Radix Economics

Discussion in 'General' started by Pizza, Jun 1, 2017.

  1. Jazzer

    Jazzer The Dutch connection Staff Member

    Please keep it civil in here guys. There's no point in going off topic and simply writing posts attacking people. I've issue warnings to the posts going out of line. Thanks.
     
  2. trescuernos

    trescuernos Beta Testers

    Dude. From my beta tester pov since 4 years, the Radix economics system will be build with 3 basic principles: fair node reward what difficults centralization of nodes, fair inflation distribution what difficult control of marketcap by whales, and attenuattion of fast pump/dumps what stabilize and build trust for merchants and business.

    I hope you can be enought intelligent to read the forum and understand it.
     
  3. Slav2

    Slav2 New Member

    1) If you plan to trade RDX against several fiat currencies on the same exchange, resulting graph will look like this during a day.

    upload_2017-12-25_6-25-53.png

    System may do one pair (e.g. RDX_USD) flat only or may try to adjust to some average value with ~1/2 of volatility. 3-6% fluctuation per year seems very optimistic.

    2) Can somebody explain what the system will do with funds received from people purchased RDX from the system? If RDX will repeat success of EOS, there may be 10+ bils of USD after every half year of sales. One 0-day vulnerability and all the money will go to Mr. Kim :)
     
  4. Tran Dinh Cuong

    Tran Dinh Cuong New Member

    I suggest the new RDX distribution should be 80% to the holders and 20 to nodes. This will attract more investors.
    Actually there are always nodes available from centralized exchanges, bussiness organisations and personals who have serious trading on RDX
     
  5. Anima

    Anima Founders Staff Member

    We don't need investors for funding, we need adopters who want to actually use it, not speculate.
     
  6. Regnar

    Regnar New Member

    Investors aren't for you and your funding, we know you don't need funding. They are for themselves. Speculation is literally the spirit of free markets searching for asymmetric rewards for risk, lets not pretend that this idea of Radix is infallible and risk free, everyone who enters the Radix universe is a speculator. Some on changing the world, some speculate on increasing buying power and that's perfectly acceptable but you shouldn't outright say you don't need speculators. The reality is that everyone who takes a chance here is doing so with their hard earned money and is in it for more than one reason. But if there isn't a strong enough incentive for people to risk their money and take a chance with Radix, it won't matter how great the economics are, price will stay stable at zero.

    Now I personally think the 50:50 ratio sounds pretty fair but I'd lean more to the 75:25 in favor of accounts over nodes simply because its likely accounts will outnumber nodes grossly. for example 10 accounts split 50% so each gets 5% and 1 node receives 50%. Now we assume massive growth not only in accounts and nodes, but the difference between the two grows as well. 15,000,000 accounts share 50% so each gets 0.000003333% and 11,678 nodes get 50% or 0.004281555. We can see as this goes up new creation will benefit nodes much more. Additionally as the account numbers rise the share will eventually diminish to almost nothing for accounts and the nodes would have the higher percentage of new funds as well as the increase in traffic/transaction fees. The number of nodes are the only one here that have an upper limit due to their costs, too many nodes come in it may be unprofit. I also didn't pull these numbers out of my ass, 15mm is roughly the amount of bitcoin wallet addresses and 11,678 is the number of full listening nodes on bitcoin network (or so I read).

    I think this brings us to a chicken or egg situation. Does network power bring users, or do users bring network power? If we don't entice speculators to dip their toes in Radix with the potential for returns suiting their risk, then we can miss out on the entire purpose of networking systems, and that's viral growth. Sure we can get some users and that's fine, but we should also remember that there are billions of people out there who honestly don't care how fast and beautiful the infrastructure is to their money, they just want it to buy stuff and not be worthless tomorrow, and there are plenty of options that can suit those criteria without the barriers to entry like buying crypto. besides, with the explorer test I was just watching, you could bootstrap a dozen or so nodes and run the whole network all on your own. ;)

    It's a bit late, but I'll be back to ask questions about the valuation of RDX and how that is determined or discovered. Goodnight all.
     
    Last edited: Dec 26, 2017
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  7. Tran Dinh Cuong

    Tran Dinh Cuong New Member

    RDX has to be well known and accepted by large community before to be used as standard payment and transactions.
    Normal people already have fiat currency for everyday usage, they will not notice RDX among over 1300 cryptocurrency despise all the technical advantages of RDX. The investors come first, then they help to promote the coin, the users come later.
     
    fishbulb likes this.
  8. Peachy

    Peachy Founders Staff Member

    Yeah, but with Bitcoin there is a reason for the small number of nodes: Only a very few with powerful resources (i.e. high cost systems) can hope to solve the Sudoku puzzle and get the new supply + fees.

    However, with the Radix system effectively ANYONE can run a node and receive earnings with very little impact to their system performance since you're only doing real work when needed. This normalization of nodes vs. accounts leads to further use cases and future development activities that can be built on top of the decentralized ecosystem (e.g. distributed servers, file backups, internet hosting....etc).
     
    Lloyd and Rickard like this.
  9. Peachy

    Peachy Founders Staff Member

    That'll be covered in the marketing plan and strategy.
    Also, the "investors first, then users later" isn't the ONLY way that products become successful.
    How much money did investors dump into Facebook initially?
    Hint: they came later once the users we're beginning to swarm to the product en masse.

    Reference:
    http://fortune.com/2011/01/11/timeline-where-facebook-got-its-funding/
    It was over a year after release (May 2005) before they accepted any real outside funding (excluding the Angel investor).
    Number of active users at that time: 5.5 million

    As for selling the concept to users and merchants it's a pretty easy proposition if you ask me:
    1. Lower fees than banks (e.g. Paypal, Western Union, Visa/MC, Chase...etc)
    2. Potentially better interest payments
    3. Ease of use and control
    4. Stable price
    ...etc.
     
    Last edited: Dec 26, 2017
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  10. Regnar

    Regnar New Member

    While that is true, I think we're going to see similar differences between nodes and non-node users. unless Radix can run a node on mobile devices, tablets, and laptops (I hope it can, that'd be great) while also being worth running a node with such small computing power. I know the whole thing is designed not to be a heavy process, and each node only handles the shards it can reasonably handle, there will still be the users who decide not to run on, don't have the ability or desire to, and there will still be institutional node users who will monetize this as a business (not a problem). but either way my point stands, it's likely that Users will largely out number Nodes, which means nodes will receive more from new supplies, and more due to higher transaction volume, while user account rewards will only diminish to near zero. But besides that one point you brought up...

    Why not flip the script and do a 75:25 (or something) new supply reward? All this will really do is award all users (including node addresses) with a greater percent of new supply. this greater percentage will remain significant for longer than a 50% model (though still will forever push reward closer to zero as new users enter). And will provide a greater incentive for the average user to join, even if they don't address this simple concept of diminishing percentages. Expanding supply rewards are a diminishing reward, while transaction volume is an increasing one (as new users enter). So unless I'm missing a drawback here, why not do this? Are you worried the transaction fee award will be too low for nodes to continue performing work or something?
     
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  11. Jazzer

    Jazzer The Dutch connection Staff Member

    Nodes can indeed run on consumer hardware. Not mobiles or tablets (even if technically possible not recommended) but your everyday run-off-the-mill laptop/pc. We want to encourage average Joe to run a node and really be a part of the crypto revolution. Also, more nodes means a more robust network.

    In short, we believe that giving nodes a good chunk of the gains is more in the interest of Radix and its long term goals.

    Of course, if you're a pure investor it's in your interest to push the split as much to holders as you can. It is to be expected that many forum users will argue the same. We do things a little different here at Radix than most other cryptos though. :)
     
    trescuernos, Lloyd, Anima and 2 others like this.
  12. tesslerc

    tesslerc Beta Testers

    I think the incentive for work is important.
    Since every user can participate, this way the distribution is more fair and less goes towards the big bag holders.

    This in turn brings more users, over a small number of big investors.

    At the same time it does benefit holding large quantities.
     
  13. Regnar

    Regnar New Member

    Please don't read this like I'm angry or anything, I'm voicing my concerns, not lamenting my missing potential profit.
    If I was only seeking profits I would say keep these awards as they are and I'll invest in a node setup. But i'm not doing that because I think this award system is damaging to the economy as a whole. Unless I'm confusing this, it would be better to build the ratio of rewards 50:50 closer to the ratio of users:nodes.
    The 50:50 award (rough example following) is akin to saying there is an increase of 100B RDX so 50B is awarded to the 10,000 nodes, and 50b is split among 15m users (including node addresses too) That is 5,000,000 per node, and 3,333 per person. Which is why I said to lean more towards users who are actually going to be using the coins, not the nodes who are likely to become whales and who already have incentive to work (transaction fees).

    What the 50:50 split is saying is "if there is an increase in money supply, we award the nodes with significantly more than the average users, simply because supply has expanded." and the whole purpose of awarding users and nodes with an increase in supply was to facilitate trade on the DEX, counter degradation of buying power for the average user, help create liquidity and facilitate velocity of money. If that is the case splitting the increase in money supply evenly across the board would work better than 50:50. Nodes are paid for Work done, but users are what create increases in market cap, they are vendors, buyers, sellers, they are the economy.

    User growth and Node growth being equal is unlikely from the start or in the future. Computer ownership is declining in developed countries and undeveloped countries are most likely going to leapfrog all our old tech and jump right to smart phones and tablets, which was said isn't even recommended to run a node on. So there is likely to be a large discrepancy between nodes and users because the average user in the future is likely to be on mobile. A 50:50 award will create whales out of nodes, a compounding wealth generator for nodes. And with growth the average user will receive awards in amounts approaching zero at a significantly faster rate than nodes, effectively reducing their buying power as more users enter.

    I will admit 50:50 is an incentive for more nodes to join, but I believe it is an exorbitant award for nodes and a slap to users. Reminds me of the US giving bailout money to banks thinking they will loan it out, instead of just dropping an amount into everyone's accounts to stimulate the economy and create liquidity.

    As I said, I'm trying to help here because I think this award (50:50) is bad for the Radix economy. I have some suggestions what I think will work better. Number 3 is my favorite.

    Other potential options:
    1. Equal percentage of new supply among users (like PoS) but this can lead to initial investors becoming whales and hording.
    2. User % > Node % as I stated earlier, this is a static setup that will still keep unequal awards in favor of Nodes but less likely for Nodes to be whales and is more beneficial to average users.
    3. Dynamic Award ratio, award ratio fluctuates based on User:Nodes ratio so that if there are significantly less nodes than users, the award is greater for Nodes which can provide incentive for new nodes to enter the market until a new equilibrium is met. I think this method will create a stronger overall network and automatically scales if mobile nodes ever become a thing.
     
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  14. Jazzer

    Jazzer The Dutch connection Staff Member

    Thank you for the well posed arguments. That will help shape the discussion.

    Of course, the reality is that due to bitcoin we have become used to miners getting 100% of supply gains with holders getting 100% of the valuation gains. This is quite asymmetric, but due to the design of bitcoin that's just how it is. Since the valuation gain has recently been much greater than the supply gain users have benefited tremendously recently, but that's not always going to be the case.

    In Radix we have more freedom for design due the economic system. The 50/50 split seems (to us) to be fair as well as provide the right incentives to build a robust network. To us it doesn't feel like a slap to users at all since they actually get 0% of supply gains in bitcoin.
     
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  15. rckt

    rckt New Member

    I'm still trying to wrap my head around what the advantage to keeping the price stable is. The actual value will still be susceptible to wild swings. Businesses will have to keep track of the market cap and adjust the amount of coins required instead of just changing the price. Wouldn't price stability come with mass adoption?
     
  16. Regnar

    Regnar New Member

    Price stability is important if a currency is to be used as a unit of account as well as unit of exchange. We don't price things in Bitcoin because the value swings too much and many of us still think of things in a Dollar valuation. Some currencies are actually ONLY one and not the other (like most cryptocurrencies are units of exchange, the Unidad de Fomento of Chile is only a unit of account, but most are both like USD, GBP, EURO etc..

    If people can't price in RDX easily and reliably it makes for more friction of regular transactions and can cause a decrease in acceptance. Imagine selling coffee in 1923 Germany, the value of the Mark swung so much that it was near impossible to keep up, if RDX price swings too much, shops will simply not accept it like they do with Fiat, because there is a stable currency they can accept, Dollars. So Radix has the plan to create a stable unit of account and unit of exchange.

    Yes, to your last point, mass adoption will create stability of prices of a finite supply of a good, but for a currency finite supply isn't really good, as it may be stable, but shifts in demand are met by heavy opposing forces, mostly interest rates at higher amounts. (think of a supply and demand curve but the supply is straight up and down, and demand is downward sloping. if demand shifts outward, increases because people want to take out loans, it shifts price up drastically and can cause problems in the economy.)

    Radix is trying to moderate supply with demand so that an increase in demand is met with an increase in supply, to the point that the equilibrium of the two (price) is the same. The Fed does very similar things to money supply for demand (controlled by interest rates) plus their desire for inflation rate. but Radix system is different in that it fights inflation of prices, but allows the currency to expand, idk how yet, we'll know more in the economics white paper.

    The drawback to stable prices is in order to create incentive you must increase supply, but if you increase supply too much it can become inflationary and decrease perceived value. another issue is investors, especially in crypto, are seeking asymmetrical returns for their risk, and rightfully so, but Radix is designed to offer a much more symmetrical reward by providing a 50:50 award for new supply. (think of what the upside potential of RDX is when it's limited to 50% of supply increase divided by number of accounts, compared to bitcoin's upside which is only in how far out demand can shift and push price up, its near limitless. Asymmetrical vs symmetrical.

    Hope this helps?
     
  17. fishbulb

    fishbulb New Member

    Regner has a really good point here with the 50:50 split. When it comes to free markets speculation is what starts it all, merchant adoption and users actually using the product then follow. The crypto market is currently all about 2 things, keeping your wealth out of the hands of governments/banks, and making massive profits. It could still take 10 years to actually be used as a separate monetary system.

    All I'm saying is make sure you get the speculation component right, because if you don't this project will be stolen (cloned) from you and they may decide to reward speculators more handsomely and therefore take a lot of speculators away from Radix meaning users will never come.

    Patents won't help here, people will steal/redo all your work and just hide in a country that doesn't care about patent law.
     
  18. Regnar

    Regnar New Member

    I was thinking about that too, someone could scavenge some parts of Radix, throw a 100B coin cap, make coins divisible to 8 decimals, remove the price stability feature and pitch it as a VISA killer crypto with huge speculative gains, all with anon devs.

    Radix positioning itself in a way that removes the edge from would be forks would be better. I understand the price stability function is important and we can't compete with the potential gains of a limited quantity coin in that instance, but offering a more lucrative and attractive investment with coin increases can close that gap. I think I'm beating that horse enough in this forum and wont be making my point any clearer, so I'll stop that.

    A question for admins and Dan, have you looked at the legal implications (US and UK at least) of a coin that pays dividends on itself? Does that fall under the SEC or some other agency? With the classification of Capital Assets, the value of the individual asset doesn't matter until the gains are realized, but a coin that increases the individual quantity someone has may fall under realized gains, and is likely to be taxable as income. I'd imagine it would be similar category of PoS coins.
     
  19. Rickard

    Rickard Beta Testers

    It will also be closed source, until it gets a good market share.
     
    Regnar likes this.
  20. Peachy

    Peachy Founders Staff Member

    As a US taxpayer (my opinion only):
    It probably wouldn't be defined as a "dividend" since those are "a distribution of a portion of a company's earnings, decided by the board of directors, paid to a class of its shareholders." Since there is no "corporation", no dividend.

    The payouts are labeled as "interest" payments in your wallet, but that's a bit of a misnomer since the IRS (currently) does not define virtual currencies as "currency" (which is the only thing that can have interest payments).

    Interest can also refer to the amount of ownership a stockholder has in a company, usually expressed as a percentage. However, that's the same issue as dividends: no company.

    As such, I'll be treating it as it is currently defined (Capital Asset) until they get around to updating their regs.

    As for the "earnings" (i.e. my share of the newly created supply rewards based on my % of work done out of all workers), those would be treated the same as mining: income.
     

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