Monero: 42,000,000 Max Supply + perpetual Tail Emission
Summary
This proposal suggests a slightly but significant adaptation in Monero aiming to increase Monero’s adoption by simplifying the understandability of its scarcity, while mitigating economic risks, by “Max Supply” and “Tail Emission” coexisting.
Scarcity — Would Monero benefit from having a Max Supply?
Monero is a tool intended to be used by Homo sapiens. Not by Gorilla beringei neither by advanced pure rational machines (at least not yet). Monero is then, at this moment, a tool intended to be used specifically by Homo sapiens, a rational and emotional animal, in which scarcity plays an important role at decision-making.
- So, is Monero scarce enough?
Well, the answer really does not matter. Instead of start comparing Monero’s asymptotic inflation vs Fiat’s exponential inflation to evaluate Monero’s level of scarcity, we should ask ourselves the truly important question:
- Is Monero perceived by Homo sapiens as scarce?
Unfortunately, no. Some few individuals may truly understand Monero’s scarcity, but the vast majority fails to understand it, primally because of the widespread terminology “Infinite Supply” — This is indeed a powerful emblem, that brings a great disadvantage in create desire in Homo sapiens, and consequently, a great disadvantage in adoption.
Despite Monero aiming to become more a MoE than a SoV, this present underestimation of Monero’s scarcity leads not only to an undervaluation of Monero’s price but, most relevant, leads to a lower adoption than it could already have if compared to a scenario of a “Max Supply” emblem.
- Can we educate Homo sapiens to perceive how truly scarce Monero is?
Well, indeed we may educate a few individuals, but the huge majority (that, unfortunately, lacks on understanding even basics mathematical and economical concepts) will continue to wrongly perceive Monero’s scarcity, at least for some generations — and waste this much time is very dangerous, especially in the early years of this fantastic tool, that is economically ruled by network effect and that may also become our last battle for privacy if it fails to survive on the short term.
Since we should not expect most Homo sapiens to understand Monero’s scarcity in a short time, could we make adjustments in Monero protocol in order to eliminate the “Infinite Supply” thus making it more clearly scarce, ultimately contributing to increase mass adoption?
Could we simplify the story, making it more didactic and making the scarcity more understandable, by bringing a “Max supply” emblem to Monero?
If so, what are the real trade-offs? And what can we do to minimize or eliminate them?
Tail Emission — How it is and how else could it be?
Monero’s Tail Emission’s formula of fixed emission leads to an inflation about ~1% in the year 2022, decreasing annually toward zero, but always remaining above zero.
While this is indeed a very clever solution to perpetually incentivize miners while decreasing inflation asymptotically, this solution has a huge disadvantage: It brings the “Infinite Supply” emblem to Monero, strongly deceiving its scarcity to Homo sapiens — and, indeed, given enough time, by this fixed emission Monero’s supply can be as high as any number.
Fortunately, “Tail Emission” and “Max Supply” are not mutually exclusive. In this proposal, both characteristics coexists by eventually changing the fixed emission for a decay emission.
In this proposal, the formula for the Tail Emission does not change until 2122 (one hundred years after the fixed emission started). Then, reward of 0.6 xmr per block decay to a factor of 48.63% resulting in ~0.3082239726 xmr per block. Then, it’s downsized 50.00% each 50 years (similar to Bitcoin’s halving formulas, but in this case perpetually and with an important chronological characteristic, that we will talk soon).
By this change on Tail Emission:
- There is ZERO impact on Monero’s inflations in the near future (<100 years);
- We bring the “Max Supply” emblem to Monero, which will be asymptotically approaching to 42,000,000 moneroj but never reaching it;
- Miner’s reward remains perpetually existing and inflation remains asymptotically towards zero (despite, indeed, in an intense level in a far future (>100 years), that we will discuss soon).
In this proposal, the limited supply of 42,000,000 xmr does not comes from an arbitrary number, neither just a reference to 1 million times The Answer to the Ultimate Question of Life, the Universe, and Everything.
The first main reason that drives this choice is simplicity. Since almost any Homo sapiens that is now discovering Monero have already knowledge about Bitcoin, then associating Monero’s Max Supply to an integer number times Bitcoin’s Max Supply is a very efficient and didactic method to teach about Monero’s scarcity. Remember: Monero is a tool designed to be used by storytelling creatures. The easier the story, the easier the understandability, and then, the greater the adoption.
The second reasons that drive this choice is time. By choosing 21 million (1 times the bitcoin max supply), we would have a drastic change in Monero’s inflation in the near future (<100 years) that could indeed cause relevant collaterals effects. By choosing the next integer (2), we can manage to avoid literally any change on Monero’s inflation in the near future.
Despite that “1 Monero existing for each 1 Bitcoin” would be a powerful suggestion to grows Monero’s price, the main goal here is not to merely inflate Monero’s price at any cost, but instead, to make scarcity simpler to understand, contributing to mass adoption and network effect, while mitigating any relevant collateral effects — “2 Moneroj for each 1 Bitcoin” is then enough didactic to teach scarcity while not impacting Monero near future, only impacting Monero far future.
The Far Future
At the present moment this proposal can bring to Monero a great advantage in adoption, by the “Max Supply” emblem.
In the near future (<100 years) this proposal does not modify Monero’s economics in literally any aspect.
So, in the far future (>100 years), what are the impacts of this proposal?
Now we could start comparing the fixed emission versus the decay emission:
- We could argue that the reward, in decay emission, in a far future will eventually become irrelevant. But we also can argue that, given enough time, fixed emission reward will achieve the same relative irrelevance to the total supply.
- We could argue that the lost moneroj could compensate the fixed supply reward irrelevance, but we also could argue that a “recycling strategy” for lost moneroj could be created in this decay emission proposal in order to compensate the reward irrelevance.
But instead starting comparing the future of fixed emission and decay emission, let’s talk about the “far future” itself.
Society is in the edge of an insane disruptive era, evolving in an exponentially pace. Technologies like blockchain, quantum computer, machine learning, biohacking, I.A. and others will make the next 100 years more disruptive than the last 1,000 years.
Trying to forecast and create a perfect rule for how inflation should work in a world 100 years from now, based on our present experience on economics, is as naive and unprecise as an Aztec forecasting the volume of fuel needed by an Airbus to travel around the globe, based on how much water his llama drinks after running a mile.
While there may be solid fundaments to implement this exactly inflation of “0.6 xmr per block” for the next few decades, there is no evidence that, in a far future with completely new variables and parameters, this specific fixed emission is the best choice, nor that this will even be a good choice at all. Even worse: given enough time, the chances of this immutable formula (or any other immutable formula) to fail tends to 100%.
The intended in this proposal is not to elucidate which the decay emission rate is or the fixed emission rate is the best option to the far future: Given enough time, both are equally doomed to failure, if immutable.
Monero (or any other coin) survival on the far future does not rely on any “perfect forecasted immutable formula” by century-old creators. Instead, its survival relies on community’s ability to correctly mutate and adapt itself to keep existing, according to the scenario it will be living.
By today blinding embracing this fixed emission rule for the far future, we are aiming an uncertain advantage (or even disadvantage) in the far future while sacrificing having now a “Max Supply” emblem that we already heuristically know that drastically improves desire, thus, also adoption.
Should we embrace a certain disadvantage in the present for a completely uncertain result in the far future?
This a trivial asymmetrical bet: we have the opportunity to trade a powerful advantage in the present for a completely uncertain advantage/disadvantage in the far future, that no matter how much intense, given enough time tends to be complete irrelevant if immutable.
Monero early decades are the most critical for its survival and we should focus our efforts on them—By network effect, the improvement of early adoption in the near future plays a colossal times more important role in survival than any utopic attempt to forecast far future’s economics rules.
Thank you for your attention. Despite eventually implemented or not, I hope this proposal will contribute to the improvement of Monero’s community by at least instigating this type of discussion.
I would appreciate any feedback that could help improve this proposal, especially in grammar, since English is not my native language. Feel free to contact me:
Twitter: @TahanHarari
Reddit: TahanHarari
E-mail: Tahanharari@gmail.com
If you would like to donate for the improvement of the research in this proposal, feel free to send XRM: 47yVAg9yXXHKaVumqgTqRA3W57SwQLYWM8GLQ9GU4WqTTcARavbBek3faSufZFwBPfdv1akamBS5m3xNWM27JVPRRQQHqmp
