This seems like it opens up another layer of social challenges around deciding what validator to bond to. Wrapping my head around the implications of that.
Following closely. We’ve been assuming for pragmatism we need to essentially fork the inflation model of the hub for Regen, but we also prefer demurage and I’m very interested how this intersects with our current design work around bonding oracles and other network service providers.
There are number of assumptions on tax side being made here. To design a system based on these assumptions will have have a number of unintended consequences when IRS (and other tax authorities) decide how to treat PoS awards. Assumptions in this conversation that are by no way obvious: 1) Awards will be treated as “income” or “capital gains”. See here for a good discussion https://www.gibsondunn.com/wp-content/uploads/2019/01/Hamano-Staking-Out-New-Territory-Taxation-of-Proof-of-Stake-Protocols-Tax-Notes-01-28-2019-.pdf There are decent arguments for neither, at least until disposition of the rewards into fiat. 2) Cosmos/Atoms are like a “stock or stock issuance”. Or they could be a SoV. Or Utility token. Or ? Each one will have potentially different impacts on tax treatment. 3) How regulatory authorities view the original issuance of Atoms will effect #2, which will effect #1. And on and on. Further, every change made and how that change is made will potentially effect other regulatory aspects i.e. securities regulation. We may be solving one problem while creating larger problems in other regulatory areas. Proceed with caution…
This covers a very narrow and specific area of tax law as it pertains to zero coupon bonds. Tax law is incredibly complicated. Think better approach then picking one analog example would be complete survey of possible approaches…
I t will effectively eliminate short-term traders who will create trading volume. Without volume, atom price will fluctuate like crazy. without trading volume, some big malicious capitalist can crash Atom price. Laws of economic is simple. we have to lower interest rate. we have to let market choose number of validators.
I agree, any design making assumptions about tax treatment should be run by tax attorneys from many different countries before being implemented.
This discussion will also probably be more productive in about a year once everyone has paid taxes from staking.
Interesting take- are you saying that people selling Atoms to pay their income taxes every year will create volume, which is good in and of itself?
What I mean is “inflating coin” is better than “burn unstaked token” scheme. (Don’t get me wrong, I think low inflation is better.) What I mean is paying validating income tax is better than punishing speculators. Because speculators are extremely valuable asset to chain ecosystem since they provide volume that is essential for token price. if you burn unstaked token, there will be no trading volume becuase short term traders will leave!
I really think inflation should much lower then now. that will create more trading volume.
one more tip : if you want to punish short-term traders in order to focus on long term investors , short term traders ( speculators) avenge will find chain. This is lessons learned from previous chains.
If cosmos want to learn not from history, but from experience, it will be sad thing.
Thanks for the insight. Reducing inflation will also make this issue insignificant, and maybe that’s the right solution anyway.