Introduction to Creator Coin Flow Controls
tl:dr:
- Flow controls help ensure creator interactions with their coin economies are fair for the entire community
- $RLY governance will have the ability to adjust flow controls over time
In a previous explainer on Creator Coins, I alluded to restrictions, or flow controls, that would be in place to help ensure creators engage in behaviors that are fair to the fans and supporters participating in their economies. As we draw closer to the end of our deployment phase, I wanted to provide a bit more detail on these flow controls and the thinking that went into the design.
First and foremost, it’s important to acknowledge that creators are the centerpiece of their token economies so anything they do is likely to impact perception of their Creator Coins. Additionally, at inception, each creator receives a large quantity of their own Creator Coin to ensure they always have a meaningful stake in the success of their own economy. It’s impossible (and undesirable) to try to prevent a creator from impacting their own economy so our restriction design is focused on introducing flow limits that control that rate at which creators are able to sell their own coins. The design follows token bucket algorithms commonly used to manage bandwidth and burstiness in network traffic.
Specifically each creator:
- Has a maximum number of tokens they can sell at any time.
- Earns towards this maximum allowance based on community activity.
The maximum number of tokens a creator can sell at any time has initially been configured at .25% of the total supply of their Creator Coin. As an example, if a Creator Coin currently has a circulating supply of 100,000 coins, the creator behind this coin can sell a maximum of 250 coins out of their own supply in a single transaction.
Along with this maximum cap, creator sales are rate limited by the activity in their coin economies. Per our hypothetical example above, after selling 250 coins, this creator would need to re-earn that allowance before selling additional coins. Creators earn allowance based on community buys, sells, and transfers of their coins. Each Creator Coin purchased adds 1 to the sell allowance, each coin sold adds 0.1 to the sell allowance, and each coin transferred between users adds .01 to the sell allowance. As healthy buys, sells, and transfers happen within the economy, a creator will build a sell allowance until they reach their cap of .25% of the total supply at that time.
The initial configuration of this flow limiter is intentionally conservative and restricts a creator’s ability to instantly sell large portions of their own coin. Starting conservative should give us the most flexibility in terms of observing and redefining these limits without anything going catastrophically wrong. As the community observes behaviors and has a better sense of what is fair to creators and community members, the community will have full control over how these limits evolve via $RLY governance.
