[Discussion] New PRV utilities

Hi guys,

The native token of Incognito, PRV, originally has two utilities:

  • Pay the network fee
  • Stake to become network validator

Problems

  • The network has been collecting a typical fee (~100 nano PRV per transaction for now), which means everyone is capable of spamming the network with a lot of transaction requests. Every transaction requires the network validators to compute and store the transactions in their disk drive. Although we placed a limit on the number of transactions per block already, the problems of computation and storage would lead to the deterioration of real users’ experience. To be more specific, if it is limited to 100 transactions per block and there are numerous spam, other users have to wait for those transactions to be executed instead of the actual ones. Hence, preventing spam transactions helps to relieve the network validators and facilitate users’ experience.

  • The max supply of PRV is 100M and is fairly minted over time to incentivize the network validators. The more PRV is minted, the higher circulating supply of PRV. It is obvious that the increasing circulating supply along with fairly remaining demand for PRV leads to unhealthy inflation. Therefore, other sustainable demands for PRV are needed in order to incentivize PRV holders (network validators, PRV investors, etc) and balance the supply and demand of PRV.

Proposed initiatives

  • Increase the network fee to 0.1 PRV per transaction. Accordingly, x% of the 0.1 PRV will be paid for network validators, and (100-x)% will be burnt. As it is costly for Incognito transactions, the spam ones are expected to decrease. In the same vein, burning PRV reduces its circulating supply, which gradually contributes to a balance between supply and demand. The initial value of x is 5 for now and is subject to change through consensus voting in the future.

  • As stated in the Q4 roadmap, we are transferring the decision-making of the project to DAO (gradually) to promote community oversight and management. Power is distributed to PRV holders who can vote on the proposals by PRV. It is expected that Incognito development orientation will be discussed thoroughly by dedicated members as well as another utility of PRV token is added.

The mentioned initiatives are subjectively suggested by the team, and we are open to hearing your thoughts on the increase of transaction fee (aka 0.1 PRV per transaction).

P/s: It’s my pleasure to introduce myself. I’m Maisie - new Community Manager at Incognito. As a community manager, my responsibility is to help the Incognito community grow and prosper. I hope you can enthusiastically engage with my first topic.

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hey @Linnovations, @abduraman. I think you guys will want to join this discussion. As always, your opinions are valuable to us.

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and how we will make the first exchange where to take the commission…Did I take it in the faucet And now 0.1 PRV faucet won’t give…?..This fact will slow down the exchange for beginners…I think it is necessary to ban spammers for one week. But your idea is great

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Hi @PilevinA, thanks for the question.

Actually, the faucet will be deactivated in the future.

When a beginner takes his/her first step entering Incognito, he/she has to deposit (or shield) funds to Incognito before using any supported services anonymously. Once the shielding transaction succeeds, there will be an airdrop of 0.3 PRV which is equal to the payment of 3 transactions’ network fees. He/She is encouraged to buy a sufficient amount of PRV in advance of future transactions.

And in case of users have been using Incognito for a while, they should have held a certain amount of some tokens. Therefore, it is feasible for them to buy PRV and pay for the network fee.

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So PRV’s final supply “never” will reach to 100M, won’t it? @maisie

As a validator/holder/investor, if we can easily update the fee at future by governance, 0.1 PRV is good for now but probably not good for the bull market. However, evaluating the other cheap L1/L2 chains and their goals, I prefer at most $0.01 fee. So as a user, I suggest 0.01 PRV instead of 0.1 PRV for now and we won’t need to update it for a long time.

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With a bull market in practice and in life, I observe a strong load on the network, I think I need a floating commission from 0.01 to 0.5 PRV (0.01~0.5 PRV)…Correct me if I’m wrong!!!

I was buying PRV at $3.00 USD, so… 0.1 sounds quite excessive… obviously, it’s not $3.00 now, but I’m hoping it does start trending up again (along with the whole market)…

In fact, the best way is to fix the fee in terms of USD. Some networks do this. Incognito also may implement this later. For example, when PRV is $1, the fee becomes 0.01 PRV. When it is $0.1, the fee becomes 0.1 PRV. So the fee formula is $0.01 / price_of_PRV_in_USD.

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Love this idea! Great call @abduraman

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One other suggestion, why are we burning 95% of the fee and validators only get 5% of the fee? I think the validators should get a larger portion of the fee to incentivize validators. More validators = more stable network.

Maybe 50% to validators, and 50% burned?

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The validators already get rewarded with block rewards, so the tx fee is only on top. I am fine with my earnings but won’t say “no” to more :wink:

Regarding tx fee I agree with @abduraman. We should set a fee in USD and remeasure on a daily basis. So how much would we think are people willing to pay?$0.10.-, $0.05, $0.01?

Best scooter

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I would appreciate it if the team could share the economic rationale for 0.1 PRV. This amount should not be ‘taken from the ceiling’. I consider this a massive fee as this was one of the advantages of the Incognito chain - low trx fees.

Can’t get what’s the actual issue here. Do you mean that the circulating supply could go beyond the Total supply of 100 M PRV? (AFAIK it should not be like that).
Or do you address that there’s no sustainable growth of demand for PRV? If so, then it’s a product market fit question.

This is a great move! Hope we will be able to vote by the staked amount of PRV along with not staked.

I :100: support the idea above by @abduraman.

For this network to remain competitive the TX fee should to priced similar to the competition hence that mean pricing in USD rather than the highly volatile PRV. We should apply a slight premium for the added benefit of privacy.

A dollar value would be good, but if that is not possible then I’m happy with the proposed 0.01 PRV.

As others have commented above, I too feel it is a shame to burn 95% of the fee. However, that said by burning the token creates a reduction in the supply which is deflationary.

Btw, thanks @Jayce_Nguyen for bringing this to my attention.
Thank you @maisie for raising this topic and WELCOME :champagne: to the Incognito Community!

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I do feel it is a shame to burn 95% of the TX fee, however…

… the DAO is starting up soon.

I’m just wondering, will the DAO have any treasury funds upon it’s creation?

If not, I’d like to propose this idea…

Rather than burn the remaining ~95% of the TX Fees, could we take a portion of the TX fee (E.g. say 50%) and deposit that into a wallet that the DAO will eventually control, then burn the rest?

Hence, the more we use the Incognito, the better us loyal users will feel by the fact that 50% of our TX fees will be going into a DAO wallet that will be of use by the community in the near future.

When the DAO is rolled out, this wallet will have some PRV ready to be used for initiatives raised and voted upon by the community. Hence we will not be starting from $0.

What do others think?

If you like this idea, please hit the :+1: button.

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we deviated from the topic and confused everyone…initially, it was proposed to prevent spam on the network to raise the commission to 0.1 PRV, and you @abduraman are calling us a value that is not at all in the subject…Don’t you see how the whole network freezes?.we have to wait a long time…I don’t think the dollar is stable China and Russia are abandoning it… Its price is low

This will make it harder for beginners to swap for the first time, unless the tap gives the first 0.1 PRV

(100-x)% burnt is a great idea, but for Incognito, I don’t think it’s the best problem to solve right now. Raising network fees is a good way to prevent spam transactions, but as far as I know, Incognito’s transaction volume and number of transactions are not high. Raising network fees at this point in time will prevent more transactions and cause liquidity to decline. This in turn creates other, more serious problems. Maybe we should look for other ways to increase the transaction volume and delay the implementation of the part of increasing the network fee?

Max supply of PRV is 100M and will be minted over time. This number is unchangeable.

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@PilevinA @abduraman @yoo @brico84 @scooter
At the present, 0.1 PRV is equal to only 2 cents which is very affordable for everyone to use Incognito.
Actually, there are 2 ways to adjust the network fee. Firstly, on-chain code can help automatically update the network fee according to the value of PRV. However, while PRV’s marketcap is still small, it would be easily manipulated by any malicious ones. Secondly, network fee is programmed to be a parameter and timely updated depending on community consensus. We believe the latter is safer, and this parameter is verifiable by anyone.

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Burning 95% of transaction fee aims to reduce the circulating supply. All PRV holders gain benefits because of PRV scarity. Meanwhile, validators earn current ~80% APR (which is pretty high compared to other network.) More rewards from transaction fee can be temporarily beneficial for them. But a balance of supply and demand is much more advantageous for the network in long-term. Also, this split will be a subject to change in the future through community consensus (again) when the APR from mining rewards decrease, especially when the block mining rewards are reduced every year.
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As mentioned, increasing transaction fee is to prevent spam transaction and strengthen the network. Incognito has to choose between low fees and the inconvenience of spam. For example, a block is limited to 100 transactions, there are 8 shards, each transaction costs 0.1 PRV. So 100 x 8 x 0.1 = 80 PRV is needed to spam the network. Meanwhile, with the proposed network fee, a real user only needs to pay 0.1 PRV (~ $0.02) for a transaction so it won’t impact to user experience I think.

I have mistaken the term ‘total supply’ and ‘max supply’. Max supply of PRV is still 100M.

It is not a product market fit problem. As there are numerous daily transactions, the network fee is too low to raise the demand for PRV. For example, a transaction costs 0.0000001 PRV right now, and even if there are 1,000,000 transactions per day, the total cost is only 0.1 PRV. This tiny number obviously cannot raise significant demand for PRV token.