Summary

Should ORE temporarily reduce daily emissions by 40% to address hashpower concentration and study the effects of a market-driven emissions rate?

Overview

The purpose of mining and boosts in the context of ORE is to broadly distribute the ORE token to as many users as possible. Mining serves as the foundational hashpower-based distribution mechanism of ORE, while boosts act as a lever for the community to direct a portion of emissions towards various growth initiatives.

Currently, boosts are exclusively used to provide a “risk-free” native yield rate and incentivize ORE liquidity providers. However boosts could be used to additionally reduce overall daily token emissions. That is, we propose creating a boost that receives 40% of daily emissions and burns them. The rewards allocated to this boost would come from the emissions currently provisioned for miners. Current LP yield would remain unchanged.

This experiment would be set to run for a 4 week time period and then ratchet back down to 0% burn over the following 4 weeks, decreasing burn by 10% every 7 days. Since the target emissions rate in the core mining contract is set by the circulating supply on the mint account, these burned tokens would eventually re-enter circulation later down the line. The max supply of 5 million tokens would remain the same, and the net result of this proposal would simply be that ORE emissions going to miners would reduce for the duration of the experiment.

Motivation

Hashpower-based mining is currently highly centralized around a single private pool. Over 40% of overall daily token emissions is being mined by a single private pool that currently does not accept new miner registrations. This pool operator has a closed sourced mining implementation that other operators are having a difficult time replicating. During this time, ORE token emissions have increasingly become concentrated into a small group of hands that are extracting liquidity from the market, and largely serving as an obstacle to broader adoption.

Given mining as a distribution mechanism is currently an asymmetric field of play for users and not serving ORE’s larger mission, we believe the emissions allocated towards this channel should be temporarily reduced. In this proposal, LP yield would remain exactly the same, but miners would receive 1/5 of the rewards they currently do. From the individual miners' perspective, this would appear as if hashpower on the network increased by 5x. Given a large chunk of daily miner emissions are sold directly into the spot market, reducing this allocation may have an effect on open market selling volume.

Further, various members of the community have long advocated for a market-driven emissions rate. A “burn boost” as proposed here would provide a mechanical means of achieving this within the existing rules of boosts and within the constraints of the hardcoded non-linear supply schedule. While this is not a long term proposal for an algorithmic market-driven emissions rate, the experiment proposed here would provide valuable data and feedback on miner profitability, participation rates, and correlated price performance to inform the debate and designs of such a mechanism.