Improved Mining Algorithm & Minting Schedule

#1

In 2017, we published the Blockstack Whitepaper 1.0 and completed the first Blockstack token offering, with a focus on regulatory frameworks and creating a vision for the future of the technology. We’ve learned a lot since then, and are proposing new improvements to our token economics going forward.

Since 2017, there has been a lot of progress in the (new) field of token economics with different models and analysis frameworks emerging (see this and this). Given the potential offering to the general public in 2019, the hard-fork required to distribute those Stacks tokens, and the potential start of mining on the network in late 2019 or early 2020, we felt that it was the appropriate time to take a deep dive on the Stacks token economics model, engage the relevant experts, and perform an economic audit of our token distribution model.

We recently commissioned Prysm Group to conduct an economic audit and help establish a robust economic model. Our goal was to identify any potential long-term issues and help the ecosystem avoid issues related to token inflation and volatile network activity. In addition to the Prysm Group, we also sought feedback from Blockstack core developers, independent entities (like New Internet Labs), Blockstack PBC board, and other domain experts. We plan to make the executive summary of this economic study public as well.

Now we want to get feedback broadly from the Blockstack community.

Certain sections of the token economics 2.0 paper are still being reviewed but I’m happy to share the details on the proposed adaptive mint and burn mechanism. Please see Section 4 Future Token Supply below:






We are excited to introduce a more robust economic model to strengthen the ecosystem well into the future. We plan to share the full token economics 2.0 paper and executive summary of economic audit soon. In the meantime, we are interested in hearing your feedback. Please let us know your thoughts by commenting in here. Thanks!

Muneeb Ali
CEO, Blockstack PBC

Rule 255 Legend This communication may be deemed “testing the waters” material under Regulation A under the Securities Act of 1933. We are not under any obligation to complete an offering under Regulation A. We may choose to make an offering to some, but not all, of the people who indicate an interest in investing, and that offering might not be made under Regulation A. We will only be able to make sales after the Securities and Exchange Commission (SEC) has qualified the offering statement that we have filed with the SEC. The information in that offering statement will be more complete than the information we are providing now, and could differ in important ways. You must read the documents filed with the SEC before investing.

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#2

Thanks Muneeb. Continue to appreciate the insistence on revisiting previous assumptions, whether with App Mining or here. Given these are novel economic systems in fields where experts barely (if at all) exist yet, it’s paramount they evolve as understanding and best practices do.

-X

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#3

Thanks for all the work you and your team have put into this @muneeb.

A lot of projects created their tokeneconomics very quickly during the bull market of 2017 and didn’t give the topic the research and consideration it deserves. One could even say that bitcoin itself ran into the same problem.

As a fan of hard money, I really love the idea of a fixed supply of 21 million bitcoins - and it’s an easy message to convey to people. However, it’s led to real questions about the future sustainability of the security of the system once the block subsidies goes to zero. People making transactions will have to bear the entire cost of the security of the system while people HODLing free ride. Layer 2 scaling mechanisms like Lightning require reasonably low transaction fees so that people can on-board to the system and enforce the rules while at the same time, the security budget once the block reward goes to zero requires high transaction fees. Paul Sztorc wrote an excellent post on bitcoin’s security budget that I encourage everyone to read as it provides a case study of how token emissions and transaction fees fund the security budget.

Having a predetermined inflation algorithm like the adaptive mint and burn system you are proposing is an opportunity to make sure that all token holders pay for the security of the system.

I think it’s important that whatever the mechanism that adjusts token emission rate that this rate is clearly defined so that people know the rules of the game when they opt in to the system.

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#4

Like this concept of BME, would the evaluation window be open to changes after the network goes live with the current one?

#5

We’d like to finalize the x and y numbers for the evaluation window before the Stacks blockchain v2 goes live.

#6

Ok. So once you’ve decided it, it won’t be changed in v2.0 of stacks blockchain. The one you guys decide now will stay for eternity?

#7

Any future protocol changes depend on future governance. Current process of proposing changes/improvements as Stacks Improvement Proposals (SIPs) is listed as SIP-000. If a SIP is accepted by core developers and implemented in code, then it will depend on miner adoption (and there can be a minimum miner acceptance threshold required) to activate the change.

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#8

Future governance :heart_eyes::heart_eyes::heart_eyes: I’m dreaming about it everyday.

#9

Noticed that inflation does not account the monthly unlock of the initial tokens, can you calculate the inflation by including those as well. Would present a clearer picture.

1 Like