PIP: 0001 Title: Inflation & Staking Schedule Modifications Author: CryptoGuard <cryptoguard@protonmail.com> Status: Active Created: 2018-02-14
Keep inflation at 5% even during the second year, reduce staking reward percentage to 4% by default, award additional 1% to stakers running a tor exit or relay node.
This proposal proposes the inflation should be kept at its current rate of 5% per year but staking rewards should be reduced to 4% yearly, leaving 1% of the rewards unaccounted for through default behavior. This "bonus" 1% would then be redistributed to stakers running their Particl wallet through a tor relay or exit node.
The Tor network is in dire need of decentralization. There are some concerns that a lot of its nodes are ran by either malicious parties or government organizations. One of the reason not a lot of people set nodes up is that there are no financial incentives to running a node that would help strengthen the Tor network, so the hassle of setting one up usually is not worth it. After getting in contact with the Tor Project, it was clear that any scheme they tried to adopt to reward their users was blocked by their legal team as that would render liable in some way.
With Particl’s PoS, we have the opportunity to passively distribute “sourceless” income without the use of a middleman and without requiring a party to be legally liable to said payment. As we are slowly, but surely, reaching the second year of our project, our inflation rate is supposed to reduce from 5% to 4%. I believe this opens up an opportunity to do good and help a fellow privacy and security project in need of support!
It does seem like our first year with a 5% inflation rate resulted in a stable price, and that buy pressure did outweight the inflation itself so that it didn’t grind the price down. One of the problems we are currently facing is lack of volume, and in part lack of sell pressure (making the orderbook less attractive to market makers and those partaking in arbitrage). This creates a chicken and egg situation where people don’t want to sell their stakes because they believe in the project, and traders don’t want to trade the coin because there is too little PARTs available for sale.
With this in mind, I believe keeping the inflation at 5% would actually do good (as reducing the inflation may result in even less PARTs available for sale, thus making the order book even thinner). Reducing the default staking reward ratio would be as initially planned, but for those willing to go the extra mile and help strengthen the Tor network with proper Tor-routed nodes, an additional 1% could be earned.
- Help strengthen the Tor network and make it more resilient, decentralized and scalable (better bandwidth).
- Help legitimize the Tor network. More users = more decentralized = lesser percentage of malicious nodes.
- Potentially develop a positive relationship between the Tor and Particl communities and teams.
- Would not result in fewer PARTs for sale on the trading markets as a result of a reduced inflation. We do NOT want the number of PARTs available to keep getting smaller. We need a healthy balance between coins being staked and coins available for trading.
- Good move from a PR/Marketing point of view. Shows we are out to do good.
- Good opportunity to make our own network more private and give an financial incentive to our users to stay anonymous.