I just had an idea relating to this and I thought I’d share it just in case anyone thought it sounded better than the previous ideas in this thread. So let’s go through the previous ideas again first and their negatives.
1. The first idea was taking a small percentage of PoS block rewards and allowing users to opt-out if they want to. Since minting participation is low this isn’t very profitable.
2. The second idea is taking a small percentage of every PoW block. This would provide more funds than the PoS idea, but it is likely to crash our mining participation, which would cause our PoW inflation to skyrocket. It would ruin Peercoin’s trend of lower inflation. It would also significantly lower Peercoin in profitable to mine lists.
3. The third idea is implementing the Peershares custodial grant feature where stakeholders can vote coins into existence. This sounds nice, but we are not the Federal Reserve here and shouldn’t be printing coins out of thin air. It can possibly be abused by stakeholders who get too eager to print their way out of problems. If abused, it would ruin Peercoin’s economic system by causing lots of unpredictable inflation. The concept of sound money would be lost.
4. The 4th idea is taking a percentage of coins from wallets with no transactions in the past 2-3 years, assuming they are lost coins. This could affect people who haven’t lost their coins, but are simply minting with them or just have them in cold storage. This doesn’t seem to be technically possible either.
5. The 5th idea is adding a donation button to the core wallet that ties to the Foundation address. This is the simplest and least intrusive way to raise funds. It’s voluntary though, so there’s no way we can predict how successful it will be.
6. My idea is that the network has a yearly minimum operating budget. One time every year a set amount of peercoin would be created inside an address controlled by the Peercoin Foundation. This would act as the minimum budget that the Foundation receives from the network every year to fund development and marketing initiatives. After the Foundation spends this budget, it will have to either rely on community donations for the rest of the year or it will have to wait for next year’s budget in order for more coins to be released. In this way the network pays for its own maintenance every year.
This is similar to the custodial grant mechanism in that it creates coins out of thin air, but it has some key differences that make it more appealing. First, the coins are not created from voting, so it’s impossible for stakeholders to abuse it whenever they get the itch to spend money. Second, unlike custodial grants the number of coins created from this mechanism every year is hard coded into the protocol, making it predictable and something that can easily be factored into annual inflation forecasts. Third, it encourages smart spending practices because the budget is limited and the Foundation board members will know it can’t be refilled again for an entire year.
The number of PPC we hard code into the protocol as the minimum operating budget should be low enough as to not affect our inflation level too much, maybe between 50k and 100k PPC per year. It should be no more than that though. Anyway, I just wanted to share this idea in case people thought it made more sense. Are there any drawbacks to this I am not thinking of?