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RE: Introduction to VIVA, part 3 : How does it work?
You mention that Crown Holders decide when to mint or get rid of coin and have other important responsibilities to keep VIVA stable. They seem to have a lot of power, which is fine if they choose to use it wisely. What is to keep a Crown Holder honest? Or, if they are less than knowledgeable about what's best for the ecosystem and they make errors of judgement? Or if they act solely to line their own pockets? Why should we assume they will work for the community rather than for themselves?
You're right, Crown Holders do have enormous power, but it's collectively, not individually. For each parameter under their control, the system uses the average of all Crown Holder votes after loping off the highest and lowest figures.
So someone who really doesn't know what they're doing is going to end up a couple of standard deviations outside the mean and end up with their vote ignored.
There aren't a lot of places where a crown holder could be dishonest and the system is configured so that everything works best when crown holders are seeking solely to line their own pockets. This is true of everything except the awards committee, but that's why the awards committee is a prestige position voted on by the community.
By seeking activities which maximize their own income, it benefits the network greatly because it means that everyone is engaged in an enterprise of some sort. The coin is finding use, gaining traction and visibility. It becomes a thing people want in and of itself, not just a means to an end.
Clarify, how does lining their own pockets benefit the community?
Usually the downfall of a utopian society, where all have sufficient income, occurs because the leaders become greedy.
That's because utopian societies fail to account for greed as the normal condition of human beings.
People are greedy little monkeys who will fling poo at anyone who tries to take our bananas.
Crown Holders, have one way to make money, this is by owning a treasury right and using it to mint.
If they want to mint more than their allotment, they need to buy more crowns, and this gives them a bigger slice of the economy.
Having crowns means you get a say in how much money in total is being printed, but your share is directly related to how many crowns you own.
If the crown holders print more money than current market prices support then the supply contracts to keep the price stable.
This means that the system begins to eat into their current balances via negative minting. Remember it's crown holders, not mints that are on the hook for negative minted amounts.
They need to slow down the printing press for a bit and let the market catch it's breath or pull some of their coins off market, or even buy some on the open market.
If they fail to print enough money, then they lose out on literally having free money. They're leaving money on the table.
This causes a seesaw or if you prefer an orbit effect where the price trades in a tight range.
It's powered by greed but we all get richer when they are being greedy since their greed is what maintains the balance between supply & demand.
Great explanation! Thanks. This economy looks brilliant! 8-)
You've run simulations of this? There's data to be examined somewhere?
Yes that's what the whitepaper is for. This is just to distill it into a simpler explanation.
Very good questions!