cosmos-economics-chat.txt

crainbf
[7:15 PM] 
@adrian I started discussing ANTE & atoms with Gautier


[7:15] 
let’s continue it here


[7:16] 
@adrian do you have the picture of the graphs/tables we draw in Canada?


[7:16] 
I think that would be helpful


gamarin 
[7:17 PM] 
Hello @adrian, I'm happy to join the discussion


crainbf
[7:18 PM] 
Regarding whether validators should get ANTE as a block reward.

I think one advantage is that it would increase the incentivization for new validators who didn’t receive ANTE because they bought Atoms later.


[7:18] 
Otherwise, if the transaction volume is low, maybe that would be an issue.


[7:18] 
However, I’m not 100% sure this is a good idea.


gamarin 
[7:19 PM] 
But they would still get ante through transaction fees

crainbf
[7:19 PM] 
Right. But the transaction volume may be low

gamarin 
[7:19 PM] 
They would increase the fees

crainbf
[7:20 PM] 
They could, but that would make the network less attractive. I think especially in the short- to medium term, low fees are desirable

gamarin 
[7:21 PM] 
I have thought about inflation extensively and the only valid argument i've been able to come up with in favor of it is to increase liquidity. However, since our network distributes coins to people already holding them, I'm not sure liquidity is improved in any way

[7:21] 
If fees are low, validators would increase inflation to remain profitable

crainbf
[7:21 PM] 
But only at genesis. Afterward, let’s say you buy 1% of atoms and validate. If transaction volume is fairly low, you may get very little ante

gamarin 
[7:21 PM] 
The network would be less attractive in both cases

crainbf
[7:22 PM] 
They would increase inflation of what?

gamarin 
[7:22 PM] 
Validators can change inflation through the governance mechanism right ?

[7:22] 
(in the current model)

crainbf
[7:23 PM] 
Absolutely. Both of ANTE and atoms

[7:23] 
Definitely of atoms. I guess Ante is up for debate

gamarin 
[7:23 PM] 
Why tho ?

crainbf
[7:23 PM] 
One could also have a model of a constant supply of ANTE. My intuition is towards an inflationary Ante model though

[7:24] 
You mean why they may not be able to change Ante inflation?

gamarin 
[7:24 PM] 
Why would we have inflation at all in the network ?

crainbf
[7:25 PM] 
For atoms, to incentivize bonding


[7:25] 
For ante, to increase liquidity. (Again, not totally sure it’s needed/desired for that one)


gamarin 
[7:25 PM] 
I don't see how this incentivizes in a more effective way than fees


crainbf
[7:25 PM] 
Bonding?


gamarin 
[7:25 PM] 
yep


crainbf
[7:26 PM] 
It definitely does. If fee volume is low, they will do very little to incentivize bonding


gamarin 
[7:26 PM] 
But they can set whatever fee they want


[7:26] 
If tx volume is low, it will increase fees


[7:26] 
Validators just want to be profitable


crainbf
[7:26 PM] 
There will be a market, so this will not necessarily work


gamarin 
[7:26 PM] 
They can either increase inflation, or increase fees


crainbf
[7:27 PM] 
Right. That’s the point. That’s why we want inflation of atoms


gamarin 
[7:27 PM] 
But you are taxed either way


[7:27] 
With inflation you are asking other users to pay for your tx (in a way) (edited)


crainbf
[7:27 PM] 
Let’s say running the validators costs $100k per week. And there are only 10k transactions per week in the beginning. If you charged $10, this would be a super unattractive network


[7:28] 
With inflation, you can incentivize validating even when transaction fee revenues are low or nothing


gamarin 
[7:28 PM] 
You just hide taxation


crainbf
[7:28 PM] 
Yes, sure

[7:28] 
I think that’s a good thing

gamarin 
[7:28 PM] 
If it was only that, I'd agree

crainbf
[7:28 PM] 
I don’t think either Bitcoin nor Ethereum would work without this

gamarin 
[7:28 PM] 
Bitcoin's inflation will be 0

[7:29] 
Inflation was positive only to distribute coins

crainbf
[7:29 PM] 
I don’t agree with that at all

gamarin 
[7:29 PM] 
with what ?

crainbf
[7:29 PM] 
Inflation in Bitcoin is essential for security. It would have failed otherwise, IMV

[7:29] 
That inflations primary purpose is coin distribution

gamarin 
[7:29 PM] 
Ah !

crainbf
[7:29 PM] 
Otherwise, why would there be inflation in Ethereum?

[7:30] 
They already distributed coins in the crowdsale

[7:30] 
They needed inflation to pay for security and to allow transaction fees to remain reasonably low

gamarin 
[7:30 PM] 
The difference is that coin holder are not the same as (inflation-)coin earners

crainbf
[7:30 PM] 
I don’t understand that

gamarin 
[7:32 PM] 
In Ethereum, miners earn newly mined coins and sell them immediately to cover their hardware cost. People who use the coins are not the same. I'd argue that in the case of Ethereum it improves liquidity. For us, I don't know. Also, I think I read that there may not even be inflation when Ethereum switches to PoS.

crainbf
[7:33 PM] 
Yes, that’s unclear

[7:34] 
I don’t understand how that is so different. Validators in Cosmos may similarly sell the coins for paying for their operating costs

gamarin 
[7:34 PM] 
We'd have to really pinpoint the differences between an inflation based model and a fee based model

[7:35] 
Yes but they held the coin anyway


crainbf
[7:35 PM] 
At least this is a point that I’m very confident on: That we need atom inflation


[7:35] 
Unfortunately I have to go


[7:35] 
Let’s discuss more tomorrow!


gamarin 
[7:35 PM] 
Sure :wink:


[7:36] 
Atom inflation... not sure I agree. Let's come to consensus through rational discussion :stuck_out_tongue: Looking forward to it. See you !




----- Yesterday August 9th, 2017 -----
adrian
[10:56 AM] 
@gamarin Thank you for your input.


[10:57] 
Are you available over skype sometime next week to discuss how we can take it forward?


gamarin
[11:37 AM] 
I am currently in the south of France, my internet connexion is very up and down. After that I'll go to Croatia from Aug 14 to Aug 23 where I won't have internet access. From Aug 23 I'll be available for a skype anytime :slightly_smiling_face:
If it's too late we can try a call before saturday but I can't guarantee that my internet connexion will support it.
However, Brian told me we would meet in Berlin early September (with you, if you're available) to discuss inflation and other economics-related topic at length. Either way, I'll share some ideas in this channel !


crainbf
[3:51 PM] 
Yes, September is confirmed


[3:51] 
11-13


[3:51] 
I’ll send calendar invites



----- Today August 10th, 2017 -----
adrian
[10:34 AM] 
@gamarin What is your email address? I’m going to invite you as a guest to our private slack, and copy over the history from this chat. In about 1 week we will lose this history.