Discussion: Honey Issuance Policy

🍯 Honey
#32

People are pulling liquidy because honey price is falling. Honey price is falling because of general market conditions but also because the perception is honey has moved quite swiftly from an extremely low mint coin to a high mint / inflation coin. In my opinion to obtain liquidity, honey needs a maximum mint proposal.

An awful outcome would be a deflationary death cycle, where freebie hunters outnumber everyone else and endless votes for free honey are passed, which are worth less and less and more and more gets honey get printed. If we lose the exclusivity of honey, everything within the ecosystem will suffer, especially liquidity because impermanent loss of honey pairs will be guaranteed and the harvest product unwanted.

#33

Instead of incentivising lp’s by farming, why not give more in trading fees? I think because of the low fees, why would you choose to add liquidity here if your pool isn’t incentivised?

I think a solution, and attention grabber, would be to raise the amount paid out to lp’s in trading fees. Doing this would bring liquidity to all pools simultaneously and incentivise the lp’s to stay though turbulent times.

Just a late night thought I had

I think if fees paid for providing liquidity were more attractive than our direct competitor than the money moves this way.

#34

The fees for trading is exactly the same as uniswap. You pay 0.3% of your trade with every transaction which is paid out to the liquiity providers. The gas fees are unrelated.

2 Likes
#35

I understand that the payout is the same. I also understand the gas fees are much less. To entice liquidity to move from one platform to ours, we need to be better than uniswap in every way. 0.3% of trading fees isn’t very enticing considering they make that for just sitting where they are now.

Also, raising the percentage would naturally start filling the pairs with liquidity without giving away new honey. This solved the problem of which farm to incentivise next because all of them would now be incentivised. This will also stop the “why not my pool” syndrome.

Run a “special” for 30 days and triple the fees paid out to 1%, then drop it back to .5 to stay a couple points better than uniswap or revisit and adjust in 30 days.

I think it’s important to show we are faster, cheaper to use and pay better than any other platform out there.

#37

Is it possible and advantageous to offer a fee percentage that is based on time? Meaning the longer your an lp for a pool, the percentage you earn increases to a max %. This might keep lps longer than a 30 day duration compared to farming.

#39

@Pressure I agree with setting a 30,000 HNY cap and possibly posted this suggestion on the chopping block prematurely, but I think this is an important issue. There are many points to be made on the matter in regards to the previous thread:

  1. This is not a matter of issuance. While this effects issuance, the issuance mechanism would still need to be decided. Setting a hard cap would involve burning tokens minted beyond 30k.

  2. 30,000 hard cap is not arbitrary. With 25,377 token supply, 30k is the closest multiple of 10k, which would be favorable.

  3. The biggest argument for a hard cap is that we would protect our rights and vote in the Hive. Without a hard cap, there’s always the possibility of dilution, which is unappealing to serious investors and contributors to the community. With each additional token minted, the value of my votes diminish.

  4. HNY is divisible to the 18th place value. As the value of the token appreciates in tandem with the value of the community appreciating, individuals will still be able to partake and purchase what ever amount of HNY they wish to purchase.

In closing, setting a hard cap on the supply does not restrict the involvement of future participants. However, not setting a hard cap or setting a higher hard cap disproportionately dilutes the value of current participants.

I posted the suggestion/proposal (as I didn’t realize this thread was simultaneously occurring) Support if you agree: https://1hive.org/#/proposal/54

2 Likes
#40

Can you explain what isn’t arbitrary about 10000 as a multiple that we should be targeting?

This implies that those who come before should always have more power than those who come after, and that value created earlier in the life of the DAO should have more weight than that created later.

With each additional token minted, it’s possible for another person to have a vote. It’s possible for more voices to be heard.

Just because it’s technically feasible to buy 0.00000000001 HNY doesn’t mean people will want to own such a small fraction of anything. Even discounting the psychological barrier to owning such a small fraction there are logistical barriers too: quick, how many zeroes are in that? Is 0.000000000001 more, less, or the same number? What if we start measuring them in microHNY? Where does 0.0001 uHNY fit between those values?

I’m not sure this is evident. We decide how much we dilute our own value by process of vote, therefore we decide the correct proportion of value to dilute.

2 Likes
#41

This implies that those who come before should always have more power than those who come after, and that value created earlier in the life of the DAO should have more weight than that created later.

I don’t think this implication holds true. If I purchase 0.5 HNY and don’t keep up with/follow the community, a year later the HNY I purchased will be significantly lower because of the dilution. If issuance is capped, being an early adopter doesn’t guarantee that you will always have “more power”. Instead, it ensures that the value of said token purchased a year earlier will retain the same level of value relative to the community. Nothing is stopping a newcomer investor from purchasing more HNY from me than I originally purchased as an early adopter and thus having more voting power than me. The only thing, theoretically, stopping that person from purchasing or earning the same value as me is the presumed increase in value HNY would have appreciated over that period of time.

I am still torn about this topic, because with ongoing issuance we dilute the value held by the known whales, but by capping the maximum supply and removing issuance the everyday investor with less HNY can confidently hodl their HNY knowing it will not depreciate in value because of inflation.

I actually think it’s less fair to expect all members of 1Hive to actively be a part of the community indefinitely and at all times, without break, following their investment. Many of us have other careers and are not in this full-time. If someone invests 0.5 HNY now and doesn’t keep up with the community, their value will be significantly diluted in years from now if issuance and free distributions for community efforts/contributions are not controlled.

The reason I pulled my proposal for a $30,000 hard cap from the Honeypot is because I still need more time to think about what would be best for everyone. When I created this proposal, I only had the perspective of a newcomer/early investor. Having spent some time in this community and now heavily involved in multiple aspects of it, I don’t want the max. supply to be arbitrary, I want it to be meticulously calculated and well-planned so we all benefit long-term. That may mean a $30,000 hard cap is best, that may mean modifying the current issuance protocol is best, but at this point in time I am not sure what is best.

1 Like
#42

Before or at least in parallel to the hard cap decision we need to establish what we want our theoretical inflation/deflation rate to be over the next 10 years (obviously this can change but we should have an idea) then we can better determine the hard cap. I personally would love to see an inflationary followed by a deflationary then a very modest inflationary tapering off to a cap.

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#43

This is fine because all you “contributed” is holding HNY, you didn’t vote, you didn’t circulate it. HNY should be used, it shouldn’t sit dead in your wallet.

If you mean “significantly lower” in that it will be worth less if you trade it for a different token, I don’t agree. Ideally (in my mind) the inflation rate would be such that HNY would basically retain its value over that period of time; the dilution would be offset by the increase in value in the economy.

The gain in value from HNY would ideally come from voting with it and directing the DAO, which would result in increased value of the token.

1 Like
#44

@anisoptera 30k is not arbitrary (based on random choice or personal whim, rather than any reason or system), as it’s based on being the closest multiple of 10k. You mention psychology… psychology is the basis for a rounded supply. Again, 30k is not arbitrary because it’s the closest multiple of 10k to where we currently are. 10k is potentially arbitrary, but I assume that a hard cap would be a multiple of 10k. Are you against a max supply that is a multiple of 10k? If so, please explain your reason. At the end of the day, if you answer any question, I can ask ‘but why’ until you get to an arbitrary basis… there has to be a basis. Dig deep enough on any topic, you’ll reach an ‘arbitrary’ basis.

@anisoptera My statements do not imply that people who participate early should or will have more power. My statement implies that voting rights are cheaper at this point, which make sense, as the platform is less valuable than what it will be. What this also implies is that it’ll be more expensive to have voting rights as time progresses if HNY becomes more valuable. This make a lot of sense. Are you arguing that voting rights shouldn’t be more expensive as the platform become more valuable? Moreover, you’re not taking into consideration that people will buy and sell their HNY. Weak hands will be shaken out and strong hands will emerge. Power dynamics will even out through mechanisms of markets.

Also, each additional token minted does not make it possible for another person to have a vote. Anyone who wants a vote will have to buy their votes (like now). Newly minted HNY is not distributed to individuals who are not already participating in HNY. It follows that the ability to get a vote will require the same activity as now regardless of the supply–one will have to buy HNY for a vote regardless.

@anisoptera The exact amount you reference was 0.00000000001 HNY. I guarantee that I wrote the same number of zeroes as you because I copied and pasted the value like anyone would when inputting an amount. These fractional amounts will be the case regardless and for all digital currency. You mention uHNY. You’re getting way ahead of yourself, as the value of HNY would need to surpass 100k for that conversion to be relevant, at which point, it’s really not a big deal. Gains from 500 to 100k would be tremendous, and much paradigm shifting would occur, at which point, uHNY will organically arise from the need to denote fractional representations.

@anisoptera You state: “…retain its value over that period of time; the dilution would be offset by the increase in value in the economy.” I disagree with this entirely. The value of HNY needs to appreciate, as voting rights will become more valuable over time as the platform gains value. According to incentivization theory, individuals work more efficiently and effectively with incentives. Given the nature of HNY, the incentive is appreciation. Without appreciation, this community is likely to lose valued members as well as miss out on valuable people contributing to the community. Why would someone invest in something that does not benefit them?

Main takeaways:
–Hard cap protects the value of our holdings.
–Our holdings represent votes, which will cost newcomers regardless.
–Weak hand will be shaken out and strong hands will emerge.
–Decimal will be ‘par-for-the-course’ with any decimal.
–The value of our votes should increase in value over time to be inline with the growth of HNYswap value. The appreciation of these votes will also incentivize participation.

CAN WE PLEASE GET A LIVE CHAT GOING AROUND THIS MATTER because looking at many of the comments, there’s much that needs to be clarified regarding monetary policy and contemporary economic theory.

I like @Monstrosity idea, but the inflation rate does not need to precede the max cap. We can fit the inflation rate to meet some max supply.

#45

This was kind of my point. 10k is arbitrary (you cite “psychology” but don’t actually refer to anything concrete). Why not cap the supply at 100k? I want to see the reasoning.

This is untrue. The faucet is one such mechanism. Pollen is another. I myself acquired the majority of my HNY through submitting a proposal; previously I was not already participating in 1hive. Part of my argument is based on the idea that direct contributions should carry more weight than simple financial “support”. I put this in scare quotes because the main reason one would supply such “support” is mere speculation: they hope to sell the tokens at a profit later, not to vote on the direction of the DAO.

In general, my distaste for this constant stream of calls to turn HNY into a deflationary asset stems from this fact. Turning HNY into a deflationary asset mainly benefits those who already hold HNY, a good chunk of whom are holding it because they hope for their bags to be pumped. (Or seed members who have expressed a desire to see their bags be redistributed in some way.)

I don’t think you understand how humans work. People expect to be able to interact with currency numbers like they always have. There’s a reason most currencies actually used in the world limit themselves to only two decimal places. No one will accept your argument that they should just always copy and paste the number.

Also, which one of the values did you copy and paste? They weren’t the same. Was it the smaller or larger value?

Yes, it’s reductio ad absurdum, obviously it’s unlikely that HNY will be worth hundreds of millions per token. My point is that fractional values are hard to deal with and off-putting for anyone that actually wants to deal in a currency. Even now HNY values are difficult to deal with because most of the systems round to two decimal places.

Not necessarily. The platform (and remember we are talking about 1hive here, not Honeyswap) can grow in size at the same time as it gains value. That value could be acquired by diluting the stake of existing members of the DAO. In this case the value of the platform as measured by market capitalization would increase even as the value of HNY remained the same.

The incentive to hold a bunch of HNY and do nothing else is appreciation of HNY. The incentive to contribute to the DAO is either that or receiving more HNY. My argument is that we should be focusing on incentivizing the latter, not the former, and we are more free to do so if we don’t remove our ability to issue currency to do it.

Maybe they believe in what it is working toward and take a long-term view rather than a short-term one.

#46

Did you read my response? 30k versus 100k? Read the response. It’s pretty clear the difference in my initial response. 100k HNY would make your current holdings worth a quarter of what they are worth. (more responses coming, but I’m at work, so I can only respond so much) Again, are you arguing that the max supply should not be a multiple of 10k?

#47

Why 10k? Why not 5k or 2k. Max supply 35k or 36k sounds just as fine as 30k

1 Like
#48

Faucet and Pollen would still provide HNY even with a hard cap as long as there is a common pool.

Even in HNY’s current iteration, financial ‘support’ will always outweigh any direct contributions you can make, as I anyone always buy more HNY than what anyone can earn. The bottom line is that direct contributions can still be rewarded through direct contributions. You make many unjustified statements; financial ‘support’ is not mere speculation. I bought most of my votes, I expect what I buy to appreciate, and I contribute to the community. Purchasing HNY and speculation are not one in the same.

Turning HNY into a deflationary asset does benefit current holders, but also future holders, as appreciation is an on-going process. Again, weak hands will be shaken out and strong hands will remain. Stop worrying about whether people’s bags are pumped, as the pumps and dumps will solidify the community and filter out those who are not about this community.

#49

I’m not disagreeing with this, but at some point, an ‘arbitrary’ multiple will need to be decided. Could be 10k, 5k, 2k, or 1k… FYI, the closest multiple to 10k and 5k is 30k. The main point that I’m making is that the cap should be close to where we already are to protect the value of what we already have.

1 Like
#50

I understand, thanks. I think the limit needs to be considered WITH current rewards like faucet, farming, pollen. As they could drain the rest of total supply very quickly. So 30k might be too low if rewards are to continue

#51

Yes, they would need to be considered. The supply would still grow, but at a decreasing rate.

1 Like
#52

@anisoptera “The incentive to hold a bunch of HNY and do nothing else is appreciation of HNY. The incentive to contribute to the DAO is either that or receiving more HNY. My argument is that we should be focusing on incentivizing the latter, not the former, and we are more free to do so if we don’t remove our ability to issue currency to do it.”

Incentivizing the contributions to the DAO and an appreciating HNY are not mutually exclusive. Why can’t both be the case? By ignoring 1, we are excluding individuals who could be a part of this community. Some may get into this from a speculative standpoint, and that’s fine. Speculators are sorted out through the mechanisms of the markets. Individuals who recognize the value will subscribe and contribute, while those who do not understand the value will be shaken out the community.

#53

This is untrue. Markets do not work like that. Diluting the stake of existing members will directly impact the price. The value of market capitalization will reflect the overarching value of the DAO. Adding supply will not inherently change the value of the DAO. Holding the market capitalization constant, the price of each HNY will decrease, which will ultimately push many community members out. No one wants losses. @anisoptera, you’re assuming that the demand and value of the community will grow in a measurable, predictive way. Markets do not work like that. We can not quantify the demand and growth of the value of the community (as the markets decide this), and consequently, it’s unrealistic to think that we will create an issuance policy that pinpoints what the demand and value of the platform in the future.