Radix elastic supply model

Discussion in 'General' started by Alfred Duler, Jun 15, 2017.

  1. Alfred Duler

    Alfred Duler Beta Testers

    Based on few forum questions on the system of interests I would like to see if we can apply any existing models to evaluate its potential distribution among the users. I'm not talking about the transaction fees, only the elastic supply interests part.

    Edit: this is the specific case of Radix early life, with no sellers so Radix system has to step in for every new entry. Formula with sellers is more profitable in interests (we'll determine it on a later post).

    We'll say the initial market cap after ICO : X0.
    And that elastic supply is ON at T zero after ICO: T0.
    And your own capital in Radix at T0 is R0.

    For each new entry E in the Radix economic system, E will bring its own capital C and in the mean time the elastic supply system will create C/2 for its system (all the earnings for the running of different protocols - messaging, nodes, etc) and C/2 interests distributed between the R shares of the existing market cap X at the time of E entry.

    So at Tx, your interests would be: (Cx/2)/100 . 100/(Xx/Rx) => (Cx/2) / (Xx/Rx) => Cx.Rx/2.Xx

    I'm guessing ICO at 100 millions and aimed market cap at 1 billion to do simple.

    The more we have C entries between X0-Xn the less we'll have earnings / less we have C entries the more we'll have interests. So we may have an integral part with a braket based on an estimation of the number of entries in this market cap range. Then the average C brought by each entries in this range will be easy to determine.
     
    Last edited: Jun 17, 2017
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  2. Alfred Duler

    Alfred Duler Beta Testers

    I'll try a simple exemple to clarify this and from which I hope we'll be able to formulate the model.

    I said I'm guessing ICO at 100 millions R and aimed market cap at 1 billion R and I have 1000R in ICO. Having a 1 billion market cap in a year could be great but we don't take time into account here.

    If we only have one new user bringing 450 millions: I'll have a +2250R interests, market cap goes from 100mil to 1bil (x10) and I go from 1k to 3.25k (x3.25)

    If we only have 2 new users, with first one bring 200mil, second one 250 mil. Market cap still do a x10 but I go from 1k to 2.5k (x2.5)

    So now, if we target the 1 billion market cap from 450k users entries, each user have brought 1000$ capital with him after ICO. - I know this is not representative distribution of any new users in a new community but let's make average appreciations just to understand the concept - so we have in our Rad account:

    End of entry one: 1000,005 R
    End of entry 1k: 1004.95R
    End of entry 10k: 1046.63R
    End of entry 50k: 1189.20R
    End of entry 100k: 1316.07R
    End of entry 250k: 1565.08R
    End of entry 500k: 1821.16R

    Market cap do a bit more than x10 here (1bil is at entry 450001 for 1778.28R) and I go from 1k to 1.82k (x1.82) because of the fair shares distribution between pre-existing entities in the system (helicopter money like interests).

    So we have something like a log starting with our initial ICO supply when new entries of users and Capital are constant. (it will not be the case!)

    upload_2017-6-16_13-21-38.png

    The interesting part would be to put Bitcoin like datas of "new entries and capital" then maybe Ebay like or Amazon like, to have different possible scenario and outcomes of potential earnings from elastic supply.

    Remember Radix could be your bank account (like in this exemple), insurance structure, ebay market place, share tradeplace, etc. So distribution of Capital entries will be numerous.
     
    Last edited: Jun 16, 2017
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  3. Alfred Duler

    Alfred Duler Beta Testers

    To adapt this equation to your ICO participation you'll need a simple ratio convertion.

    500 R in your ICO and you'll go with :
    y = 173,56 ln(x) + yourICO (we divided the left part by 2)

    25k R in your ICO and you'll go with :
    y = 8678 ln(x) + yourICO (we multiplied the left part by 25)

    A simple search with formula in google will give you the trend
    upload_2017-6-16_16-49-33.png
    With each 10 on the (x): 1 billion R in Radix global market cap.
    (y): your Rad account.

    You'll need to keep in mind that this model is not true for a good representation:
    - If average new users Capital < 1000R (highly probable), you'll have less interests once reaching 1bil market cap.
    - If average new users Capital > 1000R, you'll have a bit more interests once reaching 1bil market cap.
    - If Radix ICO < 100 millions you'll have more interests once Radix is reaching 1bil market cap.
    - If Radix ICO > 100 millions you'll have less interests once Radix is reaching 1bil market cap.
    - There is no time table of when reaching 1bil market cap. Maybe fast (1 year is very fast!), maybe never.
    - Don't forget the other part of the elastic supply system: the earnings on protocols you runs !
     
    Last edited: Jun 16, 2017
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  4. Pizza

    Pizza I liket the pizza nomnom

    Alfred, have you ran any calculations on ICO vs running services. For example how long will it take you to accumulate 1000 Radix running services as compared to buying the ICO?

    Or another way is what is the acquisition cost of acquiring Radix through ICO vs earnings from Services.

    1 Radix ICO = $1
    1 Radix running services = $x

    maybe cost is lower running services but speed to acquire X amount of Radix is much slower.

    1000 Radix ICO = 1 day to acquire
    1000 Radix running Services = X days to acquire

    Would be interesting if you can come up with some scenarios
     
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  5. tadkis

    tadkis Beta Testers

    it is hard to compare. Radix currency amount will be growing. With different variations of speed but growing. In a longer term. But the amount of service runners can go in both directions and not necessarily in correlation with currency growth
     
  6. TheHeolyn

    TheHeolyn New Member

    Thank you for your insights on that topic!

    If we only have one new user making the market cap going from 100mil to 1bil, isn't he in fact bringing his capital C = 900 millions? Thus him "bringing" 450 millions is already C/2 so you get in fact +4500R interests instead of +2250R... Or did I miss something?
     
  7. Alfred Duler

    Alfred Duler Beta Testers

    I'm sorry I can't answer that, it's like asking how fast can you mine 10 bitcoin. With one computer? With a farm? You get the idea.

    1 entry bring 450mil:
    There is already 100 mil in ICO market cap, he gets 450 mil on its radix account, and the system creates the same 450 mil amount for the elastic supply: 225 mil get distributed in interests (the formula we are trying to determine here) and 225 mil get distributed as earnings for running protocols.
    Total of 100 + 450 + 225*2 : 1bil.

    But maybe I missed something too you know :/ I'm open to discuss this, I think I edited it something like 10 times :eek:
     
    Last edited: Jun 16, 2017
  8. TheHeolyn

    TheHeolyn New Member

    Well, it seemed to me like Lloyd told something different (on page 2 of June ICO thread) :
    Which actually would be more consistent from an economic point of view than giving someone 450mil worth of Radix and creating 450mil more out of thin air for the sake of one's system...

    Thanks again, your analysis makes perfect sense and enlighten us very well about what's going to happen to our holdings should we buy Radix, better than Anima's simple approximations anyway...

    ... Though I'd like to see some yet-unrevealed-info making him right and your ln(x) approach wrong, as it would clearly be more profitable for early onboarders! :D

    Edit: I've been running some simulations as well, and as the result looks so straightforward it should be easy to find a proper proof.

    Whatever "M(0)" the initial marketcap you're entering at, your holdings "H(t)" at a time t where Radix Marketcap is "M(t)" is given by H(t) = H(i)*sqrt(M(t)/M(0)) :) (or H(i), whichever is greater).

    Assuming that my simulations are correct they remain purely theoretical: we stand here in the case of an infinite number of people joining with infinitely small amounts between M(0) and M(t), with no token burning having ever occured during that time. Given that, we might consider H(t) above as the "minimal" value possible for your holdings.
     
    Last edited: Jun 17, 2017
  9. Cyg

    Cyg Beta Testers

    Hang on, aren't new users buying from the DEX from current sellers (in this case ICO RDX participants). Such that new demand will keep getting pilled on top (and new interest payments) if not enough people are parting with their RDX? They aren't buying from the system?
     
  10. Alfred Duler

    Alfred Duler Beta Testers

    I've got it, you are right guys !

    I edited my firs post as I described the specific case of no seller of radix and some buyers want to get in so this is the system who does create some radix !!!
    Once you have sellers for entries (and they are prioritary over the system), for a 45 mil entry you won't have the same amount of radix creation in the system :
    From Total of 100 + 45 + 22,5*2 => to Total of 100 + 22,5*2.

    So finally you'll have a model with a ration competition of 2 coexisting different ln(x) formulas:
    - one for new entries with no sellers, which is more probable in the beginning of Radix's golive (our formula up there)
    - one for new entries with sellers, which is gaining traction after the beginning of Radix's golive (~x3 ROI)

    Interesting part is: you'll get more interests when new entry have sellers (x3 vs x1.82)!
    However:
    - they'll need to be done on the Radix client to be taken into account otherwise if it is directly from people to people the system won't be able to apply the interests part as it won't know some R have been sold.
    - they'll be the most part of Radix volume exchange only when the global market cap curve has reached its plateau.

    I've got to look at this, I always look after Lloyd inputs :)
     
    Last edited: Jun 19, 2017
  11. TheHeolyn

    TheHeolyn New Member

    There is no such "Total of 100 + 45 + 22,5*2" case according to Llyod's assertion.:(

    The only case is "Total of 100 + 22,5*2": DEX doesn't bypass the market, it just inflates the monetary mass until market's temporary equilibrium is reached (ie having turned holders into sellers in order to match any new demand without rightaway sellers).
    We might need some explanation from the founders here (or wait for the whitepaper), but I believe newcomer's funds are somehow bound to his demand so that in the end he would get what he paid for in the first place (as Radix are created out of his USDT contribution).

    My guess is your formula with ln(x) is unappropriate over some long term run (it slightly overestimates gains when marketcap increases between 1 and ~12 fold, and underestimates them everywhere else), mine is ok under the assumptions given above and Anima's seems very optimistic. The later might somehow magically fit better to what'll be going on in reality though, with demands from only a few big buyers (rather than from infinitely small buyers at least) and tokens being burned. :)

    Here's some chart showing the ROI based on our different modelisations (On the abscissa: M(t)/M(o)).
    ROI on RADIX elastic supply.png
     
    Last edited: Jun 17, 2017
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  12. Alfred Duler

    Alfred Duler Beta Testers

    Yes I think this is a good overall appreciation of the interest system that might apply.
    We can note on the optimistic trend, that at 1 billion market cap your ICO will make a x2-3.
    Which is great :)
     
    Last edited: Jun 18, 2017
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  13. Anima

    Anima Founders Staff Member

    Its not MY approximations, its from a post by fuserleer in the ICO-thread (IIRC).
     
  14. Alfred Duler

    Alfred Duler Beta Testers

    And was it on all elastic supply or just interests? Because they're a bit high for just interests no?
     
  15. Pizza

    Pizza I liket the pizza nomnom

    When you speak of x3 you are speaking in terms of pure RADIX Return or in fiat such as $1000 - $3000?
     
  16. Alfred Duler

    Alfred Duler Beta Testers

    Everything is in pure Radix as Radix vs $ can change up to +/- 0.01$ each day.
     
  17. Pizza

    Pizza I liket the pizza nomnom

    Will it can it? Dan mentioned a scenario the dollar devalues 50%, and Radix raises 50% against it, he mentioned that the market will determine it's price, I don't understand how that's true, when you are constantly controlling supply/demand.

    This gets back to the other threads of price movements vs. fiat, which still seems unclear.
     
  18. Alfred Duler

    Alfred Duler Beta Testers

    Sorry this topic tried to determine evolution of your ICO ROI in Radix with Radix market cap starting at 100 mil R and aiming at 1 bil R.

    How much you will sell them in US $ may be a good topic for another thread. On a personal point of view I hope I'll be able to sell mine in pizzas.
     
  19. Pizza

    Pizza I liket the pizza nomnom

    Hopefully we'll be able to cash out with more things besides pizza like houses, cars, groceries, for however short it lasts, until the government enslavement coins appear.
     
  20. HjalmarBromwich

    HjalmarBromwich New Member

    I arrived at the same equation. I'm new to Radix so I really don't know what I'm talking about. By looking around the forum, it seemed like one's holdings H(t) would evolve according to the following model:

    dH = (1/2)*(H/M)*dM => dH/H = (1/2)*dM/M

    Upon integration we find H(t) = H(0)*sqrt(M(t)/M(0))

    We also note that H(t)/M(t)=(H(0)/M(0))*sqrt(M(0)/M(t))
     
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