coin also increases. Everybody has to eat, and there is indeed overhead for mining (though I think you may be downplaying MNs overhead) - no one wants you to be mining when it is not profitable for you. In fact, I think everybody understands this, which is why we understand that miners will switch to a coin that is - you gotta do what you gotta do. However, the assumption that the lower reward will mean no profit isn’t really true based on what I said earlier, but it would mean less sell pressure for the coin as a whole, and if the value of Firo goes up then everybody involved benefits.

Thank you for reading my FiroTalk - this is all my own opinion and does not reflect the team. :slight_smile: I also apologize for any sloppy writing/spelling errors - it is rather late by me.

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Wow thank YOU! Love the summary and reframe and agree with this.

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I actually look forward to the active discussions people will have on the community fund :slight_smile:

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community fund will be embezzled just watch
we are looking forward to your decentralized decision

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As it was me who proposed the triered-masternodes, I feel concerned.
I think I understood the method of masternodes payout : the current ones and the past ones.
As for what you affirm, you transform into affirmation what are only your opinions.

  • The development time is not very important.
  • The impact on centralization, if it exist, would be anecdotal and indirect. Regarding centralization, we have a real problem with 2Miners which concentrates currently 80% of the hashing power and more than 51% since years.
  • Complexity is only in your mind : the formua contains only additions and multiplications.
  • We can pay 1 or 10 masternodes per block and it remains perfectly deterministic.

But as I said before, this is only a proposal to facilitate access to those who want to start in Firo without investing big capital. I think it can only go in the right direction for the community and I don’t see how it could harm Firo.

For the community fund, as long as there is not a clear protocol for its use, I think it is dangerous to allocate it a part of the block reward.

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It is not just my opinion - it comes from watching many discussions over the past couple of years between community members and team members when similar suggestions have been made (actually some of the suggestions were to actually increase the collateral required to run a node). I was trying to simplify the discussion since it was an off-topic point - but felt like someone needed to say something. The main fault with the suggestion is - what would justify different levels of collateral if all nodes are doing the same thing? (and right now they would all be doing the same thing). Also - reducing the collateral amount can increase the risk of master node attacks - an attacker can spin-up low cost nodes and try to attack the chainlock mechanism - it is not a good idea - the whole idea of having collateral is to ensure the master node operators have ‘skin-in-the-game’ to keep them honest. Again - this is from previous discussions with feedback from the team. I’m sure people appreciate your desires to improve ‘buy-in’ to Firo - and that’s why I suggested that other forms of staking are available and more methods could be created.

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For tiered masternodes, the idea is exposed and the community decided.

I would like to draw the community’s attention to another aspect of the proposal made by Reuben in the original post of this thread.

The purpose of this thread is to heal the opinion of the community on 2 points:
1- the distribution of the block reward between the different actors
2- the creation of a community fund.

On point 1, we generally agree to decide that the miners remuneration must be reduced because it is no longer justified in terms of security and because miners often sell their Firo to the going with the flow and not buying any, which is fueling the downward pressure on the price.

On point 2, let’s ask ourselves the question of the role that this fund will play on the price of Firo. Will the people who receive these funds to finance projects sell these Firo or keep them? A priori, if it is to finance something, these Firo will be sold quickly. If these Firos from the community fund are sold, just as they are sold by the miners, we should not expect a positive action on the course.

I’m sure there would be great things to do with this fund…in theory. In practice, I dread the various forms of embezzlement that will cause us to lose resources that we already lack.

I haven’t checked what happens to the developer fund, but I imagine it also sells out quickly if it’s to fund development.

So, overall, of the 4 players who benefit from the block reward, only 1 keeps his Firos in the long term and prevents the Firo price from collapsing even more: the masternodes.This is the reason why I am in favor of a maximum of Firos being attributed to them.

For a reminder:
60% → Masternodes
20% + transactions fees → Minors
15% → development fund
5% → community fund (for a first try)
With such a distribution, still 40% of the block reward goes to players who will tend to sell quickly and 60% of the block reward goes to the only player who tends to hold on for a long time.

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If ppl create stuff for Firo and the proposal is beneficial for the project I don’t think we should necessarily be worried if they sell it.

That’s my point if people sell the Firo but use it to improve the project or contribute somehow that’s fine. But if people just get the FIRO and sell it without doing much for the project, then that’s the issue.

My idea is to move some of miner rewards to productive use for the project.

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This is also my point of view.

Hence the importance of clear rules for the use of this Community fund, which are not open to interpretation.
Hence my proposal to start with a fund fed at 5% of the block reward (and not 10, 15 or more %), even if it means increasing it later if its use is satisfactory and the results are tangible.

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Well it is not going to change while 2miners is the only one with competetive hardware advantages.
I mean for me as I´m solomining a few ms ping are what makes the difference. I´ve been going for quite a while now and I´m still at below 75%Luck which is likely due to supperior ping and such things.

Well if they were to use different pool adresses, then the hashrate would already be “distributed” right? Or am I understanding this wrong.
I mean what made ETH mining so successful. I mean the changing blockreward is what made it so profitable in some sense. So I´d think there should be a way which will enable us to “enforce” some distribution.

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So whatever it is, we shouldn’t cut out miners completely. One of the cool things about miners is that even with masternode failure let’s say with a massive datacenter failure, the chain can keep on moving. The max reorg would be the last checkpointed block and users can be aware that reorgs can now happen but the chain isn’t ‘stuck’. I do think that there should be some security so that it’s not easily Nicehashable and it would require more coordination to attack the chain.

I think it might be a good idea for a smaller community fund first and see how it goes with an intended gradual increase as we see if it works out.

So my new proposal would be:
35% + tx fees Miners
45% Masternodes
15% Dev Fund
5% Community Fund

This reflects the change of priority of security more on masternodes while retaining a good mining proportion. Experiments with the community fund.

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PoS is a scam not because of security, but because of tokenomics.
Firo to remain not a scam, has to be majority PoW, give the miners 40% + tx.

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as a small miner ( I only have a 2080 ) I could agree with a 12.5% reduction this year and another 12.5% in 2023; that will give the miners one halving one year before the halving. Could be something like that or something progressive;

As a small miner, I try to save 1 FIRO per month but sometimes I had to sell all; I know you guys aim to the big miners but this will impact more in the small miners

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Hey Reuben

Just had an idea. Presuming you can find people to take part, how about something like a friendly debate/show where opposing viewpoints can research and present their ‘case’ so to speak to the wider Firo community. Perhaps between someone who is an advocate for higher node rewards, someone more moderate/balanced, and someone who favors maintaining higher miner rewards?

Also with a good moderator, I thought such a format may help people consider each viewpoint.

That way, when people are voting/expressing their opinion, it will hopefully be a more informed one.

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I would love to hear the opinion on this topic from Poramin and the other Devs. They are doing a great job, but dont interact with the cummunity a lot. Especially with this kinda important topic. thats kinda sad imho.

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First and foremost, there are currently two things that PoW does for Firo. First is the distribution and moving of the blockchain - it is very true without this Firo would be in trouble. The second is to provide backup security for the blockchain should enough MNs fail and leave the chain susceptible. Firo miners are, indeed, moving the blockchain and providing distribution and as the Firo team and project is miner focused I do not see us changing from PoW - especially as it can bolster security. However, people mining Firo are not even providing backup security right now - as Reuben said 2Miners pool controls the majority of the hash right now and if the MNs came down then we are already in a position for 51% without extra fuss. What security is that? The team has repeatedly requested that miners switch to other pools to balance out the hash for said security reasons, and it does look like some miners have, but there is still enough hash in 2miners to compromise that security.

As Bitcoin Bandit has said as well, in the past during the 51% instead of helping protect the chain many miners simply switched off. What security is that? In fact, quite a few miners here have argued that they cannot leave 2miners because they’re concerned the ping or otherwise will affect their earnings. Doesn’t sound like they’re too concerned about security. I hear you about profits, and we’re not arguing that. We understand that if the profit is not there miners will move to a coin that is. Nothing is wrong with that, no one is attacking miners for that, and in fact, that is what we have been saying over and over again that we expect that to happen.

However, as has been said numerous times, as miners leave because of a lack of profits initially, the difficulty will drop. Eventually, it will reach an equilibrium of difficulty and profits which will provide a new baseline of miners. Even as it stands right now, if Firo dropped even value - do you think all of the miners mining right now will stay? Even at a loss? Will the network of miners increase while the value is so low? No, of course not. That would be illogical. Therefore if the price dropped then miners will fall off until Firo, at a lower price, is once again profitable enough for miners. Reaching a new equilibrium. This same concept can be applied if the reward allocation for mining is reduced. Yes, it will be unprofitable at first. Miners will leave. The difficulty will drop. A new equilibrium will be achieved. Now, let us think about the reverse. What if the mining reward was only 10%, but Firo was 1000 USD each. Do you think miners will go “but it is only 10% of the block reward! Bah! X-Coin may only be 3USD, but at least the mining reward is 20%!” or do you think the number of miners would increase for Firo until mining difficulty reaches such a point that it is no longer profitable? A new equilibrium would be achieved. Yes, I know there are loyal Firo miners out there and I thank you - I am working towards becoming one myself and working my way up to a Firo MN. If anything, this is more beneficial for loyal Firo miners. Even better if you are a miner who earns enough for a MN.

This is not to say that MNs are free of their own troubles. They also suffer from a bit of centralization on services such as AllNodes, there are going to be MNs who sell off their rewards, or potentially even sell off the entirety of their MNs collateral when there are pumps. This is the nature of business. That being said, MNs are still not in the same boat as mining. They do not face the same difficulties or weaknesses, which is why PoW with MNs is an excellent combination for security. However, the mining portion of this security is not doing a very good job at it. So why should mining that is effectively only providing distribution and blockchain (as it stands right now) receive as much as MNs whom are our primary security, are used to power Instant Send, provide us with 1-confirmation transactions, and will be the backbone of Firo’s privacy infrastructure?

Miners currently receive the majority of the block reward and appear to be creating a lot of sell pressure. There are seemingly a lot of opportunistic/nomad/merc miners out there. MNs require someone to first invest (or mine and save up) Firo in order to create, and there would be an increased incentivization to save up rewards to create more MNs creating the opposite of sell pressure. More MNs would also mean that the reward would be spread out more, most likely creating less sell pressure. Furthermore, when Firo’s value does recover this will increase our miners and most likely our MN holders as well as we would become more profitable! I think too many miners are only thinking of these percentages for allocation as static numbers, but there is a huge difference between 20% at 3 USD and 20% at 10,000 USD.

If Firo’s price increases everyone involved benefits, and even outside of the direct community Firo will have more opportunities and potentially expand further and faster. This could even lead to a positive feedback loop for Firo’s value. However, I am inclined to align with Zed quite a bit on this topic. As I have said and will continue to say, Firo’s community needs to be careful about undercutting the reward percentage for miners. Miners are still crucial and necessary for Firo! Just as too many of them on one pool can be dangerous for 51%, too few of them could be even more dangerous!

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Higher firo price in a staking coin is not attractive to new people. Nobody wants to be late in a ponzi.
PoW ensures the price is true, and newcomers are relatively safe to buy in.

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