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PRV token information & economics (tokenomic)

#1

Discussion is moved to Network Incentive: Privacy (PRV) Mining & Distribution.

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The Incognito Network: Ponzi or Economically Sustainable Blockchain?
[SOLVED] Incognito Endpoints
Some in-depth questions
#2

So, for “current supply” calculations, the 5M should not be taken into account?
The 5M are provided as “coupons”, the team will be able to redeem at the above-listed dates.

Does this mean that current supply is just:
number of blocks * 1.386666 PRV (with an adjustment of 9% every year)

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#3

Hi @Jamie, somehow missed your comment :sweat_smile:

“current supply” = “circulation supply”, all existed tokens should be included in the calculation, unless the tokens are frozen or locked by smart-contracts.

So the correct calculation one will be Premine + (number of blocks * 1.386666 PRV)

The same, to see a big picture you should keep in mind calculations:

  • how many tokens are staked in Nodes
  • how many are in staking pools
  • how many tokens are staked in pDEX liquidity
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#4

Okay, I thought current supply to be all PRV (pre)mined until now. Thanks.

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#5

Just to clarify, is the calculation for the number of beacon blocks, or number of blocks including shards?

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#6

Hi @mesquka the PRV creation supply in the diagrams include all combined rewards (Including shards, and beacon)

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#7

@andrey. Thanks for this post, I have a question. In the app, I thought you could use coins other than PRV to pay fees? Or is that not the case, and some fees must be paid in PRV (maybe in pDEX?).

If you can trade or send coins without ever having to get PRV, how does the long term value of PRV grow, outside of node and staking? When looking at the core platform purpose of sending and trading with pDex?

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#8

Also, can the team explain how prv will be used when pkyber and uniswap come online?

Do people using pkyber pay Prv transaction fees? I’m assuming yes.

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#9

I believe smart contracts will be available on the Incognito chain in the future and they only work with PRV

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#10

Hi, there are 2 types of trading fees:

  • Network fee: will be paid in PRV
  • Trading fee: will be paid in ETH

Therefore when pKyber & pUniswap are live, users will pay the normal trading fees as they always do when trading on Kyber or Uniswap, they won’t have to pay PRV in terms of trading fee.

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#11

Hey @doc, I think its one of the most interesting questions. Thanks for asking, it’s a good chance to answer all in once :slight_smile:

PRV usages in the network:

  1. Running the Network
    The most important for PoS network is Validators. User have to stake X amount to joint he validators pool and start generating blocks. It’s a major criteria of PoS networks. You can find such model in projects as Tezos, NEO, EOS, etc.

  2. Transaction fee for the native coin
    It’s mandatory to pay transaction fee in PRV when you transfer or do other actions with PRV. Similar model used in Monero, Zcash protocols. To send 1 XMR you must pay transaction fee in XMR.

  3. Issue and transfer own privacy coins
    When you issue own privacy coin on Incognito blockchain gas fee paid in PRV - it’s mandatory. When you transfer and trade custom coins, the transaction fee is paid in PRV. Similar model used in Ethereum, Tezos, Binance, etc.

  4. Transferring assets from other blockchains (BTC, ETH & ERC20, BNB & BEP2, NEO, ZIL, etc)
    This is incognito elusive feature. Transfer BTC or ETH faster and cheaper than on main-net and swap them to each other confidentially - its quite unique opportunity.

So far the best usability for new users it’s give them a chance to chose how they would like to pay transaction fee. Some clarifications for this functionality:

  • This option works only for several coins (BTC, ETH, USDC, DAI, USDT, BUSD, BNB)
  • For all other 2000+ Ethereum based and 200+ Binance based tokens. Transaction fee pays in PRV.
  • All transaction fee paid in PRV or other coins fairly distributed thought Node.
    Users win and Node operators win.

  1. As @raz and @henry mentioned above, PRV will be used to pay the network fees in Dapps, Papps and transfer tokens of the tokens based on other protocols which will be connected to the Incognito (Cosmos, Tezos, Cardano, etc. )

  2. PRV holders get voting rights on the making decision process (once DAO governance is implemented on chain)

:exclamation: Also, I want to highlight that this year we make a lot of improvements on the chain layer and if you guys have suggestions how to make it better, increase transaction fee structure or something else.
Feel free to bounce your Idea. Ideas with strong arguments have bigger chance to be implemented right away.

@doc let me know if my answers helped and if you have any other questions.

Offtopic

Additionally, I would like expose the myth that trading fee affects blockchain system economics.

Please ask yourself. What percentage comes from the transaction fee and whats from the block reward for these blockchains ?

  • Bitcoin
  • Ethereum, Tezos
  • Monero, Zcash
  • IOTA

Quick research will shows you that:

Protocol % earned from transaction fee Market Cap in Billions USD
Bitcoin ≈ 4% 160
Ethereum ≈ 6% 23
Tezos less than 1% 2
Monero 0.35% 1
IOTA ZERO 0.5
Zcash Strive for zero 0.4

On my opinion all conversations around the topic that transaction fee affects the project tokenomic require deep dive in the tokenomic of other protocols, especially zero fee based.

Feel free to correct me if I am wrong. I would love to hear your arguments on it.

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Start here: All the info you need, in one place.
Tokenomics of PRV (according to raz)
#12

Thanks for replying @andrey. I am fairly new to the specifics of tokenomics, so please pardon some of the naivety in the follow up questions.

What I am trying to get a solid understanding on, is where PRV can drive its value from, I understand the utility portion of using it as for network fees and rewards for validators. My question (which may have been asked incorrectly), was to try to understand how its actual value can be driven as platform matures. Right now I see its value driven by those who are buying PRV for staking, nodes, or liquidity returns, but I assumed at some point, the value is going to be driven more by the fee and demands for PRV to pay those fees.

So how can PRV value stay strong, and even increase in the future, if the fees for the most popular tokens can be paid in the native coin. Or in the case of Kyber and Uniswap, where no fees are paid in PRV at all, because it is only a trading fee?

I also understand for a usability of new comers, you have a much better chance of getting adoption, if people can use the token they are familiar with and trust, without having to but PRV. It just seems that long term, this would eventually drive PRV value down as its need can be circumvented.

So if a user is taking advantage of the speed of incognito, or its privacy on any of the main tokens your cited, BTC, ETH, USDC, DAI, USDT, BUSD, BNB (which I would assume make up the majority of the transactions and traffic on network), and is never required to purchase PRV, how does its value stay strong long term?

or is that what this is trying to get at, that value is driven by something other than fees, its driven by speculation and investors?

Thinking about this more, maybe the right question to ask, is what do you see will drive the demand to purchase PRV?

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#13

Hey @doc answering these questions, I want to highlight that PRV is designed as utility. Ownership of the the PRV gives user ability to consume some of the network’s products (1-5 from previous answer)

From legal perspective it means the PRV can’t be considered as Investment and any returns can be promised (same like ETH, BNB, XTZ, etc)

Running nodes, providing liquidity to the pdex pools, trading on pdex are the ways to get PRV for the further utilization in the network products.

I think we have similar understanding on this point. As more people execute transaction in the network (by transactions I mean, send, trade, use dapp, papp, pkyber, puniswap and so on). @henry mentioned above that network fee will be paid in PRV for the each trade.
I assume as more trades happen as more PRV will be utilized.

I assume on the increase of usage of the network. On the previous post I highlighted 5 ways how PRV is used in the network. Paying transaction fee in native coins it just 1/5 options of utilizing PRV.

I suggest you to take a look on www.iota.org. this project is top 25 CMC and they do not have any transaction fee in the network.

Henry highlighted above that trading fee will be paid in ETH and network fee in PRV.

This is the way we should work out and we open for ideas here. One of the option is that transaction fee in PRV could be cheaper than in BTC, which can drive more demand on PRV. Pretty sure we should discuss more options in this direction.

As I mentioned on the beginning the core team can’t drive up or down the value of PRV, our job is to maintain the network. From tech perspective PRV it’s designed as utility.

Probably blockchainers which more experience can explain more detailed what drives the price for the projects as www.iota.org where transaction fee is equal to zero.

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#14

@andrey @doc
In Incognito ecosystem, any coin can be used as the transaction fee if:
1- It has a trading pair with PRV in pDEX
2- The pool size is at least 10,000 PRV equivalent

Reference: https://t.me/incognitonode/17546 @Peter Could you confirm that it is still valid?

As I remember, Ethereum developers seek a solution to use other tokens as a transaction fee. I expect that they may provide the users with a solution after Ethereum becomes PoS network. To me, if they succeed, another UX barrier for the novice crypto users would be broken.

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#15

Correct, the only pool size requirements are removed for now. You can set up any size of pools on pDEX.

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#17

I tried just now but no way. I removed TIP/BUSD pair and then added TIP/PRV pair. Finally, I want to send some TIP but there is no option for TIP transaction fee. Is this a bug or is the requirement still valid for the custom privacy coins like mine? @andrey

#18

@andrey @abduraman

You are talking about different things. And in this case @abduraman is right.

If you want your own issued coin to be used for paying fees, there has to be:

  • a trading pair [your coin] -> PRV
  • the poolsize of that trading pair needs to be 10K PRV or more

The reason for this is the fact that validators get a fraction of the fees. If they get fractions of worthless coins, they don’t earn from being a validator.

User issued coins do not have a value in the network, unless it is assigned to them by creating a value on pDEX.

For adding trading pairs in general, there is no requirement for 10K PRV.

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#19