Adaptive Emission: Making Blockchain Economy Real

in #blockchain2 years ago (edited)

Let us determine what money actually is, first. Money is a kind of social agreement where we use a certain object as payment. For the duration of its use, humanity has used many different kinds of assets as payment, – from animal skins to debentures. Currencies were constantly competing and evolving while the less effective ones would disappear or stay in the background of those in demand. Thus an economic model reflects the condition of the society in which it is used. But, as we know, these models are not set once and for all.

The liquidity of any currency is determined by the level of trust it gains from a society. Unfortunately, problems in our global economy, as well as an unstable political climate, have led to a drop in many people’s confidence in our current economic models. Nowadays, properties of payment processes such as security, anonymity, and confidentiality have become more valuable than ever.

From this point of view, none of modern fiat currencies are reliable. As seen in the progression of history when an existing model becomes inefficient, a new one always appears. As we know, the technology of the distributed ledger has now been invented, offering much more efficient solutions. This invention initiated the migration of values into blockchain assets, in which technologies give birth to the principles of a new digital economy.

It is safe to say that at this point in our history, crypto-currencies have taken a firm position in our world. This can easily be seen by their capitalization. As of the beginning of May 2018, the overall crypto-currency market capitalization is $436.5 billion, of which Bitcoin represents $156.5 billion. The Bitcoin ecosystem is currently ranked 5th as the world’s largest economies. Unfortunately, there is still no crypto-currency that has passed a qualitative milestone large enough to be considered a full-fledged payment instrument.

To explain this, let us imagine that we are buying a cup of coffee. We can pay in dollars or Bitcoins. The next day we can also buy a cup of coffee spending same amount of dollars, but the amount we might pay in Bitcoin is much more difficult to estimate or predict. One of the key points of a full-fledged currency is that its exchange rates have predictability and/or stability. This is something Bitcoin cannot offer at the moment so we still measure it in a dollar equivalent. This turns Bitcoin into a certain “digital gold”, a financial instrument, but not a full-fledged money. Bitcoin could be used to acquire the property, yet it can’t be used to measure its real-world value.

As a result, crypto-currencies are not able to fulfill one of the key requirements of money, which is to be a measure of the value of goods, because using money as we've defined, market participants determine the prices of goods. It is clear that the disadvantages of current solutions inhibit the spread and adoption of blockchain technologies. Looking more closely at these disadvantages allows us to learn from the current financial system.

Let us take emission mechanisms as an example. The fiat money emission is controlled by the central bank of a country. In the case of economic growth and a national currency deficit, the country will accelerate emission so that the exchange rate of its currency does not increase excessively with respect to other currencies. This provides the economy with necessary liquidity. What is important to note is that emission speeds up the economy. This shows us that the emission of fiat currencies is dynamic and is used with regard to the needs of the economy, ensuring its governability.

The current situation in the crypto-currency market is the opposite. It is easy to see that all of the existing and developing blockchain protocols offer a fixed or algorithmically designated emission that is not tied in any way to the real growth of the network or its demands in liquidity. The emission algorithms Satoshi Nakamoto put into the Bitcoin network as well as Vitalik Buterin for Ethereum or Dan Larimer in the case of EOS, are only abstract values which have no correlation to real network growth.

Speaking of fiat emissions, we must also notice that this is all done “manually” by the decision of a country's leadership, as well as the chairmen of central banks, and that this is based on real economic data only indirectly. Furthermore, the principles of distribution are also far from perfect. The deep imperfection of further money distribution as well as unpredictability and a lack of transparency of emission is one of the biggest reasons why the public’s confidence in the current financial system drops.

But now, this problems of the distribution is now solved in a brilliant way. Blockchain technologies allow for the algorithmic distribution of emission, with no intermediaries, directly into the accounts of market participants. But further distribution there also has its problems. Because distribution is made via the miners or stack-holders (in different consensus algorithms) who are rarely active participants in the network in the context of real transactions. These participants mostly adhere to an asset retention strategy with the aim of selling at a higher price later. Miners are also adding additional pressure to rates as they constantly need to pay the often high electricity bills associated with mining,and frequently upgrade their hardware.

Holders do not benefit from using tokens as a payment instrument, and even less so for practical solutions. As a result, they are focused on the speculative aspect of the currency. If the share of real use was more than a speculative component, the rate of the token would be much more stable.

Let's take Bitcoin as an example and find the correlation between network growth and coin rate. As MIT researchers have shown in the article "Are Bitcoin Bubbles Predictable? Сombining a Generalized Metcalfe’s Law and the LPPLS Model", we can see that stock bubbles occur when the market values of the coin begin to outpace the network growth. The recession of the crypto-currency market in February-March 2018 was a direct illustration of this. Both fast growth and the inevitable recession hinder the network development.

Accordingly, on a blockchain, there is no relationship between the emission and the growth of the network on the economic level. This makes tokens extremely impractical to use in everyday life as a payment method and it’s also an obstacle to wide-range adoption and usage.

Fortunately, we still learn from working solutions that we do have and create better technologies to replace existing non-effective ones.

To solve the problem, Gravity Protocol uses a special algorithm of adaptive emission to calculate the rate of emission on the basis of Gravity Network Index that grows according to the growth of the network. After the peak values of the Gravity Network Index are reached, the protocol does not release tokens until the next peak is reached. Tokens are distributed among all users according to their personal Gravity Index, in proportion to their contribution to the network (Stake + Activity).

Token owners will receive the reward not in the form of the deflationary growth of the token rate, but instead, in the form of the increasing number of tokens on their account due to the adaptive emission. This will, in turn, motivate participants to create decentralized applications and businesses. For example, in the sphere of e-commerce, services which accept payment in the form of Gravity tokens, will receive an additional economic stimulus as a benefit of adaptive emission.

This means tokens are only issued to cover the growing needs of the network. The Gravity Index solution protects against a speculative overvaluation of the token at the protocol level and accelerates economic processes and growth of the network with the intention to reduce the token rate fluctuations.

When the network gathers its critical mass and stabilizes, this will lead to the reduction in the base token rate volatility similar to that of fiat currencies. This will also make it a full-fledged payment instrument that would actually be a viable solution to the widespread crypto payment acceptance problem.

Of course, adaptive emission itself does not guarantee the stability of a token, but it does add a mathematical model to the algorithm to bring real market aspects into the coin’s rate.

We combine all of the best aspects from the real- and crypto-economy, and we get both monetary stock, which grows synchronously with the economy, as well as an efficient distribution system without intermediaries. Thus, the network receives additional stimulus for growth as well as a harmonious redistribution of ownership at the protocol level, which contributes to efficiency and sustainability.

by Jahspear

See the previous articles

Gravity Protocol Intro
Gravity Protocol Roadmap
A Deeper Look Into Dan Larimer’s radio
Gravity Protocol initial distribution
Access to private testing

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One BTC always = 1 BTC

Cryptocurrencies are stable, It's not when one measure crypto against the Fiat.

So Don't use Fiat, where there is a possibility to use Crypto. The more people use Crypto the more stable Crypto gets.

Nevertheless, the exchange of values for the currency leads to the need to find standards. And cryptocurrencies are not yet able to serve as prices standarts.

Well not quite. Because basic supply and demand. The supply of BTC can't meet an exponentially increasing demand, or anything close to whole world adoption without a dramatic increase in price. The entire world would have to have BTC and use it for all transactions before price ever "stabilizes" but even then changing population and economies will still effect the price. This is because the supply doesn't react to changing or growing demands.

Hence the need for adaptive or dynamic emissions...

Further, although I love BTC why would I ever spend it?! It may go up in value and it costs me BTC in fees to do so. I have a credit card with fiat (which likely will go down in value) that gives me 1.5% back to spend it...

Any currency that charges fees to use, is never going to be a standard of use for the majority of people. It just doesn't make sense.

I think the more complex the financial system is the more stable the economy it could be, so it's better not to put all your eggs into fiat, diversity is proven to be effective to prevent economic crisis like what happen in 2007-2009 that they are so confident about the fiat currencies, but all it does is to create a chaos and war in some countries and exploit their commodities.

Yes, crypto economy largely arose because of the imperfections of fiat currencies.

Though cryptocurrency is totally decentralized, people yet measure it against fiats. Until the volatility of cryptocurrency reduces, it will be difficult to consider as mainstream currency. Hope one day cryptocurrency will dominate the world and make the globe smaller. Thanks for the nice article.

People measure crypto against fiat because they need fiat to pay rent and taxes. Until we reach a point where you can pay for basics using crypto, people will always value it against fiat.

Yes,agree and we are in same platform.

Oh yes, technologies makes the globe smaller..

freedom

Very well-written article. You are MUCH further with understanding blockchain technology than I. (I only do small time trading) but I like the information that you provided here. Please keep up the great work!

thanks for the good post. the MIT article on BTC was great also. I believe as this crypto market gets more mature, it'll be more predictable...

Is it a real conflict that a cryptocurrency does not have a stable value? At the moment I do not think that the cryptocurrencies want to replace the regular monetary cone, like the dollar, I think it is more oriented to be a new financial model. Just as when the bonds were created and not everyone trusted them, so the cryptocurrencies must earn the trust of their potential buyers.
At present, for example, Banco Santader has just launched for four countries the platform needed to handle cryptocurrencies (buy, sell, transfer) but hand in hand with Ripple, even though Stellar had been making agreements with IBM long before to be them. will present a reliable platform for banks internationally.
But we still have to see how all this will turn out.

Of course, cryptocurrencies need to earn the trust of users, and this requires new solutions.

new solutions? but if there are initiatives like the one in my country "El Petro", since false expectations are created and it ends in the same problem, it does not generate trust. There is a practical with a cryptocurrency that means the government of Canada that later did not continue because it was not profitable, at present this government is seriously analyzing the chain of characters in public records (with Ethereum).

good post friend puts us to think many things for example 1: it will be that the CRIPTOMONEDA IN A FUTURE WILL REPLACE THE MONEY IN CASH, 2 will be that it will have the same security that has the money in the banks, or we will have the risk of losing it by some haker that is put in the network. I think that nowadays there are few businesses in the world that are paid in cryptocurrency but as this currency and confidence continue to grow I think it will be the best alternative worldwide, as well as less and less people pay in cash and more with debit cards in the future people will pay only with cryptocurrency.
And I can also add that the cryptocurrency has been a solution or help countries where people are drowned by their economy such is the case of Venezuela and India I think are the countries that this year have joined with the largest number of people to the platform of steemit as an economic solution to the crisis that these two countries present as they get cryptocurrency in this case steem or steem dollar and change it to the currency of your country is much higher than a minimum wage being a solution for dress and food....

Yes, we also believe that a new economy model will emerge on the basis of blockchain technologies.

From #Venezuela support your work friend, greetings and keep it up, showing good quality in your posts ...

Blockchain economy a real especially for the countries with large population and where banking has not reached its will provide a great boon to the economy because technology will be much better than setting up an infrastructure

Good point. For the developing countries (Africa, South America) bitcoin is already a currency and not an investment asset.
And they need to have a currency with better scalability and economy design

While crypto money certainly introduces new challenges, it is still most certainly superior over fiat, especially the concepts of decentralization and being of a finite supply. The fact that Bitcoin, for example, is experiencing wild swings in terms of value, is something that we as humans will have to evolve in order to deal with.

Yes, and these fluctuations of Bitcoin are quite understandable.

Hello there!
I will check this out and create a feasibility study here in the Philippines if gravity-protocol can sustain a stable form of a passive income. Will check the channels that you posted.

I was amazed by this:

When the network gathers its critical mass and stabilizes, this will lead to the reduction in the base token rate volatility similar to that of fiat currencies. This will also make it a full-fledged payment instrument that would actually be a viable solution to the widespread crypto payment acceptance problem.

Not everything in the coinmarketcap is exchangeable yet so let's see where it goes.

Of course, adaptive emission itself does not guarantee the stability of a token, but it does add a mathematical model to the algorithm to bring real market aspects into the coin’s rate.

The future will show.

When will we see this project live

excellent publication, very informative, and with a lot of interesting content. Keep it up greetings!!

Pardon others often, thyself never.

I am guilty of exactly that, often to a fault.

The revolution is now

i appreciate this project very much.

Nice article sir keepit up

Hi @gravity-protocol, Thanks for your nice updated information, This post is completely full of information, Hope you'll do this further.

Gravity is a high thinking mater.gravity protocol uses a special algorithm of adaptive emission to calculate the rate of emission on the basis of Gravity Network Index that grows according to the growth of the network. That's a complex subject. I following you....sir @gravity-protocol

Thank you for this post, future is now and blockchain is that future.

Hello Brother you ve posted a. lot of posts that you ve posted so well

This is the essence of the above post

distribution problems can be solved in a brilliant way. Blockchain technology enables the distribution of algorithmic emissions, without intermediaries, directly to the accounts of market participants.

But further distribution there also has problems?

actually any kind of money all have problems! but the right handling can minimize the problems that can be caused.

The right handling is a very subjective factor. Therefore, we propose algorithmic solutions.

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So, you should start use TradeCheck - best software for traders ever!
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Dear SIR @gravity-protocol ,First of all, thank you very much for posting so beautiful, we generally have very little idea about Bitcoin, many of us do not know Bitcoin without working with Bitcoin,

SIR was very good for your posting, because you provided the right information through which many will benefit, thank you so much for posting so beautiful and will help others by providing such information in future.

After knowing some things then bitcoin should start working,

For example: ...... Bitcoin is the sign currency traded through the Open Source Cryptographic Protocol. There are no financial institutions, regulatory bodies, or fixed houses for Bitcoin transactions. All processes of Bitcoin are completed online through an open source software or through a web site. In 2008, Satoshi Nakamoto introduced this currency system.

So if you share some things with me please do not (-upvote) please

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just amazing presenting post

You got a very good definition of what money really is @gravity-protocol. Good post and I agree!

Thank you! Public test will be soon.

About time more people started addressing "adaptive" or dynamic token creation!

Protocols discussed here are mandatory for functioning economies. However, if tokens can be created, do you have a method to routinely and actively destroy tokens to balance any decreased in demand?

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I am still on the process of understanding this system, in general, blockchain "systems" or algorithms" are evolving, that excite me. though learning curve is increasing for the common masses.

will monitor more post from this acct.

Congratulations @gravity-protocol!
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  • Pending payout - Ranked 4 with $ 657,76

Hey great post! I've been wondering whats the hold up for me to be able to buy my coffee in crypto lol but you put a lot of great info in there so thanks!

NICE article..... awesome project

let's help each other vote on each other @zuhrafriska

Yes, I agree with you in your historical analysis of currencies of all kinds. The focus should be on how much they benefit

looks very interesting dude

Wonderful article, thank you!

I'm really impressed with the look that the picture is very beautiful.not even a refreshing picture,but beautiful.

your amazing post is very good and useful for me and for all my steemian friends. i am very awesome postingan.terima for your suggestion that very extraordinary good this.

Money is powerful...money anseereth all things.

Lets build SteemIt great together!

Right now we are building a new Anti NWO token that earns owners revenue. Imagine earning ETH on the NWO defeat, that is what we want to do! Feel free to check us out.

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Money is powerful...money answereth all things.

No, money does not answer "all things". It is powerful though.

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Very good post,
very useful for those who read it. thank you

The crypto always give topics to talk about and even more in this boom of digital currencies

👍👍👍

Very good article @ gravity-protocol, it seems very interesting worth trying, I hope it is already proven very successful!

let's visit our colleagues blog all, do not give up to all our colleagues @ zuhrafriska

Hello friend, excellent publication, I liked it a lot. Count on me, I invite you to visit my profile and count on you too, Regards

laff... i have to learn from scratch

İts so nice article ,thanks

your determinations and smartness marches parallelly, i really love your idea and your post as well. Anyway, i am new here and i want you to help me out in finding my way through. Nice post anyway

I really enjoyed your beautiful and useful post

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Amazing to see the innovation that can be made within a free open market and with no control. With decentralisation taking over we will improve so much more as a species!

Quite true.Token owners will receive the reward in the form of the increasing number of tokens on their account due to the adaptive emission.

Good information!

It is really great. I am hopeful to have such aesthetic post in future. Keep it up

Great post! Checking out my portfolio and thinking If some coins are even necessary for a project thy are used in (looking at you pkt).

follow me steemit mate

ufff... muy buena publicacion. Gracias por compartirla.

very good post, friend. only the confidence in a currency makes the economy of a country, of a society and of the world, above the universe of the cryptomonados, that came to stay!

Estoy entrando con paso suave y muy curiosa al mundo de las criptomonedas, solo he hecho pequeñas compras y me interesa aprender, sobre todo, el nuevo vocabulario que se maneja en este mundo nuevo. Gracias!!

It's great to read your post. All your posts are very beautiful. Read your posts
we can learn a lot. We can even know a lot.

    Hope you will post more beautiful.
     Thank you very much for your so beautiful posting.

your amazing post is very good and useful for me and for all my steemian friends. i am very awesome postingan.terima for your suggestion that very extraordinary good this.

 2 years ago Reveal Comment
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