Of Time and Tide: The Mochimo Cryptocurrency Emission Curve
March 26th, 2019 — By Matt Zweil, Creator of Mochimo
There’s a simple truth underlying the choice of emission curve for the Mochimo cryptocurrency. That truth is this:
Speculative investors are bad for cryptocurrencies.
To be direct, when I designed the emission curve it was with the intent of causing “investors” to look at our curve and realize that their dreams of 1000x gains in a year (or five years) are baseless fantasy. So listen, speculators, and find the door, because:
Mochimo isn’t an investment.
I didn’t design an investment vehicle, but rather designed a medium of exchange. From the beginning it was evident that a simple emission curve as executed by other currencies would put us on the same track as those currencies. That track firmly and obviously subjects the nascent economy of a coin to abuse by speculators. In my opinion, speculators create instability in perceived valuation, steal profits from the miners who created any and all value in the first place, and directly damage adoption and utilization. All of that serves to erode the institutional nature of the currency before it’s even had a chance to function. So I said “no, we’re not doing what everyone else has done.”
So what did we do with this emission curve, and why?
At first we projected a hash rate growth curve. This was no easy feat, and for those paying attention, we let the network run for four months before applying the new emission curve with Mochimo v2.0 fork. I did that to collect some starting data on the growth curve. We started with the assumption that Mochimo will see successful adoption and have the adoption trajectory of many of the more successful currencies. We planned to grow aggressively, in other words. So, we have this idealized projection of hash rate growth such that an averaged rate of mining difficulty increase is X per block over time, and that it proceeds on a positive upward slope. Then as a second pass we attempted to ensure (based on the first projection) that the block reward Y increases at a rate that is something slightly less than the slope of X, but not by much.
That’s probably worth some thought. Hash rate grows, and block reward grows, but more slowly. That’s a weird choice, why make the reward grow more slowly than the hash rate? The reason is because we impute the cost to mine as a function of the hash rate. There’s a lot more involved than just this (like a projection of the increased speed of hashing hardware), but we’ll just say for the purposes of this explanation that there’s a 1:1 correlation between projected increase in hash rate and the projected cost to mine 1 MCM. So, normalized to the cost of mining, this system (if I got the constants right) is de facto deflationary even though you see the reward rising and the circulating supply growing.
Deflationary means that the mining cost basis of each MCM increases with time, even though the reward is increasing. So, it costs more to make 1 MCM, every block. Some people might say, “Aha! So you are trying to make it more valuable with time, it’s really an investment after all!” No. Sorry to burst your bubble. One of the things that makes the institution of “currency” real in the minds of its adherents is its rarity. If a thing can be obtained at will, or with increasing ease, belief in its function as either a store of value or medium of exchange diminishes. I have attempted to create slight deflationary pressure in the early years because to create strong deflationary pressure attracts the wrong sort of attention (speculators), but to create none at all fails to uphold the “rarity” pillar of what defines a currency. Erosion of the institution and lack of adoption as a medium of exchange could be expected to ensue in that case.
The fact that this approach should also work to slowly increase the perceived value over time is incidental to the primary purpose of creating slight deflationary pressure.
But here’s the why of all that. I chose to act here to prevent early adopters, and second-wave speculators from cornering the market by mining / buying in bulk before the coin gains traction as a medium of exchange. These people with ultra-low cost-basis per coin could otherwise damage or control the value the coin might otherwise accurately represent. That’s a non-starter here, if I have anything to say about it. Naturally speculators/investors are annoyed by that choice, since they couldn’t care less about project fundamentals or long-term vision. They just want to buy 1,000,000 Mochimo for a penny apiece and then flip them for some matching his & hers Lambos one day. When they see the emission curve though, they realize that this mathematically doesn’t make sense. K, thx, bye.
That said, it’s worth noting here, that the system has this emergent property in my model, which is that, by having a low mining reward and slowly increasing it in a net deflationary way, new adopters have a similar position as early adopters. If I’ve gotten things right, no matter when a person chooses to start mining it will always be the cheapest time to mine a single MCM from that point forward. Looked at another way, you could say that long-term holders are incentivized to keep holding the coins they mined if this progression matches my projections, since the value gained slowly compounds with time.
So what about this weird inflection point? The emission rate suddenly starts dropping rather than rising? Why four years and not 5, or 10 or 1? Well, a lot of what’s been done here is projection, educated guess-work, and a healthy dash of speculation. But *this* inflection point is my Hail Mary pass. If I imagine a world where quantum computers are destroying first generation cryptocurrencies, picking the exact right moment to ratchet up the rarity is a must if I want to unseat the leading currencies of the time entirely. So, to do that we started by selecting a target date for the advent of quantum supremacy. When, we asked, will QC ASICs begin to pose an obvious, undeniable threat to ECDSA and related algorithms like RSA?
To answer that question, I sought the opinion of one of our advisors (a PhD quantum physicist who actually owns a QC ASIC manufacturer). I posed that exact question to him, and he said 4–5 years. So, it’s the best I can hope for with this guesswork. I decided to err on the conservative side of that estimate, and we fixed the date of Quantum Supremacy at 4 years in the future, reasoning that it was more impactful to hit the inflection point too early rather than too late. Consequently, we predict the hash rate growth for those four years and aim to keep the reward growth below that line, until such time as the QC threat is widely accepted and urgent. That’s when we hit the inflection point. Our peak reward happens right around the time we imagine people are fleeing ECDSA coins looking for post-quantum secure safe-havens. At that moment, the coin emission turns more deflationary since the reward is dropping each block.
The reward drops every block rather than rising, but drops at a very slow rate. We ratchet up the “rarity” as we’re seeing a rapid influx of users from people fleeing failed and failing projects. The purpose of this change is to drive the perceived value and adoption of the currency as a true e-currency. We want a sudden spike in interest, valuation, adoption and usage to translate to Mochimo stepping forward into preeminence, consuming the vacuum left by the dying first generation currencies. My goal is to realize the dream that we’ve all been talking about but few seem to be seriously working toward.
Look, if you’re reading this please understand that we’re attempting something audacious here. I didn’t come to capitalize on the buzz of cryptocurrency. I didn’t show up hoping to have some me-too project floating around in the top ten coins. I came to try to realize the dream of having one cryptocurrency to rule them all, and one that people actually use to buy stuff. I absolutely expect Bitcoin to die a QC death, and I’m completely serious about that. I’m confident that QC has doomed cryptocurrency. Into the vacuum this creates, I intend Mochimo to step.
I came to slay the giant.
So yes, after year 4, each reward is slightly less than the one before. This phase lasts 18 years. So while it takes 4 years to reach our peak reward, it takes another 18 for that to drop back down to the starting reward and end the coin emission. Further to the idea of predicting adoption and usage rates, I believe we’ve accounted for what we need to account for in order to ensure mining is still incentivized by mining fees once the reward dries up.
I’ve done what I can to predict this future. The rest is up to you.
-stackoverflo
Disclaimer: The opinions expressed in this article are those of Matt Zweil, and are not intended as investment advice. Here presented is some combination or analysis, intuition, educated guesswork, and a solid dose of speculation about one possible future of the Mochimo cryptocurrency and network. What is stated, is what was intended by the choices we made. What is eventually realized is subject to the chaotic vagaries of the most unpredictable space in technology, so who knows how it’ll actually work out? There are vastly more scenarios where this thing crashes and burns, than where it has the success we’ve aimed at. It could have zero value in five years, rather than any success at all. So, don’t buy Mochimo as an investment.
