Emmission rate of Grin


#1

From the doc:
"Bitcoin’s 10 minute block time has its intitial 50 btc reward cut in half every 4 years until there are 21 million bitcoin in circulation. Grin’s emission rate is linear, meaning it never drops. The block reward is currently set at 50 grin with a block goal of 60 seconds. "

Has this been discussed somewhere ? Is it acted?
Not that I’m necessarily against this, but I just wonder the reasons behind this decision.


VOTE on Grin's Mission statement
#2

You can see some discussion on the mailing list. It is currently implemented in testnet1, though testnet2 will have a ~20% increase in block reward, raising from 50 to 60 grin per minute.

For a more detailed look at the supply inflation rate check out this google doc: https://docs.google.com/spreadsheets/d/1RO3zc5AvfN9rcVnrYnLjqCikFLHmD39_7MCV18lDrvc/edit#gid=0
note that is with the current 50 grin reward

Note: bitcoin has never had a lower inflation rate than 4%, and as a proposed deflationary currency is extremely experimental. Grin aims to be more useful as a digital currency by having a constant reward.


#3

I appologise for my lack of clarity here, why can’t we reduce inflation to 1% or keep fee’s super low based on their being plenty a reward from mining? I’m waiting for testnet 2 to get started, what’s the transaction fee at present? I understand it’s probably best to stick to the plan, it’d be good to know the theory and reasoning however


#4

We want higher inflation than that to start. In a couple decades inflation will be close to 1% and shrinking.


#5

The google doc goes out 50 years, but I’m assuming the supply would continue to grow beyond that (linear) which makes grin inflationary, doesn’t this mean it automatically devalues over time? Bitcoin’s hard limit makes it a store of value. IMO, GRIN’s constantly increasing supply is good for a “means of exchange” type currency but could it not become ultimately worthless?


#6

You mean, the way that all fiat has become worthless (note that compared to fiat emission, grin’s is highly non-inflationary) ?


#7

I don’t think its a fair assessment to compare it with fiat which already has a user base in the 300 millions if we’re referring to USD.

The price of grin won’t be high for sure given the high quantity that will be in circulation over the years.


#8

I believe the rate, reward, and reward decay are far more important to Grin’s long term success than people might initially assume.

Some questions that may be worth asking:

  1. Does the hash rate tend to increase or decrease for coins that halve the reward?

  2. Does reward halving play a role in bootstrapping a coin through market dynamics?

  3. Knowing that Grin’s true market value will not be immediately known, should the price of the coin tend to increase or decrease over the life of the coin?

  4. Is the doubling of network hash rate more important at the birth of the coin or 10 years later?

  5. Should miners receive more or less fiat for securing the network at the birth or 10 years later?

  6. Does the number of unique miners tend to increase or decrease over the life of a coin?

Some back of the napkin calculations:

60 coin reward
86400 coins per day
$1000 per coin value

day / min
= 1440

(day / min) * 60
= 86400

day / min * 60 * 1000
= 86400000

day / min * 60 * 1000 * 7
= 604800000

day / min * 60 * 1000 * 30.44
= 2630016000

Miner fiat payout:
$86,400,000 per day
$604,800,000 per week
$2,630,016,000 per month


#9

We don’t need it be high though (unless you’re in the game to speculate and accumulate more fiat). Any currency needs to be inflationary by design. Gresham’s law needs to be in built. As long as its fungible and private then the goal is achieved?

edit: inflation by issuance


#10

$1000 can be substituted with any fiat value you feel is appropriate. The market will ultimately determine the price. I chose an absurd price to encourage long term thinking.

Grin isn’t a nation state with monopoly power on currency issuance. Bootstrapping and long term viability are not guaranteed despite what the current crypto climate suggests. I actually think a perpetual mining reward might be better than bitcoin’s eventual reliance on fees; however, serious thought needs to be given to these variables.

I also think it is somewhat amusing to suggest that Grin’s success depends on inflation when bitcoin would have most likely failed without the extreme built in deflation that attracted the initial group of core supporters. Grin wouldn’t exist today if bitcoin failed in 2009. :grinning:


#11

That’s exactly what I’m suggesting. Along with other attributes, inflation is required for real adoption. Bad money drives out good.

Bitcoin acts as a terrible form of money partly due to it being deflationary by design. Why would I even consider spending bitcoin for every day items if it didn’t have to? It’s far too valuable and keep increasing the longer I keep it in my possession. Bitcoin is like art, antiques, gold, diamonds. I buy, hold and never spend it. Only collateralise with if I need to. If I spend Bitcoin, then I get punished as it continues to climb in price year after year.

The money that loses value each year due to inflation is the money that I want to spend. Inflation creates a sense of urgency to spent it as €100 won’t buy me the same item that I bought the year previous for €100.

Do you want GRIN to compete/exist alongside Bitcoin as a SoV? That’s a dangerous game for any crypto and the odds are stacked against you if that’s the case.

I’d even be happy to see GRIN pegged to a real world currency to ensure it gets real adoption and acts like paper money: private, fungible and yes, inflationary.


#12

So what will the total supply of grin? Sorry for probably the most noob question here.


#13

The total supply of grin will be ∞

But first we’ll overflow 2^64 in the year 2603. Please mark your calendar…


#14

A couple of points,
As i understand it the supply of Grin “in circulation” is not infinite. The continuous linear emission rate is thought to eventually be less than the “loss” rate. The loss rate being the % of Grin in circulation that is permanently lost due to lost seeds etc. I am not sure what this percentage will be in the future, some have speculated it will be 2%. That seems high to me.

If we agree that the loss rate is a non trivial % of existing circulation then at some point the loss rate will exceed the emission rate and the amount of Grin in circulation will plateau. This plateau level will be significantly different depending on the actual loss rate. A loss of rate of 2% will produce a plateau much lower than a loss rate of 0.5% or 0.1%. I am sure someone smart can run the calculations.
What happens to these lost Grin coins? Will they forever be frozen in the Blockchain as unspent coins?

Does this mean that if wallet technology improves and people adopt better practices that greatly reduce the loss rate then the amount of Grin in circulation will greatly increase?
Is that good or bad for Grin as a currency?

Regarding inflation being necessary for a medium to be useful as currency is speculation that is not proven. Gold being the longest used form of currency the most obvious counter example. Inflationary mediums of exchange do not have a good track record. I believe the evidence shows a minimally deflationary medium is actually the best form of currency.

This is certainly an exciting experiment, I hope we get it right but i have concerns. I dont understand the implications of a lot of these decisions.
Of course if it is a total flop i hope someone will use the open source Grin code to make a new coin that has better parameters.


#15

Assuming a perpetual 2% loss due to mishandling is nothing more than a deception used to claim a coin is deflationary in nature when it is actually inflationary. I believe your intuition is correct; people will continue to improve their key management and 2% loss will never happen on a long term scale.

I also tend to agree that there is little proof of an inflationary currency having better long term performance than something deflationary.


#16

What happens to these lost Grin coins? Will they forever be frozen in the Blockchain as unspent coins?

Yes, they remain forever in the UTXO set. In this sense the UTXO set will grow proportionally in the number of transactions rather than the number of active participants.

amount of Grin in circulation will greatly increase?
Is that good or bad for Grin as a currency?

Neither, since multiplying emission by a constant has no effect on the economics.

Deflation being necessary for a medium to be useful as a store of value is unproven speculation.
Gold being the longest used form of store of value is the obvious counterexample (gold is inflationary). I believe the history of fiat shows that an exponentially increasing supply is the best form of currency.


#17

I believe this is potentially dangerous thinking and was the primary reason I proposed a few of the questions in my first post.

It is hard to compare the inflationary nature of government fiat with a simple hard coded emission rate of a cryptocurrency. A better way to ask the “best form of money” question might be: Does a money supply need to increase with the economy? If the answer is yes and we’re not talking about a smarter algorithm for adjusting the emission rate dynamically, is it a discussion worth having?


#18

If the answer is yes and we’re not talking about a smarter algorithm for adjusting the emission rate dynamically, is it a discussion worth having?

I believe that would be impossible short of gai, or cheatible.

If you stated that the block reward was connected to the growth of the utxo set, a miner cartel could just grow the utxo set; for example.


#19

I agree. I think the inflationary arguments for a currency that requires bootstrapping (crypto) are misguided. We don’t have an algorithmic federal reserve controlling the monetary supply based on economic data so why pretend crypto has similar properties.

In my mind, capturing market cap through speculative means is the only known way to successfully bootstrap a coin. Some thought should be put into these variables rather than assuming they have no impact.


#20

The total supply of grin will be ∞
But first we’ll overflow 2^64 in the year 2603. Please mark your calendar…

Can we make it future proof and use big numbers?