Proposal
We should have a fixed inflation rate table (e.g. 10% in the 1st year, 5% in the 2nd year).
We should not try to artificially keep the value of the token low. If anything, we should do everything possible to maximize token value and growth.
The price of data sets should internally be denominated in fiat to account for changing token price.
Most important factor for business success is sales of data. We earn a commission with every sale and it adds a deflationary component to the system, increasing token value.
Create long-term value for the ecosystem and token holders
Even though it's a utility token, there should be the potential for future appreciation in value
Since we are conducting an ICO, it needs to be an attractive long-term investment
A certain number of tokens will be generated at launch either through an ICO or an Airdrop.
This initial supply is called:
Users' activity on the platform is rewarded by giving out tokens. This acts as an inflationary element on the money supply. Since the inflated tokens are given out continuously for every user interaction, the money supply can be approximated by:
Where M(t) is the current supply at time t
i is the inflation rate
exp is the exponential function
Let M0=1000000, i=5% per year.
This means after 1 year, the money supply is given by:
M=1000000∗exp(0.05)=1051271
which is roughly 5.1% more, as expected.
After 5 years:
M=1000000∗exp(0.05∗5)=1284025
So after 5 years, money supply has grown by almost a third.
A doubling of money supply can be expected after 14 years.
It might be beneficial to initially have a higher inflation rate and decrease the inflation rate slowly to prevent hypergrowth.
For example, inflation in the 1st year could be 15%
in the 2nd year 10%
in the 3rd year 5%
Exact parameters would need to be determined.
Our formula thus changes to:
M(t)=M0exp(i(t)t)
where i(t) could be any function.
Initially, the token might not be worth much, so we need to incentivize the early users by giving out a sufficient number of tokens.
When the price of the token increases, the reward per action increases accordingly.
For example if the price of the token is worth 10x as much as before, we could halve the inflation rate from 5% to 2.5% and the user would still receive 5 times as much money per action as before.
Of course, this also depends on user growth. When the price of the token increases dramatically, it is likely that more users will be active effectively reducing the per-capita mining power since the reward pool is shared by all users. In this case, it might not be desirable to decrease inflation.
This is a very complex interaction and is hard to predict.
When data consumers buy data, the tokens will be burned. This adds a deflationary mechanism. The effective inflation rate r(t) is thus given by:
r(t)=i(t)−d(t) where d(t) is the deflation rate at time t. Our formula thus changes to: M(t)=M0exp(r(t)t)=M0exp((i(t)−d(t))t)
Observation:
This means our initially inflationary system can become deflationary if d(t) becomes greater than i(t). This is an economically desired outcome.
If the token price increases, the fiat price of our data sets should not automatically increase.
Therefore, we denominate the price internally in fiat, but display the price in SLANT tokens on the website according to the current market price.
That means the price in SLANT will fluctuate from day to day, but in fiat terms it does not change.
This reflects the change in purchasing power the SLANT token is subject to.