I checked the simulation,
1- seems you are trying to turn the xem into a stable coin(i’m not sure) and let catxem to be the next xem(xem2).
2- removing a zero from the supply is " Redenomination", you are just trying to show your tokens more valuable by increasing it’s value to 10x, but it’s not VALUE, it’s just a price. making new nem to $1 by decreasing the supply is unnatural move, because you are trying to show the people “a $1 price” and not VALUE, it can’t get more adoption. what do u want to do when the price goes deeper!? decreasing more supply!? it’s a WRONG, i can understand that u r running out money. the solution is adoption. $1 price can’t get adoption, but, Usability can get more adoption.
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Yes I agree, I was talking in terms of the original number of tokens in NIS1.
I still don’t know what benefit there is by changing the decimal place anyway.
Perhaps others can elaborate on why.
I’m just assuming there is some sort of physological benefit to speculators who see cheap tokens with low supply and room for growth?
IDK, on the other hand the likes of ripple have a far greater supply of tokens, so am unsure what impact the supply actually has.
Hello rajc,
You bring up some good points. It’s not smooth and easy to implement the sealed supernode account idea. The best way is probably to hold it in a locked multi-sig account with a governing body overseeing automatic payouts based on blocks produced. I’m not sure we would keep the distinction between nodes and supernodes. Then the idea would be to incorporate the system into protocol in time (or burn the tokens and give all nodes a built-in harvesting bonus.)
As you point out, the sealed supernode account idea has risks and difficulties. It’s included because the current Catapult system has very few built-in solutions for maintaining a healthy number of nodes in an extended low-growth scenario, and this could help the economy survive that scenario. The beginning of the proposal discusses the trade-off between trying to maximize early growth versus maximizing safety features to survive a famine. This proposal leans toward safety features.
With a 1:10 supply reduction, an account with 134 XEM would be able to claim 13.4 XEM2. This would extend down to at least 6 decimal places.
The benefit is that XEM2 could possibly launch at a price closer to $.30 to $.50. A higher starting price may be safer in the long term because it allows more perceived distance for the price to fall or glide in an extended bear market. Hope for the best, but plan for the worst.
As a point of comparison, Catapult could hypothetically issue XEM2 at 100:1 (100XEM2 for every XEM.) In that case we would expect the launch price of XEM2 to be closer to $.0003, and if it went down from there, it would more likely be perceived as a failed project by the public.
But it’s possible 1:1 ratio may be safer if only because it makes current holders feel more comfortable with the migration.
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Thanks, I fixed it.
Thanks, and good points.
It all comes down to where the community wants to put its risks. If you see Catapult as a free spin on a slot machine, you’ll want to maximize the chances of a fast increase of the XEM + XEM2 market caps. If you are focused on NEM’s success for the next decade, you’ll want to invest in some safety features. Maybe I have been traumatized by viewing too many projected charts where it can possibly fall apart in a few years.
You’re right that the entire system rests on tx fees, and in a non-bear market it should work. I also agree that just adjusting tx fees over time would reduce the need for subsidies. But we can’t count on enforceable tx fee adjustments for two reasons. First, it would require an update which most nodes may not agree to, maybe splitting public chains. Second, node operators are competing for traffic not only within this network, but with other networks. In other words, if the Econ Lords decide Catapult will be healthier with an enforced min price of $.02/tx, and then comparable network services become available on Stellar or whatever at $.01/tx, users will start to leave the network. That’s what led to all the subsidy stuff.
That works in logical terms but the market is not logical. I am an original stakeholder and more than likely all that will happen is the price will steadily or perhaps even sharpy decline due to lack of awareness and use cases. This compounded by the fact that going forward NEM1 will be running alongside CATA with all use cases electing to stay on NEM1 currently. I am unsure if XEM on NEM1 will remain on the chain but if it does, you have essentially temporarily doubled everyones value which will cause hard sell offs on both chains as people try to liquidate and buy in on CATA cheaper. It becomes a race as to who can do it first before price regulates, and there is a good chance it will regulate well below the expected 10x you hope for. It will force people like me, long term holders to sell and rebuy as well, screwing with the value as I would lose a huge portion to tax despite not wanting to exit. As an economist you should know these things. In all honesty though the crypto market and value is not dictated by economics and math it is dictated by psychology, more often than not, illogical psychology. In summary I and other long term holders either lose 30-60% of value by holding or 50% to tax come migration if both chains go ahead parallel and you divide by 10. Even both chains going ahead parallel in itself will already make this precarious and dangerous for everyone.
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There are two competing forces with supernode requirements. If requirements stay high and the network scales up, then supernodes cost millions of dollars, almost no one can afford one, and the number of nodes can’t increase to match the increased network needs.
On the other hand, if we make requirements low then it potentially introduces a large amount of supply into circulation, which helps sell pressure, as meyns noted. Although some supernode owners may hold more tokens than required, we can’t categorize those tokens as removed from circulation because there’s no incentive barrier to jumping in and out of that investment on a daily basis. Those voluntarily held tokens would be better categorized as harvester tokens.
Also, there’s no vesting in Catapult, so there’s no barrier stopping harvesters from buying and selling their entire accounts on a daily basis. So these things inflate circulating supply and create sell pressure. That’s partly what led to the 1:10 path of increasing scarcity as a way to reduce circulating supply.
It would be very helpful if supernode requirements could be tuned over time. It’s a terrible situation if a SN costs $1m to start while the network is growing rapidly. It’s also bad if you have $1m to invest but to put it all in supernodes would require you to maintain 500 nodes.
The right thing is probably to put requirements somewhere in the middle, and work toward a self-adjusting solution in the future.
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Thanks, I fixed it.
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The lower supply is only to increase the possible XEM2 price near launch. This could have the advantage of a higher perceived value, and therefore the ability to absorb more of a price drop if things are unlucky with too much circulating supply. Circulating supply is very likely to go up since supernode requirements will probably decrease, there is no vesting, and reserve funds will likely be dropped to harvesters. Hopefully price will only go up, but higher scarcity could be a safety net if price goes down.
You are correct that with the 1:10 proposal, a NIS1 account with 1,000 XEM would be able to claim 100 CatXEM, and the max circulating supply of CatXEM would be 0.8999… billion.
At a XEM2 price of $.04 USD that’s $80k, which is close to Dash masternodes ($75k.) But Dash already has 2000+ masternodes, and few probably bought in near that price. If price goes up, that $80k buy-in price would probably become too high for Catapult to ever reach 2000 supernodes. My recommendation is targeting around $5k USD so there’s room to grow.
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Your points are all valid, but not everyone wants the same thing. There are those in the community who believe a tech project should succeed or fail based on the value of the utility it provides. There are others here who rightly point out that psychology and perception drive market prices and therefore determine resources available to help the project succeed. This proposal is trying to represent the interests of many.
The principle of reflexivity is counter to the idea that it’s inherently wrong or deceptive to manage appearances responsibly. An example of reflexivity is when a company issues an overpriced ipo that gets a lot of business news coverage. This increased coverage leads to more new customers, generating more revenue. So an increase in perceived value can lead to an increase in fundamental value. Presenting a good appearance during a network launch is responsible the same way it’s responsible to wear your best clothes to a job interview.
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The proportion of tokens in circulation will (probably) be a lot higher in Catapult than in NIS1. Consider,
Lower node reward requirements (if any.)
No vesting, so harvesters can fully jump in and out of their investment on a daily basis.
Supply being moved from reserves into circulation as inflation and subsidies.
Uncertain liquidity or exchange access for investors to grab circulating tokens.
If you chart all these out and usage grows well, the price chart looks good. Great! Hope this happens.
But if not, the price chart starts low and goes lower, and you start looking for ways to reduce all that circulating supply.
The most painless way is to reduce supply at the beginning so there’s more distance to get to 0. Granted, it’s not clear how much it would help, but if we feel a safety buffer is useful, it would be a simple one.
I am against the decision to reduce the number of coins by 10 times.
I already passed it on another coin. There were 30,000 coins, after the swap they gave 3,000. The price on the exchanges did not change, and then it also decreased.
You can not guarantee that the price on nem in the catapult network will be 10 times higher than in the current network.
So you take away 9/10 deposits from each holder of coins. No need to do this!
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This guy gets it.
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Reducing the supply by 10 times less is madness, who assures you that the price of Cat-Nem will be 10 times higher thinking that nem is now 0.04$, the market will say the price of Cat-NEM, THAT IS NOT DECISION OF THE NEM TEAM. And the thin crop ? and the SN ? maintain a crop will be 1000 CAT NEM ? WILL SN BE 300K? the cost of transactions ?
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I also strongly disagree with 1:10 CAT:XEM ratio. Plase do not do it. You will make lots of actual XEM stakeholders angry. 1:1 should be without any discussion.
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there is another thing.
899,999,999(supply) / 400(min harvest) = over 2M harvester
2 million harvester is very very high number! nem blockchain does not have enough node and powerful servers to support more than 2M client
currently, its just 900k (max) harvestor based on “9B / 10k” formula.
Agreed. There isnt much point in changing it as it wont have any material affect on the overall value of the network or adoption.
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