RE: Koinos Will Use Proof Of Burn Consensus Algorithm

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Already for some weeks I have this task open to connect with the Koinos community again, but so far failed to do so. As you, I was one of the first day miners of KOIN and stopped like after 2 or 3 days. Subsequently I started to buy some KOIN since I felt this team will create something super good. Not financial advise, but if these guys can deliver what they promise and if they do play the business game well, this KOINOS chain will be part of the top 10 tokens, at some point in time. Through a Twitter chat I already understood mainnet will not be delivered this year. You say: Q2 or even Q3 2022? I do hope more like Q2, or even sooner, but the launch of mainnet must be flawless, so when that takes longer to reach that, than it'll take longer :)

Proof of Burn. Need to read the article, but I suppose anything that allows peeps to participate in mining that isn't related to the amount of money invested upfront (PoW and PoS), is a good method. I like to see a super decentralised chain for KOINOS since I believe this will set KOINOS apart from all the other general purpose smart contract chains. Not sure how the chain itself works when mining is gonna be through NFTs. NFTs doesnt give any compute power that is required to run a KOINOS node processing and validating transactions. Something and more than someones need to do that. Anyways, will read the article.

Deflationary KOIN token. Not looking at details, I can imagine the statement from Andrew on KOIN to be deflationary has to do with the idea that the amount of KOIN printed will be less to the amount of KOIN being burnt. However, if we take the case that the printed KOIN is solely meant for rewarding the miners, and KOIN will only be burned by the miners, deflationary basically means the overall mining network makes a loss. Somehow this feels not the right solution. That said, casino's work on exactly the same model, and they make good money and see the usage of their service growing instead of slowing down.

Though I/we don't know all the details, I'm super confident that the team will come up with something rock solid.



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Hi @edje.

You bring up an interesting explanation how deflation would work. I didn't even consider that for some block producers mining will be a losing game. That makes more sense now. I guess we will find out more in the future. It is an interesting project indeed and I can't complain for investing in it. If you say it can become one of the top 10 coins, then I may need to hodl them for longer time. :) Thank you.

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Don't take my word for Koin to be sitting with the top coins at some point in time. It may happen.But it may not happen as well. After the relauch of Koin token, it may not even get any traction. We dont know. The crypto universe is quite unpredictable. Other projects and chains maybe favoured. In the end the value of a token is determined by its usage. Though Koinos chain has good cards to build an ecosystem, the development/crypto business market have to see the benefit in adopting the Koinos chain. Speed and cost to Ethereum, and Ethereum-likes may not be an issue anymore with the L2 solutions in and coming to the market, hence a reason less to adopt yet another none-Ethereum like chain. But that said, Koinos has good cards in my honest opinion. Therefore HODLing a bit of tokens maybe not be that bad... NOT FINANCIAL ADVISE, JUSTMY PERSONAL OPINION {have some gamble like part that plays a role in previous statement}

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(Edited)

Finally, I got around to reading the Koinos Consensus Algorithm white paper. It holds this small paragraph about deflationary characteristics for Koinos. Though, in this paragraph, it is explained that under certain conditions, Koinos is deflationary. However, when such conditions are not met, Koinos can be inflationary.

In my own words and to my own understanding, Koinos will be deflationary when the demand for miners is increasing over time, ie increasingly more Koin will be spent/burned per the same amount of time to acquire the miners. With a set limit to the amount of Koin being printed per time period, the system ends up burning more Koin to Koin being printed. Hence Deflationary. I believe, to reach such a situation, the value of Koin needs to increase as well. Something that may happen intrinsically since those who want to produce blocks needs to buy Koin to pay for the Koinos Miners.

However, when said conditions are not met, Koin can become inflationary. And to be honest, Koinos must allow inflationary mode. Hints of the reasons are given in the white paper as well.

A question I had was: "What happens when the interest in mining is so low that the network will break, ie an increasingly lower amount of peeps willing to become block producers?" I believe the chain will have to rely on at least enough peeps that are willing to take the risk to recoup their pre-invested money to acquire the virtual miners, in an undefined time period, which is in kinda worst-case scenario's months to years and in most worst-case scenario infinite.

Though my question was more or less answered by the white paper, at least to my understanding, I will address this part in the Koinos community. Hopefully, sometime soon I'll have a Koinos Group answer instead of my own :)

The white paper also answered my question on the software nodes that are required to run the blockchain. It's not enough to hold the virtual miners to be rewarded as block producers, but one also needs to run the Koinos blockchain node software. At least, that is my takeaway from the white paper. Also this I'll confirm with them.

Not sure about what I'm now gonna state, but maybe SPK network is gonna use something similar regarding virtual miners. Wondering who come up with the idea first: SPK team or Koinos team. Or both independently. Anyways, doesn't matter too much. Koinos will be the first general-purpose blockchain adopting such a consensus algorithm, which is a huge plus imho. I just hope the crypto developers and dApp market, will think the same :)

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