A Symbol Core Value: Sound Economics
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Blockchain and distributed ledger systems have evolved to such a point, we sometimes forget the original core values as envisioned by Satoshi Nakamoto: Sound Economics & Capitalism
In today’s society, the word “capitalism” has become polluted. We imagine large corporations lobbying governments for favors. We think of CEOs that defraud their customers, yet receive 7 figure bonuses.
This is not what we are going to be talking about today.
Today we will discuss freedom to participate in an economy, without hidden fees, without central control, and with fair, clearly defined rules — encoded and protected with mathematics.
Immutable Total Supply:
Bitcoin has a total immutable supply of 21 Million $BTC.
Symbol has a total immutable supply of 9 billion $XYM.
It matters not what the total supply is, but the fact that there is a total supply.
Like $BTC, $XYM creation cannot be done by a central authority, by a community vote, nor by a future generation that may wish to divert from Satoshi’s vision.
Inflation:
Satoshi encoded block rewards into the bitcoin core as a means of rewarding early adopters to secure the network, and as a decentralized distribution of a fixed total supply.
However, many cryptocurrency projects today have perverted these methods to instead enrich themselves, and implement endless inflation.
These cryptocurrency projects will boast about their “high yields”, encouraging people to buy their tokens. But fail to consider the impact of high inflation rates over long time periods.
Many do buy into the hype, unaware of a fatal flaw. The moment demand fails to outpace the inflation rate, price depreciation is certain.
The greater the inflation rate, the greater the demand must perpetually increase.
Considering that demand is almost entirely driven by speculation that currency value will increase, once they plateau, years of price suppression and low morale almost always occurs. The influx of such a large supply of new coins applies great selling pressure to the markets.
Unfettered inflation coupled with proof of stake consensus algorithms is an especially devious implement. Proof of stake encourages saving, while inflation punishes those who do!
The graph below demonstrates the expected inflation rates of both Bitcoin and Symbol tokens, via remaining $XYM supply to be harvested on Symbol network, and remaining $BTC supply to be mined on Bitcoin network.
Block Rewards:
Symbol has a block rewards structure built to reflect the ideals encoded in Bitcoin halving. The key difference is the gradual decrease of inflation rate every 4 months, vs 4 years on Bitcoin.
This smoothing effect is an improvement that provides more economic stability, avoiding the sudden shocks we see in Bitcoin.
The graph below demonstrates the expected block rewards for both Symbol and Bitcoin networks over a period of 25 years.
As you can see, Symbol block reward reductions mirror those of Bitcoin, but with a smoother reduction schedule.
Tiered Node Structure
In Bitcoin’s early days, anyone could mine BTC with their home computers. Today, ASIC mining devices dominate the market, making it impractical and unprofitable for the average person to mine.
Symbol reintroduces the concept that anyone can contribute to network security, and profit from it.
No manufacturer can create a new device to extract a disproportional amount of the block rewards.
With harvesting rewards and a new tiered node structure, Symbol empowers everyone to benefit from block rewards and network fees.
- One only needs 10,000 XYM to begin harvesting. Once activated, they collect 75% of every block they complete.
- If one wishes to extract a greater portion of the block rewards, they must stake more $XYM, or increase use of the network, to improve their importance.
- Node operators in turn receive 25% of every block reward earned by harvesters delegated to their node. This incentivizes them to secure the network, and attract delegates to their node.
- For a period of 6 years from launch, Symbol provides Supernode Bonus Rewards to those who stake high levels of $XYM, and keep high performance nodes online with no downtime.
Each of these things puts buy pressure on markets, benefiting all who stake $XYM.
Symbol Tiered Node Rewards:
• Less than 1 million = Harvesting rewards
• 1 million = Base block reward + Harvest rewards
• 2 million = 2.7x base block reward + Harvest rewards
• 3 million = 5.78x base block reward + Harvest rewards
• More than 3 million = 5.78x base block reward + Improved harvesting rewards
Dynamic Fees:
Dynamic fees has been an important aspect of Bitcoin network for some time. Network participants can state the amount of $BTC they are willing to pay to have their transaction processed. The more they are willing to pay, the faster their transaction is confirmed.
Symbol adopts dynamic fees as well, allowing the free market to self regulate network expenses.
Conclusion:
Symbol’s tokenomics mirror those of Bitcoin, enhancing the aspects that are most beneficial, and reducing impact of undesirable traits.
Longtime NEMbers, Altcoin traders, and Bitcoin maximalists alike see the value in the Symbol tokenomics plan.
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Resources:
Recent Updates Regarding Symbol Launch
Original Tokenomics Proposal
Symbol Tokenomics Plan (referred to it’s codename “Catapult”)
Symbol on GitHub
Introduction to Symbol
NEMHub Community Platform
NEM Official Telegram
