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Signal non-final status of base reward and desired issuance goal #971

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merged 1 commit into from Apr 22, 2019

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@vbuterin
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commented Apr 20, 2019

An issuance increase is proposed based on community feedback, to 2**21 ETH if 2**27 ETH is validating, along with an agreement to set the base reward quotient based on a pre-set max issuance bound once all protocol details are finalized.

Here's a table of new total issuance rates with this proposal:

ETH validating Max annual issuance Max annual return rate
1,000,000 181,019 18.10%
3,000,000 313,534 10.45%
10,000,000 572,433 5.72%
30,000,000 991,483 3.30%
100,000,000 1,810,193 1.81%
134,217,728 2,097,152 1.56%
@JustinDrake

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commented Apr 20, 2019

Below's my rationalisation as to why the numbers are reasonable.

Targeting 2^25 ETH at stake (~32m ETH) for the long term feels about right for strong security. In such conditions, the base inflation would be ~1% and the base return ~%3.2%. Assuming each shard consumes on average 1,000 ETH in gas per year (about 100x less than what Eth1 consumes today), with half of the gas burnt, then inflation would be ~0.5% and the validator return ~5%. Feels healthy!

If we get significantly less than 2^25 ETH at stake then doubling the base inflation wouldn't be unreasonable :)

@dankrad

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commented Apr 20, 2019

These numbers seem more reasonable to me than the numbers currently in the spec!

If we get significant less than 2^25 ETH at stake then doubling the base inflation wouldn't be unreasonable :)

Wait, the way I see it at the moment, base inflation would actually be lower with less money staked, right? Rewards per staked money would be increased though.

@adamluc

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commented Apr 20, 2019

@JustinDrake - why are a portion of fees burned?

@JustinDrake

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commented Apr 21, 2019

@adamluc Eth2 will likely have a new gas mechanism which involves burning some fraction of the gas fees. See EIP 1559 for one possible way forward. https://medium.com/@eric.conner/fixing-the-ethereum-fee-market-eip-1559-9109f1c1814b

@adlerjohn

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commented Apr 21, 2019

Feels healthy!

That...doesn't seem like a particularly rigorous metric. Neither does "this other blockchain has X issuance rate, and they haven't gotten attacked yet so X must be fine!" A chain is secure until it isn't. I attempted to solicit discussion around the metrics for issuance rate parametrization in #833, but it looks like it fell on deaf ears. Is the issuance rate really being influenced by "community feedback"? Why not just outsource the task to an independent panel of actual expert economists?

@collinjmyers

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commented Apr 21, 2019

Happy hear a proposal has been put in place to get the conversation started - for those participating in staking (especially the Genesis stakers) it is also crucial to have more clarity around network fees and how they are divided up between pow & pos participants - I will provide a new validator profitability analysis and update my original articles based on the new proposal - however without a better understanding of network fee dynamics at the 10M mark and at genesis/phase 1/phase 2 the analysis will remain incomplete....ish.

@djrtwo

djrtwo approved these changes Apr 22, 2019

@JustinDrake JustinDrake self-requested a review Apr 22, 2019

@djrtwo djrtwo merged commit d9b3021 into dev Apr 22, 2019

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@djrtwo djrtwo deleted the vbuterin-patch-2 branch Apr 22, 2019

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