Plan to reduce inflation on the MINA token - burn mechanism on 40% of transaction fees, quarterly burn events and fixed max supply

Hi everyone, I have been following Mina Protocol for a year, I believe it is a project that has a lot of potential, even if the plan is very ambitious and in an experimental phase at a macro level in the crypto landscape.

Unfortunately, too much inflation on the token is killing both the token and the project, and only the devs and validators are the ones that are gaining from all of this. Above all, validators are asking for even more tokens with the sole purpose of dumping them to investors’ heads.
All this does not allow the growth of Mina, as it only makes it a deceptive protocol done only to allow the validators to make money.

I saw that a proposal had already been made to reduce inflation for about a year and it has not yet been approved, moreover I see that in the various social networks, even on Twitter the discontent of the whole community about how things are going is very strong.

I spent days also reading the comments of the validators, but even if you then go into the technical details on their part, I only saw excuses to keep inflation high so that they can have as many tokens as possible to dump.

All this does not help the growth of Mina Protocol.

We need to find a middle ground that gives the right rewards to devs and validators, but at the same time we also need value for investors, otherwise the whole project will be seen as a scheme designed to make money on investors instead of creating true value.

To do this, it is necessary to give value to the token by drastically reducing inflation.

My proposal is to mix a burn mechanism that brings together what, for example, Moonbeam with the GLMR token and Binance with BNB.

Then burn at least 30-40% of transaction fees (Moonbeam burns 80%), and in addition to do quarterly burn events on tokens in general in the treasury (as Binance does).

Furthermore, I think it is essential to achieve a fixed max supply of 1 billion tokens and no more.

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@evan @garethtdavies what’s your take on this idea?

Upp. Agree, I would prefer even less max supply than 1 bil

Validators don’t make money figment recently dropped their archive node so wallets like auro etc. stop displaying new transactions. I am always against high inflation which can be seen in any comment I make. I am also against pos, which doesn’t make much sense considering my position as a validator but validators making money statements is not that correct. There are few earning much more than they spend but you need to understand there is a cost to everything. Considering standards around 3000 USD is the lowest operational cost for a validator. While you can drop it to 2000 by trying your hardest. Right now only validators with 5 million and 10% fee make about 4000 USD. According to staketab we have only 11 validators above that level. Validators also require profit btw. That’s why we have sub-optimal setups majority of the servers are concentrated at hertzner to cut expenses to min so they can stay above. So validators making money argument is not that true and they should technically otherwise we won’t have a functioning network. With the fork drop, even some of these top 11 going to have some issues. Not to mention there are parties not just running validators but doing much more in the ecosystem and these stake income help them with these expenses. Wallets like auro clor, gareths and staketabs explorers are mostly known products. Few of these products were using figments data hub for mina which provides historical data. Figment as 3rd biggest validator on mina closed that service.

We didn’t sell a single yet and we didn’t even earn anything from being validator since we are 0%. We have money but that’s not something sustainable so validators need to sell to cover their expenses because everything costs money and with a recent price increase on everything it’s become much hard to sustain.

We can burn 100% of the tx fees it won’t change a single decimal on the inflation rate

That’s just wishful thinking there is no guarantee BTC will stay at its fixed supply cap. If people don’t use BTC and transactions fees won’t be enough to cover tx fees at a certain point they will require to fork and increase the cap so that’s just a pr thing from my point as someone in this industry for years. I never see a single chain stop at their “fixed max supply” when they reach to that level.

The growth of mina depends on various aspects but mainly mina foundation, o1labs and partners working on mina. From foundations and 01 labs point. Their aim is to build a sustainable ecosystem with their vision. Not increasing the price of the tokens. The sustainability part doesn’t happen with high inflation or low inflation so it needed to get balanced and planned well. In the case of a token price increase, they also benefit because since they hold high amounts they will have more funds for future endeavours but that’s not their aim. Not to mention that should not be a way for any project. If some projects are actually trying their most to drive their token price higher and take actions according to that. The ones who gainst the most out of it always be the early investors, validators, foundations etc not the investors as the community you stated. If you just check recent collapses and everything there is only a single common thing between all that billion dollar blowups they all heavily rely on their token price and try to increase their token price.

I wrote all these as technically someone on your side because I am mainly against the whole structure of the pos. That doesn’t mean it’s simple like reducing some number or fixing some other number to a limit. Nothing is that simple but if something is very wrong and an outlier stage(for example total inflation being at 50-200% range and known for a fact it’s going to keep going at that rate for a year or something) it should be acted on faster. At this stage, I don’t think it’s the case for inflation. These take a long time to set and adjust so they can work and become more durable. With the upcoming fork, the first adjustment will happen and we will see where it fails and where it works. Then some other adjustments will happen that’s how this process works. There is no single trick or magic wand fixing it all at once and covering all possible issues. There is always a trade-off.

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Thanks for the post, @CCRam, I’m looking forward to the discussions it brings!

Thanks for such a thoughtful and detailed post, @EmrePiconbello!

In case it’s not clear I never see fixed cap stayed for any other pos chains while btc has its use and structure not sure of the data of it since I didn’t look at them for a long while. It could cause a significant hash drop and a lot of miners might leave after block rewards end. Btc difficulty adjustment takes a long while so it’s likely that the transition period will be a bit hard for everyone in the process. But at some point, users who pay the tx fees and miner’s expenses will balance out at a certain level and there will be no more competition to increase the hash rate like right now. If at that level difficulty is high enough to sustain security for the chain then btc can sustain a fixed cap. From on-chain data closest chain which can achieve this is Ethereum and they did choose a much longer slow and more dynamic approach in the long run with adjustments, they could achieve something like a fixed cap. Considering ethereum burning millions of dollars of fees every day and still inflates. Everyone should have some data points to understand how hard to achieve this. While these are good goals for the future they should be considered at that scale. Right now nothing mina or any other pos network does can reach close to what happening there. The first ecosystem needed to build to have users and then improved for sustainability. Mina is at the start of ecosystem building stage.