Discussion: Honey Issuance Policy

🍯 Honey
#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.

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#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.

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#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.

#54

More you mint more you erode. You can easily double your issuance and immediately half your worth (or more).

If we get this wrong (and over mint or lock in the possibility of over minting at anytime ) the project will be hobbled forever.

If we protect the rarity of honey, we could have an amazingly powerful fuel to keep the machine running.

Less is more

2 Likes
#55

The reason for the inflation to deflation then back to inflation is to match the growth and development cycle of a project. if you assume 2 waves of development and growth. It give room for a ‘cool down’ period if you will.

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#56

So you’re saying that holders should be penalized if they don’t contribute? Expecting every single user that buys HNY to become an active participant in the DAO is extraordinarily unrealistic and in my opinion a narrow-sighted goal.

Long-term holders should be incentivized, not penalized.

2 Likes
#57

@monstrosity I liked your model and I think we could see it through if we max the supply at 30k, deflate to 20k in order to inflate towards 25k total supply. The only issue I can see in that is the sole party effected is likely the common pool. Thinking about where the deflation would come from, we’d have to agree to burn a good portion of the common pool over a specified period of time. I wonder to what extent this differs from setting a hard cap. Timing would be critical for when this deflationary period would occur. Moreover, this decision would come about due to aspects related to adoption and demand, which we do not have the means to time. While I do like this model, I think it could over complicate things. With that being said, I think it’d be great to have a supply of 20-25k, which would implore your model, however, the idea of burning tokens adds too many layers to the proposal.

For me, if we can just set a hard cap, then it’d be easier to establish the issuance policy, as we’d have a canvas in which we can work. That’s why I posted the proposal; support if you agree with what I’m saying: proposal/54

This decision is extremely important for the project and I agree wholeheartedly with @Paddington when he says ‘less is more’.

#58

If it were issued immediately and dumped on the market, maybe. The ability to inflate to 100k HNY might actually allow my holdings to be worth four times what they are worth today.

If we get this wrong (and remove our ability to issue additional HNY entirely) the project will be hobbled forever.

Just because I don’t think we should turn HNY into a deflationary asset, that doesn’t mean I think long-term holders should be penalized, even passive ones. I just don’t think we should prioritize their financial incentivization over the ability of the DAO to control its own currency.

If you actively vote with your HNY then there should be no concern about the currency actually losing value and you should expect it to grow in value due to the decisions you are helping guide it to. Even if you don’t actively vote, you should obviously see an increase in value if the DAO is functioning correctly.

5 Likes
#59

This is an unsubstantiated claim that is driven more by optimism in the platform. There are assets that perform poorly all the time that have tremendous fundamentals; look at the marijuana industry or even the automotive industry. At the end of the day, what you are suggesting does penalize current members and every justification that you provided is based on what you think. Look, supply and demand is real. Moreover, all these things you want out of the protocol are possible with a hard cap. We can still incentivize participation in the platform. In fact, a stronger HNY will make incentivization more meaningful. What’s the point of giving rewards that are worth close to nothing… Markets over react. Multiply the supply by 4, we are likely to see a dip greater than a 75% correction, as markets are forward thinking and overreactive.

1 Like
#60

@cryptematical paying for growth with dilution is pretty common and generally the only way if you don’t have some basis for credit. I agree with you that its an important topic, and its important that we are aware of the dilution effects of issuance over time, but the notion that we need to determine a fixed supply now doesn’t really follow directly from that line of reasoning.

Dilution is not a penalty, its an ongoing investment made by honey holders into sustainable growth. It’s possible that ongoing investment is not wise at the current time or at a rate that is too high given the level of growth we could reasonably expect given he stage of development we are in, or that the honey already in the common pool is sufficient for long term investment already, but its certainly not a penalty for holders as it is intended to grow the size of the pie overall not simply to redistribute value from one to another.

It’s also possible that a fixed supply and issuance schedule would be desirable because while it decreases flexibility in terms of resource allocation and investment long term, it provides people with a more predictable model for dilution. I think this is fundamentally the case you need to make to be convincing, and I really haven’t seen a strong argument for it yet.

2 Likes
#61

In my mind, A fixed supply now like bitcoin would be the single easiest thing to guarantee honey remains valuable (and this could also provide an income for decades, and fee’s could pay for innovation there-on-after).

Markets love nothing more than certainty.

We could chose to go down the Eth road and keep it open cap but I fear that will be a case of each newly minted coin made, two coins in price going backwards. Hence making it even harder to pay to fuel the Dao going forward.

The markets are a bit like humans, if you commit to them, they are more likely to commit back. However if you want to be all non committal and keep all your options open, they do the same back.

#62

I think it would be a mistake to set a fixed cap now and find later, it was set too low. Setting a hard cap is a permanent action that can limit the growth of honeyswap in future. You can set issuance to 0 as an interim measure that has the same effect but does not prevent it from being expanded in future to grow honeyswap.

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