on the mumble chat server there was a discussion about things, and we were discussing how to increase the incentive for pos minting, and SK mentioned in the recent interview he was thinking about something, we started talking about ideas:
[1:00:58 AM] To BeyondBitcoin: i have an idea what he could do
[1:01:09 AM] To BeyondBitcoin: but not sure if it is possible
[1:01:12 AM] (Channel) Troglodactyl: And besides, I don't see why interest rates should be higher on lower balances.
[1:01:17 AM] To BeyondBitcoin: but the tx fee gets destroyed now right
[1:01:30 AM] To BeyondBitcoin: what if they give the tx fee to PoS minters
[1:02:09 AM] To BeyondBitcoin: yes
[1:02:54 AM] To BeyondBitcoin: but idk how it will conflict with ideas behind destroying it
[1:03:06 AM] To BeyondBitcoin: okay i'll post it
[1:03:28 AM] (Channel) Troglodactyl: Destroying it effectively pays everyone who holds Peercoin through deflation.
[1:03:52 AM] (Channel) Troglodactyl: As opposed to only paying those who actually support the network by running staking nodes.
so if you find a proof of stake block, you get the transaction fees from the previous block in the chain.
if that could work, it would give great incentives to run mining nodes. even multiple nodes. that would expand the network even further.
great idea if it could be done !!!
Only notice this thread now. I just responded to this here: http://www.peercointalk.org/index.php?topic=2783.msg25061;topicseen#msg25061. Don’t want to double post but happy to continue discussion here.
we probably should explain how we got this conclusion in chat.
one of the users mentioned “i only have 6 ppc from a long time ago. its not much, i’ve tried to mint, but the amount of coins i have, its going to take a very long time”
we then thought that adding transaction fees to the reward helps in these two ways:
1] small wallet holders, example less than 10 coins could also earn a chance at earning the transaction fees
2] it would encourage everyone to put up a ppc node even if you just had 1 ppc in it and a cointstake of 30 days at a hope of earning the transaction fees. this would be to help decentralization efforts
Ok, assuming we agree we have the following problems:
- Not enough participants to secure the network
- Difficulties getting new relatively small coinholders aboard
I’m sharing my thoughts from your perspective. There is some overlap with the other thread though.
When I joined the Peercoin forums one of my first frustrations with it was that it was not crystal clear what the chance was that I could mint with my 50 odd coins I had at the time when I started. After a very long POS thread we finally figured out and have a reasonable reliable calculator to calculate the chance on minting a block given a certain amount of coinage. This clarified that either I had to sell my coins or buy more to increase my chance on successful minting or accept that I would waste time and energy to try to mint.
I realised that this is actually the same in the fiat world. If I go to the bank with the value of 6 PPC (say $15), I doubt whether any bank would open an account for me and give me interest. The cost of doing that would be higher than the benefits. I can spend a lot of time finding and convincing another bank which might eventually give me my less than half a dollar of interest a year, but that seems also a waste of time.
So for Peercoin, I came to the conclusion that the value of the stake you provide (coins and coinage) have to be at a level where it would be valuable to the security of the network. At the current difficulty levels (amount of peercoin actively trying to mint) 6 PPC doesn’t contribute enough to the network to successfully create a block in 3-4 months. But even if it did after a year, the reward would only be 0.06 PPC. So I agree not worth thinking about, even the power of a Raspberry Pi would be more expensive over that year.
So my point is; is it profitable for the network to reward the small coinholders given the current difficulty? Answer, no it is not. Assuming we need to increase the participation to strengthen the network we basically have two options:
- Lower the threshold for the large coinholders to participate (e.g. secure minting).
- Increase the benefits for the small coinholders.
Option 1 is already been discussed in another thread here: http://www.peercointalk.org/index.php?topic=2783
Option 2 is what you are proposing by giving away the transaction fees. I’ve already said why I think this is not a good idea in that same thread (pillar of network model and still too small an incentive)
Another option to incentivise is to share a smaller reward to a small number of coin holders by chance (like a lottery).
Say the reward for 100 coinholders with 6 PPC would have been 600 PPC *1% = 6PPC. Instead of giving each of them their share you would use a lottery to only reward the winners. So say 6 winners get 1 PPC each and the others just have bad luck. In that case you might incentivise a lot more people with just 6 PPC to participate at the same network cost. If you increase the pool to all holders with say up to 25 coins (or any value depending on the difficulty), the rewards can be even higher or alternatively more people can get a reward (higher chance to win).
So even while no block is created by the winners, more wallets participate and with that the difficulty will go up resulting in a more secure network. I’m sure there are some ifs and buts, but I hope that it contributes to finding a good solution.
just fantasizing, what if when you give tx fee to PoS miners, and take away the PoS 1% reward, so you dont have to counter the PoS inflation anymore with destroying the tx fees, say replacing PoS reward with txfee reward , wonder if that will stay in the 1%-5% range
edit: and I probably forget to think about some things and it isn’t that simple I’m sure :pearcoin:
As we are thinking of new ways of rewarding the minting to create an even bigger incentive than the protection the blockchain and hence the value of the own coins already is, a strange thought crossed my mind.
Leave the 1% annual reward as it is. Destroy the tx fee.
But what if a PoS block is followed by a PoW block and a share of the block’s coinbase reward is sent to the address that received the preceding coinstake reward?
What if the size if the share depends on the dificulty of the PoW block - the higher the diff, the bigger the share that goes to the preceding minter?
That way you not only have another incentive for minters that is hard to mess around with (because minters don’t know the future), you also have an even stronger inhibition for mushrooming PoW once the PPC value incentivizes bringing more PoW hash rate to Peercoin.
As long as PoW doesn’t contribute to the security, I tend to let it pay the price for incentivizing the minters 
A side effect would be an even stronger limitation of inflation.
I know that this requires a change of protocol and hence a hard fork.
Do you think it is worth to think that through?
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@MoD I think I like your proposal at first sight, although I suspect that the number of miners would go down rapidly, so there might not be much profit for the minters from PoW left. Unless the value of Peercoin increases significantly.
Maybe we first need to have more clarity on the value of mining in the Peercoin network. Is it only distributing coins? No, it is also about having those mining wallets online all the time (nodes). And there is value in creating a block for the network I guess? Maybe that’s just an insurance when coinage pool gets thin?
PoW mining creates new Peecoins. That’s the main (or the only) purpose: coin distribution. You need no wallet to mine, but rather a pool instead. So that’s no benefit for the network.
And although I don’t have numbers, I doubt that Peercoin needs as many full nodes to distribute transactions fast enough as a network with a high number of transactions requires.
It would hurt the Peercoin network (security) in no way, if all miners turned off their machines at once.
A diminishing PoW reward resulting from more hash rate didn’t stop new miners to come to Peercoin’s PoW. If they lose another additional x% for upgrading the coinstake reward that will not drive all miners away at instant.
But it will further adjust the level of hash rate per coin price at which mining makes sense in an economical way.
And remember: the more miners turn off hash rate becuase of the “coinstake share”, the highet the coinbase reward gets.
It will not happen that there are no miners.
That’s why I wouldn’t hesitate to take from the coinbase reward and give it to increase the coinstake reward
The incentive for minting which mainly is to protect the value of the owned Peercoins is not recognized by everyone at first glance.
1% annual reward +x% annual (the share of the PoW reward) might be a better incentive, which effectively comes at no cost (at least I haven’t found costs).
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[quote=“masterOfDisaster, post:9, topic:2355”]PoW mining creates new Peecoins. That’s the main (or the only) purpose: coin distribution. You need no wallet to mine, but rather a pool instead. So that’s no benefit for the network.
And although I don’t have numbers, I doubt that Peercoin needs as many full nodes to distribute transactions fast enough as a network with a high number of transactions requires.
It would hurt the Peercoin network (security) in no way, if all miners turned off their machines at once.
A diminishing PoW reward resulting from more hash rate didn’t stop new miners to come to Peercoin’s PoW. If they lose another additional x% for upgrading the coinstake reward that will not drive all miners away at instant.
But it will further adjust the level of hash rate per coin price at which mining makes sense in an economical way.
And remember: the more miners turn off hash rate becuase of the “coinstake share”, the highet the coinbase reward gets.
It will not happen that there are no miners.
That’s why I wouldn’t hesitate to take from the coinbase reward and give it to increase the coinstake reward
The incentive for minting which mainly is to protect the value of the owned Peercoins is not recognized by everyone at first glance.
1% annual reward +x% annual (the share of the PoW reward) might be a better incentive, which effectively comes at no cost (at least I haven’t found costs).
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It sounds good to me. However I thought that miners would have invested in special very well connected nodes as they need to compete with other miners. That would provide some value to the network, wouldn’t it? But I might be wrong on that assumption or the value of it.
In my opinion this proposal competes with Sigmike’s cold storage minting proposal in the other thread. It is also an incentive to mint more often as that would increase the chance to get a share of the PoW. In my opinion Sigmike’s cold minting proposal still lacks that incentive and people might just turn a minting PC or Raspberry off to save power, reduce aging, free a powerpoint or still some other left over perceived risk. Sounds too good to be true? We might have missed something, maybe time to post in the other thread to share this to a wider audience?
[quote=“Cybnate, post:10, topic:2355”][…]
In my opinion this proposal competes with Sigmike’s cold storage minting proposal in the other thread. It is also an incentive to mint more often as that would increase the chance to get a share of the PoW. In my opinion Sigmike’s cold minting proposal still lacks that incentive and people might just turn a minting PC or Raspberry off to save power, reduce aging, free a powerpoint or still some other left over perceived risk. Sounds too good to be true? We might have missed something, maybe time to post in the other thread to share this to a wider audience?[/quote]
I haven’t followed the cold stroage minting proposal in detail but will try to catch up.
If you think it is good to post in the other thread, do it. Once I cought up, I might do the same.
But I can already say it is not really an incentive to mint more often, because it doesn’t play a significant role when you get your coinstake reward - either with or without an additional “coinbase share”.
But it is an incentive for those who consider 1% annual reward to less of an incentive.
[quote=“masterOfDisaster, post:11, topic:2355”][quote=“Cybnate, post:10, topic:2355”][…]
In my opinion this proposal competes with Sigmike’s cold storage minting proposal in the other thread. It is also an incentive to mint more often as that would increase the chance to get a share of the PoW. In my opinion Sigmike’s cold minting proposal still lacks that incentive and people might just turn a minting PC or Raspberry off to save power, reduce aging, free a powerpoint or still some other left over perceived risk. Sounds too good to be true? We might have missed something, maybe time to post in the other thread to share this to a wider audience?[/quote]
I haven’t followed the cold stroage minting proposal in detail but will try to catch up.
If you think it is good to post in the other thread, do it. Once I cought up, I might do the same.
But I can already say it is not really an incentive to mint more often, because it doesn’t play a significant role when you get your coinstake reward - either with or without an additional “coinbase share”.
But it is an incentive for those who consider 1% annual reward to less of an incentive.[/quote]
Ok, so it would only encourage people to keep a wallet on-line (with or without stake). In that case I have to think about it as it wouldn’t have that great advantage I thought.
It wouldn’t encourage people to just keep a wallet online and to operate a node without minting.
They would need to mint to receive their “coinbase share” as additional coinstake reward!
The great advantage is that you make minting attractive for people who are not attracted by 1% annual reward.
Amongst them are
[ul][li]those who only have small amounts of Peercoins and buying 1% of their Peercoins per year is cheaper than to operate a minter[/li]
[li]those who are just too lazy[/li]
[li]those who have have big amounts of Peercoins but do not want to risk them for only 1% annual, but might be willing to put at least a part of the Peercoins at stake for 1+x% annual reward[/li]
[li]and for sure others I can’t think of[/li][/ul]
Remember: all is based on incentives. If you create stronger incentives, you will attract more people.
isnt it possible to visualize it a bit with graphs, wasnt someone making charts of some scenarios (d5000 iirc?) idk what software was used, maybe it can be done with mathlab or something
You can for sure try to create algorithms and visualize those in graphs.
But I’m better in trying to describe the relations.
I can try even harder if it not yet clear what I’ trying to propose
[quote=“masterOfDisaster, post:9, topic:2355”]PoW mining creates new Peecoins. That’s the main (or the only) purpose: coin distribution. You need no wallet to mine, but rather a pool instead. So that’s no benefit for the network.
And although I don’t have numbers, I doubt that Peercoin needs as many full nodes to distribute transactions fast enough as a network with a high number of transactions requires.
It would hurt the Peercoin network (security) in no way, if all miners turned off their machines at once.
A diminishing PoW reward resulting from more hash rate didn’t stop new miners to come to Peercoin’s PoW. If they lose another additional x% for upgrading the coinstake reward that will not drive all miners away at instant.
But it will further adjust the level of hash rate per coin price at which mining makes sense in an economical way.
And remember: the more miners turn off hash rate becuase of the “coinstake share”, the highet the coinbase reward gets.
It will not happen that there are no miners.
That’s why I wouldn’t hesitate to take from the coinbase reward and give it to increase the coinstake reward
The incentive for minting which mainly is to protect the value of the owned Peercoins is not recognized by everyone at first glance.
1% annual reward +x% annual (the share of the PoW reward) might be a better incentive, which effectively comes at no cost (at least I haven’t found costs).
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I like this proposal to move pow reward to pos, I can’t see what would be wrong to have some fixed reward for minting PoS block and that reward could diminish over time. That would give incentive to minters to mint 24/7 and at the end if somebody has 10 times more coins he will mint 10 times more blocks (if he is minting 24/7).
A diminishing of the net PoW reward that is payed out to the miners depending on PoW hash rate AND time (=block height) is a great idea.
That way you not only limit the PoW hash rate even more (that it is currently only limited by the reduced reward as a result of a rising difficulty).
You have a way to phase out PoW smoothly if more and more of the coinbase reward gets paid to the PoS process (independent from the hash rate and difficulty, respectively).
Once the share of the coinbase reward that is paid to PoS hits 100% there’s no incentive left to mine Peercoins in the PoW process and in the meantime people got used to minting!
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maybe we need to consider something else: when profitability of mining peercoin is higher than bitcoin, miners will switch to peercoin, where the difficulty would go up again until it isnt more profitable than bitcoin, ok nevermind I guess, have considered it now
That’s already in place - more or less… currently it’s slightly more profitable to mine BTC and trade them for PPC instead of mining PPC directly.
But hey: even more incentive for PoS minting. As I said, I want the share that is paid to minters to be growing with the PoW difficulty
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