BiblePay DSS (Decision Support System) from the CMC (Cryptocurrency economic simulation) model
In the spirit of making solid future changes for BiblePay based on strong mathematical decisions, I have written a program called the 'CryptoCurrency Economic Simulation'.
In this CES, we attempt to create a synthetic model that reverse engineers DASH's success. In the model, we have the money supply, the emissions per day, the GetBlockSubsidy rules, the dash 7.1% deflation level, and many assumptions based on new users per day, theoretical miner count, the buying activity by miners, the buying activity by investors, the investor count, the miner liquidations per day and expenses, the governance expenditure percent, the % allocated to charity (IE the % of payroll vs charity), assumptions on whale liquidations vs price, the market cap from CMC per day, etc.
The goal is to allow the program to run and see if the model will match the actual price in history then let it create the effect(s) into the future, and therefore then allow us to plug in theoretical changes to the dash model for BiblePay, and resimulate then decide what elements of our infrastructure should be changed that will improve the future.
For Dash, the basic premise is they cap the governance emissions level per month at 10%, they have a 7.1% annual deflation level, DGW limits the payout per block when difficulty rises, and since the Masternodes lock half of the money supply up, that causes less money supply to be available, theoretically increasing the price. A very influencing factor to growth is the amount of new users per day (augmentation and negative attrition levels). For dash, they attract about 50,000+ miners to the coin due to the price per block payout per month. With an electric cost of $20 per month, you can imagine that the DASH infrastructure can support this many people. All of these people contribute to a positive impetus on the price - because some act as investors.
One hidden aspect regarding miners other than the miner-investment relationship, and the positive word of mouth, is we must view miners as a positive expense - basically similar to payroll. Because this data reveals that spending money on mining rewards is far different than capital expenses. The miner will not sell the coins unless they made a profit, meaning that money spent to miners does not necessarily cause the price to drop. The price drops when they liquidate coins to pay for electric. However the miner may be living in the basement, where the expenses are already paid by the household. Meaning a miner may make a substantial profit off of BBP even if they break even on paper (due to the fact that the electric is a constant given expense where they live regardless of their computer running).
Elaborating on this to be more clear, one aspect of this project is to rank each type of expense as to its ability to pull down our price. For example, we have : mining expenses to miners, governance to payroll, governance to charity, mining to poom, mining tithes given to POG, and QT controls (among other things). This exercise is revealing very interesting things about our project: Mining rewards to miners are positive - because - their liquidation requires : psychological profit and for our price to be higher than the electric costs they spent. Rewards to POOM otoh, immediately drop our price because the miner must sell to recoup the fiat spent (meaning POOM = 1 as far as benefit to biblepay). Mining rewards = 9 due to word of mouth. Mining rewards for GSC-POG appear "good", but looking deeper into these - the POG component that the miner tithed to the foundation is another problem. This means our liquidation for those 2mil per month coins has : expanded our governance budget way beyond .10% initially designed, And worse, those coins hit the market and immediately lower our price. Making POG also : 1 (bad for biblepay). Governance percentages: Although we originally designated 10% cap to charity, with POG, we have been spending 20% on charity, and with POOM, 40% of gsc, making our monthly budget grossly overspent on charity (50%). This "sounds" great from a charity perspective, but the problem is, we must be healthy in order to even be in business. You cant kill the golden calf and expect to be a blessing next month if the whole calf is dead. So, another thing this simulation reveals: To run a tight ship and be a bigger blessing, we must take control of our charity expenses and pull the horns in and cap this at a strict 10% per month - no more - to any other budget allocation. This will limit coins spent (other than the 10%) to not drag down our price (IE all other coins would end up in IT projects, proposals, payroll, and mining).
QT: QT is another 'feature' that has an entirely different side of it than the proposal alludes to. From the proposal we said, hey lets take control of our expenses, lets run a tight ship and go up in price. However, the unintended consequences are this: we blocked our growth. In order to have growth (the +1 new user per day we will discuss in this thread) you must have mining expenses. Above we show mining expenses are not bad - because they are allocated over hundreds of wallets and provide good word of mouth. So, we ran our users off by trying to save money. The model shows, with a stagnating attrition level of just -1 UPD, the price goes sideways, and worse, could go down once the users leave. However, by spending more on mining, with +1 UPD, the price goes north. (See charts with +1 UPD - Good - BBP). So I will be recommending that we shut down QT.
Chart 1: Dash as they are now (Good) - with positive new users per day:
Chart 2: Dash - in a bad environment - where they increase governance % to 20%, and, with negative user growth per day:
Chart 3: BBP - in a good environment - with 10% charity budget, and, positive user growth per day:
Chart 4: BBP - in a bad environment - with 20% charity budget, and negative user growth per day:
Summary of Changes:- Remove QT (Quantitative Tightening): This increases our emission back to our original plan. This will theoretically attract new miners and new users and new investors as word of mouth increases.
- Make each currency unit more expensive: Back when we had PODC, each currency unit was harder to mine, because we had 300 concurrent PODC users competing in Team Biblepay for RAC. It is clear that when user count increases *and* it becomes harder to mine, our price goes up. Therefore we must do things that lower the barrier for miners to enter (lower ABN fees), allow difficulty to increase, and add PODC.
- Lower ABN fees: Although counter intuitive that with a rising diff, you would expect a *higher* abn, we actually want a higher diff (to make each currency unit more expensive), and we want a lower abn, to bring in as many users as possible. I recommend lowering ABN to 25,000 to attract more users. I think we can leave ABN in the code so as to help remove potential botnets. However, it could be argued that the ABN is over-complicating BBP and it is complicating the pool (and adding requirements for unlocking wallets etc). Lets talk about this in more detail.
- Reinstate PODC: Although we removed PODC so as to not have as much code to support, with the above revelation on POG and its negativity for expenses and tithing, I feel we are in a good position to re-enable PODC in our GSC system. Additionally, there are ways to remove the oracle risk, which I will discuss soon. I think in phase 1, we can accomplish our short term goals like this: We write new code to pull in Rosetta CPID RAC into a GSC contract. We raise the daily GSC payout to 80% for PODC. We reward Rosetta CPIDs for tasks from the GSC "CancerMining" budget. We cap each CPIDs reward at a certain RAC (equal to something like 5 computers). This *helps* prevent users with astronomical RAC from overrunning the rewards in this GSC. (I know split cpids will occur but we protect more small users this way). We require team BBP for cancer mining.
- Remove POG - replace with PODC: Primarily due to users not feeling comfortable with daily tithing, *and* the POG budget being a negative related to exchange liquidation; remove it
- Keep Healing - Healing is bearing Christian fruit; and is only 5% of the daily budget; keep it
- Decrease Charity % back to 10% (Original Design) - Due to the fact that POOM was added, and POG crept in, we have essentially increased our charity budget way beyond 10%. Its around 10% from governance plus 10% from POG plus 20% for POOM equaling about 40%. This alone, when plugged in the model creates a
death spiral for biblepay. Its almost as if these expenses will certainly kill our price per month, and the only hope for a recovery is hitting 1 satoshi and losing 90% of our orphans. Therefore, it is recommended we go back to our original design: No more than 10% for charity. How can this be? This goes hand in hand with the DAC idea; how can we accomplish this and still be a dac? I recommend we lower our monthly governance charity % to zero (while we pay off our current new exchange deficit), and adjust POOM to be exactly 10% of our monthly budget. Since poom is new, it accomplishes the charity budget in a decentralized nature already (today). We can allow compassions credit to work its way to zero and then we temporarily cancel compassion. In the near future, depending on how POOM works, we can offer Kairos to integrate with POOM. If POOM fails, we can then talk about Sanctuaries decentralizing charity expenses. For now, this proposal proposes to : Lower Charity superblock budget to zero, remove POG and tithing, lower Cameroon-Ones POOM budget to exactly 10% of our monthly budget. If cameroon-one is not used up by the miners, the coins are burned (as it is already set up now).
- Sanctuary payment/heat mining payment: Sun asked in the forum thread if sanctuaries are getting too little due to QT & DGW. On the DGW side, I am a fan of a decreasing reward when the diff is exceedingly high (I think Dash was correct in penalizing an inrush of large hashpower). Aside from this, with QT removed, our rewards increase dramatically (60% more), and recently last month MIPs proposal won that increases the sanctuary payout by 10% (by decreasing heat mining 5% and decreasing pog 5% - note - this restores the sancs to the original launch parameter that was disturbed by pog). So I feel we are OK on our current path with Sanc/heat payments. If anything were to be considered for change in the *future*, we could consider simplifying biblepay by : first requiring chainlocks (for increased security) then lowering the heat mining reward and raising the PODC reward. But I feel we can postpone this idea - until after chainlocks are working successfully in prod and we regroup.
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