ThreeFold Tokenomics Discussion

#21

Hi Patrick,

I agree with your assumption that the farmers now earn less TFT for cultivation, because the burning takes away from what they receive. But the big win for farmers is that this model allows us to limit the amount of tokens in circulation drastically. We are not allowed to make price predictions, but consider that the underlaying capacity is incentivized to grow steadily, and the amount of TFT in circulation remains the same.
Calculations showed that 10% burned tokens would not free up enought TFT to be farmed to make this model feasible.

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#22

Iā€™m not sure that would be the case, as in some cases it would mean people physically moving closer to our nodes, as opposed to us trying to place our nodes close to where data is being generated.

#23

Completely agree that we cannot make it perfect, we have reached the point when we say it is good enough and launch. But I would caution against changing tokenomics in the future as if anyone sells TFT to a third party, changing tokenomics afterwards might be considered by that buyer as a material change to the value of the asset so the seller had better be very careful about making reps and warranties.

#24

Certainly worth exploring some kind of bounty outside of what will be baked in to the tokenomics. Iā€™ve made my thoughts known that there needs to be a credible incentive for farmers to place nodes in hard/expensive places if thatā€™s where the demand is. Otherwise we are forcing these users to use nodes located far from them, increasing electricity usage and internet load.

#25

Would also think that by clearly showing that we are not ā€œstuckā€ on the same place and not willing to evolve is detrimental - best indeed to be transparent, willing to improve down the road vs claiming to be perfect from the start

#26

And with burning + limiting the total tokens that can be issued, the increase of value of the token looks to be even overcompensating the burning - this according to what we saw in the simulations that were shown in the various zoom meetings

#27

Who can help me with installing and running the token simulation?

Not a techie with phyton at all. KISS approach applies.

#28

Hello Georges,

Right now it will require installing SDK and launching it from command line.
http://sdk.threefold.io/
Its not hard, but if you are looking for something easier, in one of the upcoming releases it will be integrated in personal 3bot and will not require any tech skills to deploy it.

Feel free to reach out to me personally if you need help with it.

1 Like
#29

Thank you nickolayā€¦

1 Like
#30

Keep in mind that the simulation tool is exactly what it is called: a SIMULATION tool. Putting 3 USD as a token value is just an arbitrary choice, just as saying that we will take 1% of global capacity.
If we want to have 1%, we would need to expand the current grid of 40 Pb more then 40,000 times overā€¦
I donā€™t see that happening anytime soonā€¦

#31

Do you have the simulation tool available to you TFFarmer?

#32

Nope, not yet, I run on PC with windows (like most people in the world), and it is not yet available for PCā€¦

#33

@kristof @AdnanF : Do I have this correct?

On July 1 - TFTAs can trade but ONLY if:
a) TFTAs are in at least $20k blocks in size (assuming you can find such a large buyer)
b) at a price the higher of i) 15c and ii) at a price that is higher than that of TFTs at that time.

A quick reply would be very much appreciated.

Thank you.

#34

The proposal as now made wrt token economics will indeed drive the price and is more simple to explain.
However, the latest evolution of the model brings up some new concerns: the substantial reduction of the total amount COMBINED with the fact that burning will no longer happen, will make the tokenomics very similar to the one of bitcoin.

One big inconvenience of the bitcoin way of doing is what I want to call the ā€˜whale effectā€™. Being that

  • concentration of tokens is that high that price manipulation is again possible, and
  • it favours early adopters way more than when the maximum supply is very high.

We know that for bitcoin, about 1000 people own 40% of the bitcoins, making that big price movements can easily be achieved by one of these. Add to this that Satoshi is likely to have 700k to 1mio BTC, which have never been moved, making that whale effect is even bigger as the total number of tokens effectively to be taken into account is lower.

I hear some concerns about the latest tokenomics changes, that I try to grasp. And I believe that a similar effect as the above described whale effect is the worry. And as we have a usage of the token which is farming, concentration might happen quicker than you think with big farmers.

Now, TFT is not in the same situation as bitcoin, as

  • there is still a higher number of tokens yet to be created.
  • I know the willingness to create whales is far from many peopleā€™s objectives, making that there might be a way to deal with that. Burning would have helped with that, but it gives other drawbacks. One thing is economic, like what is the base amount to be taken for VAT calculation: what the user pays or what the farmers get ? (we wonā€™t escape VAT discussion at one point in timeā€¦)
  • tokenomics are not yet put into concrete, but the time is almost there.

Now, what could be the solution to this :

  • The idea to create a market bot to drive price stability might be a key to a solution ?
  • anyway there is something needed and maybe missing in our mechanism, which is an incentive for token holders ā€˜not to become a whaleā€™. In a first phase whales can influence the market to increase price stability, but 10 years from now, there might be other whales in place that again only think about their own profit. We have to anticipate that moment now, either in the tokenomics itself, or in additional measures.

Can we invent a rule

  • that has a deflationary effect when concentration gets too high ?
  • that drives the usage of the network?

Can we have a mechanism where the maximum amount of tokens in circulation increases with every new capacity reservation ?
At first view

  • this would not have the inconvenience of burning, but has a similar diluting effect, also allowing newcomers-farmers to have a chance to enter the market,
  • it drives the usage of the grid, as well as the incentive to keep on farming stays as well, as there will be tokens available to mint for a way longer time,
  • it allows to have effect gradually with the growth of the network. With low usage now, cap is increased at very slow pace, meaning we have some control over price fluctuations. When usage gets bigger, we will have less control but hopefully it is then no longer needed as market has come to maturity by then.
  • it could also incentivize farmers to keep the price of their capacity at a reasonably low level. The higher the price they ask, the more a dilution effect occurs.
  • Itā€™s a negative feedback loop, and Iā€™ve learned from my classes that these negative feedback loops improve stability, something that we aim for.

I know, I add some complexity to this discussion, and itā€™s not helping in getting a quick agreement. But I feel an informed decision is better than a quick decision.

#35

Just thinking out loudā€¦

Iā€™m trying to understand here:

What takes it to become a whale in the TF economy?
And how bad would that be?

Either you have to create big-farms, but (big) farms is what we want.

If the farms are there, but no usage, then that will work deflationary on the token price.

Or you have to buy up all tokens that become availableā€¦

But, I donā€™t see that happening.

The history and model of TF is just too different from Bitcoin. Bitcoin is/was ONLY speculative, TF is not. TFTā€™s are just not a good asset to speculate with for short term gain.

I think you try to address a mostly ā€˜theoreticalā€™ problem here.

Nevertheless, your idea to link max. tokens with ā€˜activityā€™ is an appealing one. Itā€™s very similar to the real economy where the money-supply grows with GDP (ignoring idiot countries like the USA who currently overheat the money-printing machines without growth).

You will end up with tokens that are ā€˜linked/come to into existenceā€™ to/via a real asset (capacity), while the maximum token amount is tightly linked (no money presses) to the TFT economy as a whole.

However economy is capacity x productivity.

What I find tricky is that we currently sort of assuming that supply automatically generates demand. For some reason Iā€™m more worried about network utilisation than available capacity. Adding hardware is easy, attracting users is hard.

Does any one know the network utilisation of Folding@home? I assume its low, and here usage is free.

What if we link tokens in circulation not only with capacity, but also with usage?

Tricky to define ā€˜usefulā€™ usage (using the TF Grid to mine-bitcoins will not particularly help), but if we can do that, then usage would be a better metric for economic succes of the Grid then capacity.

I think someone should build this into the simulator and see what happens.

1 Like
#36

There is a whale effect on almost every financial instrument in the beginning. Itā€™s a factor of risk. The early adopters carry the most risk and also stand to earn the most if successful. So if some load up at cheaper but risky amounts they will have the most influence if the investment is successful.

What you commonly see with startups is classes of shares and/or convertible debt. This is what we had here with debt but not with preferred classes.

Early investors here bought convertible debt. (Check your contracts) these were then converted to TFTs. That was the agreement and it was followed. What was not agreed to was a preference class of TFT.

Regardless if there was some kind of zoom poll/agreement this is not what was contracted. So for me there is a massive legal risk to do classes of token here.

We can play with the mechanism of the tokenomics increase/decrease the amount of max supply, burning etc. But not with tokens already purchased under contract. Thwir rights are already spoken for per se and nothing in the purchase contract allowed for this.

For me itā€™s simple: Tokens bought under contract all have the same rights as any other token unless stated otherwise. Not the other way around.

Yes sure that might be bad for the price but only in the short term. But what are we concerned with here?

I would say 95% of early token buyers are the heartbeat of this project. They are the ones that bought the dream of building a better internet; who took the most risk. Now we are saying we canā€™t trust you anymore not to sell?

We should be thanking them and afford them the respect and trust to make their own decision in this regard. If any token holders want to give up TFTs for TFTAs again I respect that and have no issue with it.

Now rotating back to the BTC/TF comparison - TF has far few whales then BTC has and we are being asking to trust them to be able to sell first. This might well be the case but why would one trust if that same trust isnā€™t given back. Itā€™s quite insulting actually.

This is what I think will happen if TFTs are all allowed to trade equally on the same terms at the same time. Yes I do believe some will exit. People have need for cash, especially in todayā€™s covid19 world. Price will fall a little - but this provides opportunity for cheaper tokens to be available, defusing the whale effect, distributing the tokens further. These tokens will be snatched up. Especially due to all the good news that will be coming out. Price will go way above 15c quickly.

So what exactly are we afraid of? Why would the price collapse as some are suggesting? The tech is improving, many projects are looking at TF and many other good things on the horizon. We need to believe in ourselves and avoid all the complexity of a two tier token.

Please show more trust and respect for the people that first showed TF trust years ago. That have stuck by TF all these years.

The metric for success is not measuring the short term token price. This is an insane metric. Nor is it how many tokens exit day 1, week 1 or month 1. Not even year 1 more even.

Really, this is getting too much at this point and frankly if I was on the outside looking in I would say this looks like an interesting project but there is too much dirty laundry here to be investable.

#37

Georges, we have already discussed this 20 times.

There are very good reasons why the launch of our token is the way how it is, by the way so far +95% of the token holders see the benefit of our suggested approach, the poll is not completed though.

We will not do fake marketmaking, nor unjustified hype or so called pyramid games.

We have a super solid project where we allow our first backers to sell their tokens in a way it protects the price which is good for everyone involved, if the large majority of the current community agrees then there is nothing else to say any more.

Kristof

#38

its not like you say it,

the bot has sales orders open at the price of that moment, if the price is higher than USD 0.15+2% per month starting May 1. The total size of the sell orders is 20k USD.
Whatever sales gets done, can be much smaller than 20k USD it will be spread out over the open orders given to the bot from the TFTA pool.

E.g.

  • Imagine the price is a USD 0.18, which means TF Market Making Bot will constantly have sell orders open, which means everything sold gets automatically given to TFTA token holders.
  • 10k USD open sell orders TFTA to the TF Market Making Bot by e.g. 10 TFTA token holders.
  • TF Market Making Bot has sales orders for TFT = 20k USD on the Stellar Exchange
  • 1k USD TFT gets bought by public buyers on Stellar network
  • now 10 TFTA token holders get each 100USD , the 1k USD divided by 10
  • now another 2k USD gets bought, now 200 USD gets given to each TFTA token holders
  • from the moment we are underneath USD 20k open sell orders the TF Bot will place more sell orders on the Stellar exchange as long as the price is above the minimum.

For the record the TFTA is tradable as well, there is no lock.
The TFTA is exactly like our current token, anyone can sell it, trade it, transfer it, ā€¦
If you sell TFTA to a buyer who is fine with the properties of TFTA (how it converts to TFT), this is absolutely ok and will prob happen.

#39

I didnā€™t say do fake anything or hype or pyramid. Please read what I wrote again.

We are all backers. All of us. Miners, ambassadors, token buyers. The majority of what the community polls doesnt hold precedence over what has been contracted. I said this is legal risk. I never said I am suing or that I know of anyone who is.

I expect to be blocked yet again after this but I am used to it by now so I will not take it personally. Itā€™s your call.

#40

I really donā€™t care for an analysis of how a TFTAs sell will work. If a TFTA was the same as a TFT it would be called a TFT, but itā€™s not. Anyways I told you earlier today I am personally not planning to sell.

But I also think itā€™s not up to anyone but the token holder to make that decision for themselves.