… continuing from point 5 above …
- We want to incentivize 2/3 to be bonded. - responding to the below comments:
6.a: Keeping 2/3 of ATOMs bonded is good.
6.a.0: Not everyone should focus on mastering blockchains or crypto-economics.
6.a.1: Staked ATOMs, being more like shares rather than money, separates the users into the cryptoeconomic/PoS aware, and the general population (laymen, or “grandma”). This allows the ATOM distribution to remain more intelligent than the general population. This in turn allows ATOM to represent a differentiated stakeholder class that can best steer its function, BFT-PoS, ICS, and IBC.
6.a.1.A: Without it, it is like letting the Apple computer company make business decisions based on the collective intelligence of its customers, rather than the specialized class of founders, stakeholders, and employees. Apple would have never been created under a communist regime, it was made possible by private self-selection and private equity. If you had asked people what they wanted before cars were invented, they would have said faster horses.
6.a.1.B: This is also why we should encourage the slashing of airdropped tokens based on governance votes, ala prop69 independence-day. This keeps ATOM stakers accountable for their votes, just as we should slash them for malicious consensus votes.
6.a.2: Removing this goal is akin to attempting to make ATOM money, which is intended for use by the general population, not any differentiated class. If ATOM were to become money, it would either force laymen to making staking decisions, unless we remove the 2/3 bonding requirement.
6.a.2.A: The market cap of “money” will always be significantly greater than the capital that can intelligently making staking decisions (unless we go with the WEF model of “you will own nothing”).
6.a.2.B: If laymen make decisions (governance or delegation), the decisions will be worse for the competency of the hub, AND they would be committing to an environment of slashing where they have no competency.
6.a.2.C: If the 2/3 bonding requirement were removed, any conspiracy of whales can easily take over the decision making of the hub. This will only guarantee that capital will take it over.
6.a.2.D: 1/3 of unbonded tokens is sufficient to establish a liquid market of ATOMs, while 1/3 is also the threshold for Byzantine voting power for partially synchronous consensus systems. Thus it is arguably the most natural factor to keep bonded.
6.b: Inflation is really a proxy for punishing non-bonding. It is more simple to inflate tokens and reward them to stakers, than it is to reduce the balance of non-stakers both from a computational and UX point of view.
6.c: The minimum inflation bound of 6% could be removed to allow natural deflation.
6.c.1 The 20% upper bound is needed for safety.
6.c.2 The minimum inflation rate was put in place for two reasons: one, to force the concept of an inflationary token as separate from deflationary/maximalist tokens (this clearly hasn’t succeeded as well as I had hoped, but maybe this ATOM ONE & ATOM2.0 conversation is accelerating it). Two, to ensure that validators can be bootstrapped by capital, to ensure that some level of transfer of ownership happens toward the validator operators.
6.c.3 The minimum bound after bootstrapping isn’t strictly necessary after bootstrapping the validators.
6.c.4 With a full ICS implementation and thus more transaction volume, there will be more incentives just from transaction fees for ATOM holders to stake beyond the ATOM inflation mechanism. So we may even see, naturally, the inflation rate to go down close to zero, or even negative(!!) to peg the bonded token ratio at 2/3. In short, removing the minimum inflation bound allows inflation to naturally decrease toward zero (or below) as the network grows and the functionality of the hub matures.
- Continuation inflation with tax-cap is better.
7.a: Inflation came be granted as deemed necessary. There is no need to pre-commit to inflation up front.
7.b: The notion that a proposal to significantly inflate ATOMs “one time” is fundamentally flawed. ATOM3.0 would inflate more and promise even more deflation, and so on. The only thing that this narrative will prove is that the hub is in denial, like a drug addict promising to quit by going out with a big bang.
7.c: There is barely any understanding of the need for a constitution, of structured governance powered by naunced UX, of differentiated proposal types, or even any mechanism to prevent pork-barrel corruption of proposals. The governance system of the hub is as of yet too minimal.
7.d: In 3 years we might approach the size of Ethereum today, and even after there will be more exponentially more talent that will be joining the system, and exponentially more development to be done.
7.e: The maximum inflation of staking is already up to 20%. By raising the tax to 50%, there can be up to 10% (non-compounded) inflation that can go toward the treasury. The amount of inflation going to treasury can be limited by setting a cap on the tax rate. This can all be done with no changes to the existing ATOM tokenomics, and simply by setting additional limitations on tax by constitution. This avoids the pitfall of 7.b as well, avoiding uncertainty which will reduce demand for an indefinite period of time.
7.f: Private capital doesn’t need the hub treasury to function; rather private capital is in competition with the hub.
- Nothing prevents the hub/ATOM/ecosystem from creating additional deflationary tokens.
8.a: As previously mentioned, any PHOTON/BETA token can simply be air-dropped to ATOM holders, and have special status on the hub as the deflationary fee token, complementing the ATOM. Existing ATOM holders would benefit from such an air-drop, while also benefiting from the differentiation as per point 6.
8.b: Allowing premissionless ATOM-derived deflationary tokens allows for more deflationary token experiments.
8.b.1: For example, one could create a deflationary token airdropped onto both ATOM and ETH, or ATOM and BTC, or all three.
8.b.2: Gno.land GNOTs will be primarily air-dropped to ATOM holders to demonstrate this approach, leading by example, but there are numerous other projects too.