UIP-13 - Change Block Rewards

[iquidus]

Simple Summary

Change block rewards to 2UBQ per block, forever. (dependent on adoption of UIP-12)

Abstract

The current monetary policy is stepping down too aggressively in relation to other variables (such as price), having a negative impact on network security. As is, the final step down to 1 UBQ per block will leave us in a vulnerable place in terms of blockchain security. We have observed Ubiq's hash rate go down at each step down in rewards so we can assume hash rate would be around 1/4th of what it is now.

With the proposed blocktime changes in UIP-12, we will reach 1UBQ per block much faster than originally anticipated.

This UIP proposes to change the block rewards to 2UBQ, forever.

To counter this additional inflation, UIP-11 (EIP-1559) is recommended.

UIP	omit or include
11 (Fee market change (EIP-1559))	include
12 (Reduce Target Time for Blocks)	include

Specification

TODO

Implementation

Adoption of the content of this UIP requires a hard fork as it introduces changes that are not backward compatible.
This UIP is dependent on UIP-12 and should be activated alongside each other.

Due to the nature of this proposal it will go through Escher governance.

Proposed Timeline

TBD

[Bullchad123]

A question would be how these options are presented for a vote
EIP 1559 only makes sense in a scenario where we change MP to increase inflation

imo vote 1 should be UIP12 (22 second block time)

vote 2 is then UIP 11/13 combined (deals with the MP from this point onward with the potentially new blocktime)

I'd have potentially 4 options on that second vote

1. Align the current MP to the new blocktime (22 seconds gives 1 UBQ per block then dropping to 0.75, 0.5, 0.25 and stays there forever)
2. Change the MP to 2 UBQ per block as per UIP outline (includes EIP 1559 and 80 gwei gas increase)
3. Compromise between two (TBC what that looks like but a couple of options have been discussed) (includes EIP 1559 and maybe 40 gwei gas?)
4. Abstain

But keeping the current emission schedule needs to be an option.

Can run both votes concurrently on the basis that if the block reduction doesn't go through, either the 2nd vote is null and void, or we apply the results of the second vote to the now remaining 88 second blocktime

[ZenithII]

The negative effects of the increased inflation will be negated by the increased usage and burns in the network. The more people use the network, the more gets burned. It will all balance out, in favor of proposed idea of 2UBQ reward forever.

[LessDaStress]

[LessDaStress]

Is 2UBQ per block is the only option for now, are other rewards models are still up for discussion?

[skywalk3rUBQ]

Gets offset with network use, which if we aren't betting on having network use increased substantially, well we are. so this makes sense.

[LessDaStress]

Courtesy of Raging Bullchad

Is the Grey line "22 UBQ @ 22sec + EIP-1559" or "Current Model + EIP-1559"?

[ElevenXi]

I would like to see multiple options for this vote.

2 per block as a single option doesn't give much choice to vote on. The options currently are 2 per block at 22 seconds, which would put as at our original inflation of 8 per block at 88 seconds. However it wont drop down as it did before.

Option 2 is to not implement this, which I assume would keep us on the current inflation schedule. So I'm assuming that means we go to 1/.75/.5/.25 (at 22 second blocks) as rewards for the next 4 block halving.

Personally. I don't like either option. I am pro the other UIP's that tie in with this one but this one needs more tweaking.

I believe nethash and price go hand in hand. They effect each other.
Looking at the way the market and nethash have performed over the past few halving show me this:

We seem to have a core group of dedicated miners (~30-35GHS) and then a handful that jump on and off when prices swing a little bit. You can also see the small bump on overall hash with the bump in price last year.
Hash is slowly dropping off as we are going forward so this does need to be addressed. But boosting it to high to quick could have a negative effect. If there are more miners joining just because our mining profitability went up 4x overnight I don't see the market being able to handle that new increase and that could push us to a lower price, which in turn will effect the mining profitability. Which, if that goes down to much, will put is in a similar situation to what we are in now.
From the hash and market history, I assume the market was fine with the 6 block rewards at 88 seconds. So I believe there is some room to bump up the mining rewards but 2 is to much of a jump in my opinion. 1 per block forever would be my bet however I believe we could push it even up to 1.5 per block.

The other UIP's do offer incentives to help with these concerns however I still think the current proposed vote choices are limited.

I would like to see the following as vote options:

2 per block - forever
1.5 per block - forever
1 per block - forever
Stay at current inflation schedule. (1/.75/.5/.25)
Abstain

These are my ideas, but there is room to tweaking the block rewards more than just the proposed options. Maybe we can even think of other ways to handle the rewards. eg: We could start a 1 per block and ramp to 2 over x period to ease the market into it.

[iquidus]

Regarding inflation. The proposed 22second blocks (UIP12) with the proposed 2ubq fixed reward results in the following.

86400 (seconds in a day) / 22 seconds = 3927 blocks per day.
3927 blocks * 2UBQ = 7854UBQ per day.
At current market price of 0.30USD, if 100% of miners sell 100% of their rewards, the market needs to absorb $2,356.2 USD per day...

In comparison ETC market currently has to absorb $1,132,291 USD per day to offset miner rewards. $2.35k is nothing in comparison.

regarding

2 per block - forever
1.5 per block - forever
1 per block - forever
Stay at current inflation schedule. (1/.75/.5/.25)
Abstain

The proposal aims to keep things simple, simply yes, no, abstain. 2UBQ can be replaced with a different value, but we can not cleanly vote on multiple values in one proposal. Also, the proposal is to change the blockreward, inflation schedule is a secondary impact. "Stay at current inflation schedule. (1/.75/.5/.25)" is not the same as doing nothing, or a no vote. a no vote on this proposal, with uip12 passing, would result in the current monetary policy remaining the same but being accelerated 4x, the current steps (defined at block height intervals), would occur roughly every 3 months, instead of yearly.

edit: Also, 65,905.4088 UBQ has currently be burned by inception, if all 8888 Ns are claimed, 782,144 UBQ will be burned, the equivalent of 99.5 days of block rewards if both UIP12 and 13 are activated.

[ElevenXi]

The comparison to ETC inflation is a bit unfair.
ETC has multiple markets with +/-2% depth that is more than enough to sustain their mining rewards.

Where if we look at UBQ, there is only 2 markets that are able to just handle that. And Trex isn't always as liquid as it is right at this moment. With only two options this concentrates where the miners will be able to sell compared to ETC where there is a wealth of options all with high liquidity depth.

Anyway, Thanks for clarifying the "no" option.

I believe there is more risk in doing nothing at all, these UIP's all compliment each other well. But personally. 2 per block is to high.

my new proposal:

• 1.5 per block
• Do nothing
• Abstain.

edit: Over cropped the picture of the ETC markets, The highlighted grey column is -2% depth.

[j40j]

At the moment I think that 2 UBQ per block is too much. I think that Eleven’s 1.5 Ubq is a better compromise right now. Only 748/8888 Ns have been claimed in nCeption so atm I don’t see it as being realistic that all 8888 will be claimed given the current trajectory. It’s easier to feed more down the line but certainly worse to have to feed less due to too high of an emission rate.

The data shared by Iquidus showing that at 22 second block times with 2 UBQ block reward would at its highest, put $2,3000 sell pressure on the market with a $.30 price. I don’t see enough daily demand in the market to make $2,300 daily seem digestible. I know that that number is only if all of the UBQ mined that day was sold but if it was only half, I still feel that it’s a lot given the current level of demand. I’m skeptical of seeing NFTs as the main driver demand as well. I’m of the opinion that DeFi products would increase market demand much more and faster than NFTs.

[Bullchad123]

Just modelled this with a block reward of 1.5 UBQ per block

Bear in mind the line for EIP 1559 (aka UIP 11) is the theoretical supply line if there is activity on chain in enough quantity to burn all new supply. The truth is that the supply will likely be somewhere between that line and whatever model is selected.

I agree with Elevens analysis around market depth. I would personally vote for 1.5 UBQ per block if it was an option but I'd also be keen on reviewing this again in 12 months time to assess performance against where we are with hashrate and price.

Regarding ETC, they have a block reward reduction planned for April 2022 and a hard cap on supply of 210m ETC, just for context.

[iquidus]

I understand the traders and hodlers are concerned about inflation but imo, security is more important. The tiny amount of inflation is easily mitigated, and quite frankly, more than worth the cost. Comparing with ETC is not unfair, its the closest and easiest comparison to make.

ETC current hashrate: 24.54 TH/s
UBQ current hashrate: 39.2 GH/s

ETC has more than 500x the hashrate UBQ has. Which is no surprise given they pay their miners roughly 500x than we do, for the same work. If the goal is to attract ethereum miners as it transitions to PoS, our rewards need to be more competitive, otherwise we will attract no one. ETC is just one example, all PoW chains that are bigger than us, are paying their miners significantly more than we are, even with the proposed 2ubq per block. If we want to remain the smallest, paying our miners the least is a guaranteed way to achieve that.

[j40j]

Looking at it from a priority perspective, security and keeping miners happy is number one. Therefore I would be fine supporting 2 Ubiq as a reward.

[ElevenXi]

CAVEAT:
-WhatToMine isn't perfect or ideal, but it is what we are going to use in this post.
-This post is purely for my own analysis and recording purposes.

• All power use cost has been turned to 0 for the sake of simple comparison.
• Only using Ethash4G
• All prices used on WhatToMine are from the time of this post. Will not be accurate in the future.
• WhatToMine doesn't monitor AMM's liquidity. So ETC is going to have more "major exchange" liquidity that UBQ. (We have good quickswap liquidity. but its ignored)
• Diff for rev has been changed to 7 days instead of 24/h

500 MH/s profitability

This is decent for the smaller enthusiast miners out there. Currently we are looking at $13.37 for UBQ and $21.89 for ETC. (again, we are ignoring power costs here) So ETC is ~63% more profitable than UBQ at 500mhs. If the vote passes for 2 UBQ per block. That would put us at $53.48 a day. (Yes, it doesn't scale like that, Its going to happen a lot here. I am keeping things simple for the sake of this proposal)
So we become the most profitable chain to mine by ~153%. Very nice.

5000 mh/s (5 gh/s) profitability

Now we're ramping up. 5gh/s is a lot of hash power. Market slippage becomes a real factor in the WhatToMine Calculations for profitability. ETC is now at $219.27 and UBQ at 121.15. ETC is now ~81% more profitable to mine. With a 2 UBQ block reward and 4x the block rate. That boosts us, once again, 2x in "profitability" increasing us to $242.30. (scale issues, yes.) Ubiq is now 10.5% more profitable than ETC.

50,000 mh/s (50gh/s) profitability

wow, now you own the current UBQ network. Congratulations. 50gh/s is a lot of hashing power. Now we're really seeing the effects of the slippage calculations from WhatToMine at play here. ETC is at $2184.81 and UBQ is at $618.31
ETC is now ~253% more profitable than UBQ. Blah blah blocktime/reward change. Would put Ubiq at $1236.62.
ETC has won the battle. Absorbing a large amount of hashrate from ETH going to PoS won't be possible in the current state of things. The other UIP's work to boost this and I am all for them. This blockreward one carries its own risks.

ETC needs to be knocked out of its spot. It is well funded but lacking in use case. Ubiq has a lot of use case but is lacking in funding. The market is one of the factors we need to convince. Its not just miners. We need to convince both.

If miners just use us as a method of profit, we will be put back into the place we are now over time. Multipools exist. We have only battled with Kryptex so far. There is many more out there in the dark forest.
Speculative miners may join us, They may mine and hold as the other UIP's work in their benefit. But I feel like there is an assumption that all miners are the same.. Some mine and hold. (like many already do on UBQ) Some will mine but sell a portion to pay the power bill. Some will be straight up multipool miners and get auto dumped for some other coin. (eww kryptex) We can't assume the majority of miners are positive. Such a large spike in minig rewards to me will just ping all the multipool operators and we get put in our place.
I agree, There is risk both ways. but if we are over run by bad acting miners, Then the market suffers and mining profitability goes down with it. Further exacerbating the issues we currently are trying to counter.

Sometimes not being the number 1 spot for mining profitability isn't the worst thing. Being last is just as bad as being first imo. We need to be near the top, but not the number 1. That is, until we get a market that is ready to support the number 1 spot. That is down to not only the miners but also the market.

2 per block is an aggressive start. I like the idea of boosting the rewards. But its far to aggressive for me.

[johndoe1827]

1,5 seems generous and risky enough. If new users come to network and start buying and using ubiq then price will rise and miners will get interested. Only then. First u get users then u get the price bump and then u get miners and more security. Eth reduced block reward and i dont remember hashrate droping, aside from China baning mining. Even at 1 ubiq per block in perpetuity wich would be my first choice, i dont see why would be any problem atracting miners if say one ubiq is 2 bucks rather than 2 ubiqs r one dollar each. To a miner its the same, if indeed objective is to get more miners. $5 per coin per block is better than 2 coins per block and 2$ per coin.