[Economic Model Suggestion] New intermediate Stage with free floating XRD


#1
Assumptions
  • In order to onboard developers onto Radix it needs to be successful (=noticeable)
  • To be noticeable Radix needs to have relatively high marketcap
  • In order to onboard businesses onto Radix it needs to be battle tested (=time)
  • To have high marketcap and survive initial stages Radix needs to onboard high risk investors first
  • High risk investors got used to huge risks and probability to loose all investment, but only in case they get returns according to the risk they take
  • Part of crypto investors will not invest in Radix due to low returns (because of price stabilization mechanism)
  • Some part of crypto investors will not invest in Stage 1 (especially the latest week), because of high risk of massive sell off at Stage 2 from Genesis holders and uncertainty regarding how much redistributable tokens they will receive in Stage 1 from forecoming investors.

Suggestion:

  • Insert a new intermediate Stage between Stage 1 and Stage 2 with a free floating XRD
  • In Stage 3 (former Stage 2) convert XRD at any given price into equivalent number of XRD’ tokens (i.e. 1 XRD at 20$ to 20 XRD’ at 1$)
  • Add additional changes to Stage 1 and former Stage 2 to be compatible with a new Stage 2

Requirements:

  • Rework of Stage 1
  • Rework of Stage 2

DETAILS


Stage 1 - Technical period:

  • Remove the existing Token redistribution mechanism
  • 95% of XRI tokens go to the Reserves (adjustable)
  • 5% of XRI tokens are returned back to investor’s wallets to pay for future transaction fees at new Stage 2, when they buy XRD (adjustable)
Optional changes
  • For new investors you can implement a Bonus system instead of existing Token redistribution mechanism: descending linear function from 50% of additional XRD for each $ (XRI) invested to 10% within 6 months period, and from 10% to no less than 5% over the next n months from there (adjustable)
  • Some % of XRI tokens may go to the Foundation
  • Some % of XRI tokens may go to Nodes which process transactions
Notes
  1. The Bonus system creates certainty of how much tokens each individual will receive upon his investment (versus current Token redistribution mechanism)
  2. Foundation may receive XRI, which is more useful for development costs than XRD, I believe

New Stage 2 - Onboarding high risk investors:

  • XRD is not tied to XRI, but floats freely (no Pmin, Pmax)
  • Transactions fees are paid in XRI (which are received by investors in Stage 1)
  • 20% of transaction fees go to the DEX to buy XRDs at current price and burn them (adjustable)
Optional changes
  • Vesting for the Genesis tokens: unlock equal parts of tokens every month during next 6 months starting from month 1 end (adjustable)
Notes
  1. Of cource, free floating XRD is the opposite of what Radix tries to achieve (price stability), but to initially bootstrap the platform and onboard high risk investors, in my opinion, it can be implemented for some period of time, which is a better solution in contrast to 2 (or 3, if we count XRI) token system with one coin being stable and the other one with a fixed supply. This will also make most of the investors happy, because they are more familiar with free floating price mechanism. Onboarding businesses in early stages is a difficult task, noone knows what risks awaits you, but early investors will take it with proud :slight_smile: Another great thing about it is if you time new Stage 2 launch accuratly, we can catch next possible bull run and onboard lots of investors and as we will be coming close to a following huge dump, like the one we have now (from early 2018), we can switch to a Price Stabilizing mechanism (Stage 3) and onboard them even more. Win-win. In my opinion, next bull run will start after Bitcoin halving (which is expected somewhere in may 2020), so this may be a great opportunity. And one more advantage for a free floating XRD is we won’t have to think about fixed supply Radix copycats.
  2. Businesses which will risk to use Radix early will still be paying low fees (in XRI)
  3. Some % of transaction fees will create buying pressure for XRD at the DEX, which will create little FOMO (inspired by @rotane’s proposal)
  4. Vesting is a great tool to mitigate the risk of huge sell off by Genesis holders for new investors buying XRD at Stage 1 and is better, IMO, than just locking their XRDs up.
Additional notes

New Stage 2 may last for quite a long time. In the mean time the Radix team will be figuring out what to do next. My proposal for Stage 3 (formly Stage 2) is the one below.


Stage 3 - Onboarding businesses and Price stabilization (formly Stage 2):

  • Convert all holders’ XRD to XRD’, where XRD’ = XRD * avg_XRD/XRI_price_for_period_T
  • Set Price Floor (Pmin) and Price Ceiling (Pmax)
  • Implement existing Token redistribution mechanism
  • Transaction fees are paid in XRD (not XRI). Set fees at 0.01 XRD.

Stage 4 - Mature growth (formly Stage 3):
No changes.


#2

Lots of invalid assumptions in my opinion.

No, it needs to be open source and decentralized.

No, there are many other ways. What people will notice is when we have a million TPS with less than 5 second finality.

High risk investors went into the project 5 years ago. You don’t need to be a high risk investor to join when the main net has already started.


#3

Well, you can’t with 100% certainty say they are invalid. Maybe some of them just need to be more specific.

There’re lots of developers who don’t care about decentralization. What about EOS, IOTA devs? Being open sourced is very important though, I agree.

I’m talking about target audience, who will be joining Radix at Stage 1. I think you are confusing cause and effect. We will have millions of TPS only when people start to join. So who are these people who’re going to send so many transactions? Users of dApps? We won’t have any serious dApps untill Scrypto is released and that’s a long road and not gonna happen in Stage 1 for sure. So they can only be crypto investors and traders. Finality? Who cares? Lots of them think only about returns and are absolutely ok with Bitcoin’s ‘half an hour’. Again, sure, some do look at those characteristics to make better investments, but most of them don’t.
Early backers are taking the most risk, yes, hence why they receive most rewards either.
You do need to be a high risk investor when the main net starts though. There’re lots of unknowns. Network halts, attacks developers didn’t foresee, wallets hacked like in Arionum, funds disappear on a DEX when orders are matched and so on… And this risk can be even higher than in any other cryptocurrency, because Radix has absolutely new data structure, new untested consensus mechanism and state sharding (which other projects still haven’t figured out how to realize?).

And for an average crypto investor a good source of successful projects is coinmarketcap’s “Top-100”. That’s it, not tech, marketcap. Most of these guys have no clue about projects listed beyong “Top-100”. Traders need more trade volume to trade less risky either. The higher your marketcap is the more influencers (youtubers, article writers, twitter folks, etc) start to talk/write about you, causing the network effect. That’s why it’s important to onboard them onto Radix as much as we can. If Bitcoin skyrockets, Radix with its stability mechanism and relatively low returns might have a bad time…


#4

Sorry. I wasnt clear. I meant that people will notice the project in July/August this year if we have a public permissionless testnet hitting TPS and finality that other projects can’t even dream about. Pehaps a million is a bit optimistic, but it will be high enough to cause a lot of attention in the crypto community.


#5

I would agree but just partially… why has Ethereum the biggest Dev Community… it had the first mover advantage for blockchain with smart contracts. So yes we have also a first mover advantage here as it is a new DLT, but there are already plenty of other technologies out there competing with radix. Time is life, time is money. So also developers dont want to spend time on things that will disappear. Therefore “being successful” is needed to attract the masses of developers that have already a busy job.

Well yes thats an argument, if it comes together with high proven security, this will help. Because usually high TPS comes with high centralization. But marketcap will help making it visible for the mainstream/financial media. This will attract more participants and so on…

Maybe you can outline how and what? Seems that there are some missing pieces in the radix story. Maybe we should call the new “investors” (or “lenders”, depending on the final economics model) simply “Risk taking fiat spenders” for the moment.


#6

I really hope so too, Adam. Radix is really impressive and currently has the best tech. But we’re talking about chicken and egg problem and which way of getting to mass market is more preferable. In my opinion lots of people won’t invest into Radix just because it has some fancy TPS, they need good returns.

Speaking about types of adoption I like @wingspan’s thoughts about it:

But we are coming back to understanding what is our target audience? It will take time for businesses to deploy their applications onto Radix and get users for the 1st type of adoption, which will turn out into a veeery long process. As for the 2nd type @Piers wrote “The Radix economics will disappoint moon boys, but they were literally the worst part of 2017” and @wingspan is basically calling adoption through “moon boys” making profit “unhealthy”. I’d say that type is just more emotionally (money) driven, that’s just how the market works. Some people gain, some people loose, but the 2nd ones take it as is, they are ready for losses. And they are part of the story, part of what already happened and will happen to crypto, part of Bitcoin’s success, Ethereum’s and others’. They are not “the worst part”, but a part of the Grand Experiment which makes the whole crypto space move forward fast, become successful or fail. We probably woudn’t have seen the Internet in its current state without many companies and moon boys of the past failing in the Dot-com bubble phase.

1st type is too slow for gaining traction, but the 2nd one in the right hands may give a great boost, we can catch the wave and then change the Economic model to what it is supposed to be - a stable currency. Both ways are possible, the question is which one is most effective?