HIP39: HNT Redenomination

[jamiew]

Info

• Author: @jmf
• Start Date: September 14, 2021
• Category: Economic
• Original PR: HIP draft – HNT redenomination #275
• Tracking Issue: HIP39: HNT Redenomination #283 (this)
• Status: In Discussion
• Discord channel: #hip-39-hnt-redenomination on https://discord.gg/helium

Rendered view

https://github.com/helium/HIP/blob/master/0039-hnt-redenomination.md

​​Summary

This proposal suggests a redenomination of the conversion rate between bones and HNT. Currently there are 100,000,000 (10^8) bones per HNT and under the proposed redenomination the conversion rate would be adjusted to 100,000 (10^5) bones per HNT.

[simonfuture2]

Most recent Example of a split. Now this is still a long term strategy. and i completely understand the point of trying to do this. and to reach more volume at a lower price. However. Apple has done this very same exact thing. that i traded very successfully by the way. however, the Apple High was at $157.26, which apple has yet to breakout above this price after the split. Normally with spilts like this, it will go down and consolidate for a long time creating a new support floor. Now can Apple breakout above the $157.26 level in the future, yes potentially. now how long will that take and is it even necessary, bc the volume coming in has NOT increased like the strategy suggested after a split due from the pandemic free money volume. apple. since the split Apple is down 18% . and has been a downward trend. This is one example, which is the most recent , and Extremely Valuable Company. Now i totally understand the point of this strategy, but just be aware of the complete opposite reaction to the market. However, that being said, will people be more inclined to buy helium at a lower price than the current market price. in the REAL World., where do you BUY ANYTHING for CHEAP that has HIGH VALUE? so I ask the community, What is the TRUE value of the Helium Blockchain? Do you BELIEVE in the enhancement we are creating with the LoRaWAN and 5G decentralized Wireless network infrastructure we are building? Is our goal to appease the minds with mind tricks and copy other crypto project market strategies? or ARE we HERE to BECOME a LEADER in a New SPACE which we Become examples of Organic Beginnings and allowing the Market to be the Market and Give Us the True Market Value without "blatant" manipulation. This is tough, and i understand both sides of the fence, here, but at the same time, I DO BELIEVE in the Helium Blockchain and its VALUE. That we do NOT need to manipulate markets to make PEOPLE WANT to buy MORE HNT. in the Markets, People DOUBLE DOWN and TRIPLE DOWN on High Value items, not because the PRICE is CHEAPER, but BC there is TRUE VALUE behind our Mission. Lets talk more and i am always willing to listen to any counter debate, and IF I END UP WRONG< then I HAVE NO PROBLEM giving you the Rep. > #283

[discochuck]

This is a textbook case of unit bias.

And people see 15+ bux per coin, and they think ahhh I missed the boat. This affects a large number of people who aren't aware of the Value of Helium Blockchain.

Making this hip an actuality will allow new folks to feel closer to getting in on the ground floor. Which makes more users of the system which spreads the message of helium which in turn will boost people's bags.

More users
More value
.
Everyone wins.

[Tajniot]

Maybe it will work,but when you realized that low rewards are not good for the project why you did the halving?why 3 milion units to be ordered when there will be no rewards?
I vote against this becouse killing the rewards should be solved asap!not like this.#283

[andy210000]

so they have changed the witness count from 25 to 10, and its a complete lottery as to who is rewarded for witnessesing a beacon (punishing all the users who have paid for good setups). now they are talking about 1000:1 also ..... talk about how to kill onboarding of new devices !! Lets go and spend $1000 for a miner and extra antennas for a 15c return each day.......no thankyou
the amount of devices in the world is a very small number and keep changing the goals post what seems like every other day right now will kill this project

[vulet]

I find the proposal hard to support in its current state. DOT is mentioned, but the DOT redenomination happened very early(days) after their mainnet had allowed "transfer" transactions and the redenomination was discussed before then. During the DOT redenomination, several exchanges started redenomination before the "actual redenomination" even occurred. However, unsuspecting market makers are the least of worries.

This will, and not potentially, effect every application that communicates with users using HNT if it goes through. It is short-sighted to suggest that because all apps are underlyingly using bones that there won't be any issues. In fact, because the applications will still work, even without adjusting for the redenomination changes, independent of timeline, is worse. There is nothing on how the migration works besides "messaging", but noticeably "market cap" is mentioned 8 times in the proposal. An application, and especially a financial application, needs to accurately achieve a user's intent and only a user's intent. Without effectively hardforking all client-side applications you are opening a can of worms.

A quick example, someone is using any user-facing app. The developers have been "messaged", and have even updated their application to prepare for redenomination. However, the user has not upgraded to the newer version since the time of this post. The balance shows the old balance, not a huge issue, as for now this is only cosmetic. But, what happens when a user sends a transaction under basis of the new meaning of HNT while the app is on the old meaning of HNT? Several accidental zeros added to a payment.

[amirhaleem]

so they have changed the witness count from 25 to 10, and its a complete lottery as to who is rewarded for witnessesing a beacon (punishing all the users who have paid for good setups).

you still have to actually witness the beacon to be part of the 10, so this doesn't hurt good setups. it's not some random selection from nearby Hotspots, you still need to witness the RF.

now they are talking about 1000:1 also ..... talk about how to kill onboarding of new devices !!

just to be clear, this proposal came from a community member. there's no "they" here.

[AndrewsMD]

I have purchased many hotspots (i.e., humbly, . . . well over 100 and still counting) and I wholeheartedly support this proposed split of 1,000:1.

This is not stock, it's crypto. To compare this proposed split to an Apple stock split who has a market capitalization of over $2 trillion dollars and traded on NASDAQ, is well, comparing apples to oranges (smile).

The polka dot example is more comparable given that it is within the crypto space. This DOT split yielded a cash return multiplier of ~1,200 times over one year after a split of 100:1.

Is it possible that a well marketed HNT split on Social media platforms could yield returns greater than DOT? The simple answer is absolutely, especially if the token is traded on more platforms. The more, the merrier :)

Consider the following article. https://www.cryptovantage.com/news/the-rise-of-polkadot-how-dot-became-a-top-10-crypto-in-a-month/

I say we put it to a vote. In the DOT example, ~86% of those who voted, voted in favor of the DOT split and the crypto rose exponentially.

[Tajniot]

I have purchased many hotspots (i.e., humbly, . . . well over 100 and still counting) and I wholeheartedly support this proposed split of 1,000:1.

This is not stock, it's crypto. To compare this proposed split to an Apple stock split who has a market capitalization of over $2 trillion dollars and traded on NASDAQ, is well, comparing apples to oranges (smile).

The polka dot example is more comparable given that it is within the crypto space. This DOT split yielded a cash return multiplier of ~1,200 times over one year after a split of 100:1.

Is it possible that a well marketed HNT split on Social media platforms could yield returns greater than DOT? The simple answer is absolutely, especially if the token is traded on more platforms. The more, the merrier :)

Consider the following article. https://www.cryptovantage.com/news/the-rise-of-polkadot-how-dot-became-a-top-10-crypto-in-a-month/

I say we put it to a vote. In the DOT example, ~86% of those who voted, voted in favor of the DOT split and the crypto rose exponentially.

Gredy helium developers are killing the rewards and all they care is to push more and more wendors(which mostly of them are complete amateurs and arrogant pricks like Nebra) who got a lot of pre orders which they can not deliver!
So please tell me how a token which is traded on only one exchange with constant fall of the averege volume that is traded will increase the price after the split?

[joewadcan]

This is a pretty interesting topic, and am surprised to read the gripes about hotspot earnings here. Seems valid but misplaced in this issue.

Re: Redenomination

I think the problem it's addressing are valid. Small fractions are harder for us hoomans to deal with.

However, it took me a while to realize that Bones to HNT are the same relationship as Satoshis to Bitcoin. If the problem is dealing with small numbers then the solution should focus on just solving that. Attempting to price bump through psychology is a different problem and solution. Elegant together, but dilutes the intent and just opens up the door to lots of similar "how can we use a HIP to pumpp to the moon" type requests.

When Bitcoin had the same problem to a much greater degree. There's a funny comic of someone ordering a coffee and the barista asking for .000000001 ₿. Bitcoin took a simple path being to just start referencing to Sats directly.

Instead of changing the existing Bones to HNT ratio, we could take a less impactful turn and start referencing those lower denominations directly. For example that admittedly is incredible un-creative...

1 HNT = 100,000,000 Bones
1 HNT = 1000 milliHNT (mHNT)

The Helium app could default to showing HNT in milli denominations (.5 HNT = 500 mHNT). Exchanges, etc all would work fine as-is but would need to specify HNT vs mHNT. What do you think? It doesn't directly solve the "expensive coin" bias you mentioned, and it would introduce some confusion into the system (do I buy mHNT or HNT).

I like the idea of re-contextualizing HNT this early in it's growth. however way we get there

[ifixi110]

This HIP does not solve any technical problem with the network, instead it's purely hypothetical trying to solve a "perception problem" in the market. I believe that the network (and its technical components) should remain market agnostic in principal.

The "unit bias" can be solved entirely off-chain by changing stuff at the API level. Simply transition to using Bones directly everywhere without changing anything in core/miner code.

Addressing each point:

1. Incentive Unit Bias: For most of Helium’s history gateway owners have enjoyed earning mining rewards in excess of 1 HNT per day (historically much higher), but with the HIP-20 halving and a 10 fold-plus increase in gateway deployments in 2021 those earnings have been reduced to partial fractions of an HNT. Even though the market price of HNT has increased approximately 20X since August 2020 and the median $ earnings per hotspot has remained generally consistent, there has been growing discontent with the HNT earning rate. In behavioral economics, the preference for obtaining full units (or completing full tasks) is called unit bias. In general, people prefer earning rewards denominated in full units rather than partial units. As we have seen in Helium, there were very few complaints when gateway owners were earning more HNT at a lower $ daily mining rate than when they were earning partial HNT at a higher daily $ rate. The redenomination would cause individuals to earn in higher HNT increments again, even if $ earnings stayed the same.

The fact that despite this claim of "unit bias", the network grew tremendously and continues to do so is evidence to the contrary. Is there a way we can verifiably prove that there is indeed "unit bias"? As far as I see, the primary goal of Helium Network is to provide a platform for incentivizing multi-protocol network coverage (LoraWAN | 5G) since traditional network deployments are prohibitively expensive and that's it. Market perception of the unit for incentivization is immaterial on a technical level, if people find it useful it gains value otherwise it doesn't.

2. Simplification of Unit Measurements: Anyone that has mined or transacted in BTC or ETH has dealt with earning extremely small fractions of units. This can be frustrating and cause confusion when dealing with excessively small fractions (often denominated in thousandths of a unit). A redenomination would make transactions using HNT more digestible, by decreasing the decimal places needed in the majority of transactions.

This is mostly conjecture since BTC/ETH are prime examples of the exact opposite. Just switch to bones or mHNT (as the other commenter mentioned above) if fractional units are too hard to digest.

3. Small $ Token Investment Bias: Tokens that are priced at a low $ amount are typically seen by the market as ‘inexpensive’ regardless of the size of the project's market cap. In general high issuance tokens have benefited from this investment bias because the tokens are perceived to have more upside than higher dollar tokens. Typically, this equates to a higher overall market cap for projects and, in the case of Helium, could help increase the incentive rewards, not only in terms of HNT but also $s per gateway.

Again, this is purely hypothetical until it can be proven.

I do not understand why/how this is "Helium Improvement Proposal" as this is just an attempt to do psychological market price manipulation. I strongly vote against this HIP and I hope other members of the community would do the same.

[wavyog]

I think it's going to work .

[eblitz1738]

I think its going to work as well. All indicators available show that this has a very good possibility for success. Will be voting in favor of this HIP

[rafaribe]

This is a proposal trying to solve a problem that does not exist. Fully agree with @ifixi110 .

[pdogbc]

Not sure how this HIP even got this far. We should focus on growing the network and increasing sensor usage... Not fiddling with decimals.

[130db]

I think this is a bad idea. The network is growing. Halving happened a few months ago.
I agree with @rafaribe, this is a proposal trying to solve a problem that does not exist.

There are 859 votes on heliumvote.com right now.
I do not think 859 votes represent 300k hotspots.
There should be a minimum threshold for a quorum to make this decision.

[xtagon]

Regardless of opinions on whether this is a bad idea, I strongly agree that there should be a minimum threshold of votes represented or else nothing changes. It seems wrong that such a big change will be completely missed by most hotspot owners/HNT holders who may not even have heard of this in time. Even now there are only 1,210 votes on heliumvote.com and estimated just 4.5 days before the vote ends.

[reelen]

The HIP should NOT pass without a larger vote from the community. This fixes a problem that doesn’t exist. This is going to cause more harm than good with confusion around units and add misunderstandings to the trajectory of the projects.

How this is moving forward rather than real problems is a huge miss and has caused many serious miners to pause and question what is truly trying to be accomplished?

This feels like a manipulative ploy by children that want a coin to “moon faster.” Let’s be better.

[Frankter]

👍🏻 hip-39👎🏻 🤷

[disk91]

In case HNT (after Redonomination) pass the $1, it means the blockchain is not able to reward for a single data transfer. So if you think this is a good way to reach $1 (eq $1000 today), you need to have in mind that this is impossible, by design, without adding bones into the system.

After redemption: 1 HNT = 100_000 bones when HNT $1 = 1 bone = 1DC equivalent

[switchzer0]

There is an argument for conservatism in systems that work well and are worth preserving i.e. what a conservative party generally does in a government — preserve what is good in the status quo. Helium is an early stage network, so the focus is not keeping the network as is except in the ways it is profoundly good, but more on ensuring it's longevity and change for the better. There is plenty that is good about Helium, but the Bones/HNT ratio and the stability of monetary policy are not core to the network's value proposition; different from the Bitcoin network where the core value prop is around monetary policy and sound money. If Helium had been around for 10 years, there would be a stronger rationale for bias toward conservatism in general. I find the argument against the proposal for conservatism unconvincing.

There is an argument for focusing on fundamental network growth and not price gimmicks. There is also an argument that the redenomination of Bones/HNT is a temporary and thus pointless "fix," and that within a short period of years (assuming continued network growth) that miner daily returns will soon drop to <1 HNT again. I believe this fact of returning to < 1HNT is true if Helium's expansion continues, but I do not think that a _unit bias / behavioral economics approach to token price and investor interest is necessarily fruitless with regard to focusing on long-term fundamental network growth. A positive impact on HNT price (unit bias driving more investor interest and more hotspot-miner interest) at this critical phase in Helium's growth means, in the short term:

• more capital allocated by the market into Helium/HNT market cap, resulting in:
• shorter/cheaper HNT-denominated breakeven period for new hotspot miners, resulting in:
• increase in incentive for new hotspots to be brought on line and more locations where hotspots can be profitably deployed, resulting in:
• more/faster global network coverage and physical infrastructure expansion, and thus more utility for network/5G/IoT/DC users of the Helium network, and thus
• more users on both the supply and demand side of the network and faster Metcalf-law type network effect and a better strategic moat for the Helium network.

Even if HIP39 is behavioral economics based and a "temporary" impact on unit price, the above cause-and-effect chain seems to be positive and come at a critical, strategically significant point in the Helium network's growth needs. For these reasons I find the " behavioral econ gimmick" and "temporary fix" arguments unconvincing.

My bias is to default to voting "no" on any seemingly cosmetic, temporary, or exclusively short-term price oriented fix, but I'm finding by the above logic that HIP39 is not merely cosmetic/temporary/price-action, but offers a meaningful strategic benefit to support the Helium network's growth and longevity, and thus I am inclined to vote "yes." Would love to hear where I'm overlooking counterarguments to "yes" or have flaws in the logic.

[cvolkernick]

Worth noting the interesting divergence between the general sentiment here on the GitHub thread and on the public vote. Seems the general consensus here is "against" while the more "publicly accessible" vote is "for".

I will maintain that personally I believe most of those in favor (and I say this with all due respect) do not actually understand what they're voting for on a technical level beyond conventional "number go up" psychological manipulation.

I don't think it's a coincidence that there is a stark contrast between the GitHub crowd (generally more inclined to be technically savvy & more closely involved in active network development) and social media proxy ("heliumvote").

Also strikes me as odd that those in favor are making arguments centered around bringing more capital into the project when currently the exact opposite problem exists -- not enough supply to meet demand. All the demand in the world won't matter if it can't be reasonably met.

[ghost]

“If it’s not broken, don’t fix it.” - this is the essence of why I reject HIP-39. It does not solve a problem. It is window-dressing. HNT has and will continue to grow organically without frivolous interventions. Do the proposers really have such little faith in Helium that they wish to rely on cognitive biases to pump the price?

Vote no and let’s redirect our time and energy towards proposals that fundamentally benefit Helium and the network, this is a trivial distraction.

[crsparks]

As an engineer I agree this may seem frivolous. However, having been involved with Crypto since 2011, I also know that project tokenomics is extremely important to the overall success of a project. Therefore I support HIP-39's 1000:1 split. Note: I would also support a variant of 100:1 split.

[ghost]

What is the status of this HIP?

[jthiller]

@netgain-justin-trantham Updates are in the Helium Community Chat under the #hip-39-hnt-redenomination channel

[vincenzospaghetti]

This HIP was repealed per HIP 67 and the corresponding vote.. We are closing this HIP. Thank you to everyone who contributed: @jmfayal @joewadcan @xtagon @amirhaleem @130db @netgain-justin-trantham @crsparks @cvolkernick @switchzer0 @disk91 @ifixi110 @vulet @simonfuture2! And more not mentioned here! Your contributions, discussion, experience, and dedication to Helium are invaluable. You can find any additional discussion about this HIP in #hip-39-hnt-redenomination channel in the Helium Community Chat (Discord) until it is archived.