Map Improvement Proposal 15 (MIP-15)

4/16/2024 Update: After a productive community discussion, we have decided to finalize a new burn-and-mint approach that we believe combines the best elements of the original options:

75% of HONEY redeemed for map credits each week will be permanently burned and 25% will be reminted as Consumption Rewards, up to a limit of 500,000 HONEY per week in Consumption Rewards. Any overage will be permanently burned.

During the comment period, many stakeholders voiced an eagerness to see more net burn. Many said they supported higher rates of net burn (and lower rates of Consumption Rewards) than proposed. As a result, we have increased the rate of net burn from 50% to 75%.

Stakeholders recognized that the cap on Consumption Rewards from Option 2 would provide more long-term certainty about token emissions than Option 1. Some stakeholders suggested that such a cap could be implemented later if needed, making Option 1 preferable to them, but we believe they are underweighting the importance of providing ecosystem participants with confidence about long-term HONEY emissions rates.

Stakeholders also voiced concern that a cap of 200,000 HONEY per week in Consumption Rewards would be unreasonably low compared to other rewards sources. This was fair; we have increased the cap to 500,000.

All in all, the new proposal will offer higher rates of net burn in the early stages of the network to promote value accrual. The cap will provide long-term certainty about emissions, with the increased cap allowing for higher levels of weekly Consumption Rewards in the earlier stages.

This change will take effect as soon as practicable with an upcoming round of burn-and-mint transactions. Thank you to everyone who shared input on the proposal.

TL;DR

This proposal would adjust the burn-and-mint economics of HONEY so map consumption has a deflationary influence on token supply, allowing HONEY to accrue value as customers derive more value from the map.

In retrospect, it was a mistake in the design of the network not to include a consumption-based deflation mechanism. We are grateful to all of the contributors and commentators who shared feedback on the design of the network and called attention to this flaw.

We are considering two implementation options, and welcome suggestions for other variations on these two approaches:

Option 1: 80% of HONEY redeemed for map credits each week would be permanently burned and 20% would be reminted as Consumption Rewards, with no limit on Consumption Rewards.

Option 2: 50% of HONEY redeemed for map credits each week would be permanently burned and 50% would be reminted as Consumption Rewards, up to a limit of 200,000 HONEY per week in Consumption Rewards. Any overage would be permanently burned.

Summary

Hivemapper exists to build incredibly useful map data products that support safe navigation for people, enterprises and cars. We use a token, HONEY, to align the short- and long-term incentives of contributors and other supporters in a way that no other rewards mechanism could achieve.

Since before launch, contributors and outside observers have shared thoughtful critiques on the economics of the HONEY token. Although we have been hesitant at times to spend time adjusting token economics at the expense of building useful map products, we have always listened.

One of the most common critiques is that the current token economics design ensures at least 10 years of inflation in the supply of HONEY until it reaches the max supply of 10 billion HONEY. Commentators have suggested that inflationary token supply could prevent value from accruing to HONEY in a way that generates long-term community alignment.

In retrospect, the critics are right.

Hivemapper relies on a token economics model called Burn-Mint Equilibrium, which is used by several other pioneering decentralized physical infrastructure projects. Burn-Mint Equilibrium models usually rely on deflationary pressure from network usage to accrue value to the token. We did not include a deflationary mechanism in our original token economics design, and we should have done so for the sake of long-term alignment. With more customers in the pipeline beginning to use the map, it has become increasingly important that we address this oversight now.

This proposal would allow map data consumption to have a deflationary impact on HONEY supply to counterbalance weekly minted rewards. That could help HONEY accrue value as customers derive more value from the network, to the benefit of contributors and supporters.

Implementation

As described above, we are considering two options.

Option 1: 80% of HONEY redeemed for map credits each week would be permanently burned and 20% would be reminted as Consumption Rewards. There would be no limit on Consumption Rewards.

Option 2: 50% of HONEY redeemed for map credits each week would be permanently burned and 50% would be reminted as Consumption Rewards, up to a limit of 200,000 HONEY per week in Consumption Rewards. Any overage would be permanently burned.

The benefit of Option 1 is that it would be more deflationary in the short run. The drawbacks of Option 1 are that it would be less deflationary in the long run as customer usage scales, and that it would provide no certainty about the magnitude of weekly token emissions.

The benefits of Option 2 are that it would be more deflationary in the long run as customer usage scales, and that it would provide more certainty about the magnitude of weekly token emissions. The drawback of Option 2 is that it could cause the deflationary emissions limit of 200,000 HONEY to kick in based on the timing of consumption, even though the total amount of HONEY burned would not exceed the limit if spread across multiple weeks. This is because in the early stages of the network, the amount of HONEY burned for map credits spikes in certain weeks as customers consume large amounts of data for specific purchases.

We recognize that in the long run, HONEY could become too scarce for map data customers to acquire without a mechanism for imposing a minimum token supply or minimum weekly emissions.

(Of course, this would be a good problem, as it would mean that billions of HONEY from the circulating supply have been burned to enable customers to use the map.)

The community would need to carefully monitor this situation and use the governance process to advance a MIP if necessary to stabilize token supply.

Community Feedback

The Hivemapper Foundation welcomes community feedback on the MIP-15 proposal.

To provide feedback, please share any questions, suggestions, and comments in the #mip-15 channel of Hivemapper’s Discord Server.

The comment period will be 7 days, running from Tuesday, April 9, 2024 until Tuesday, April 16, 2024. If finalized, we anticipate this change taking effect in late April or early May.