Proposal: Transition to a Tail Emission Model. The Problem.

12 Dec 2024, 12:54

Proposal: Transition to a Tail Emission Model The Problem The current emission schedule for ALPH spans 82 years with a hard supply cap, leading to two key challenges: 1. Perception Issues: The gap between circulating supply and fully diluted supply (FDV) creates skepticism among newcomers, as many don’t fully understand the emission schedule. This perception gap can hinder adoption. 2. Sustainability Concerns: Fixed supply models, like Bitcoin’s, face long-term risks. Once emissions end, reduced incentives for miners may compromise network security. Proposed Solution To address these challenges, we propose transitioning to a tail emission model similar to Monero or Ethereum: - Remove the Hard Cap: Allow token issuance to continue beyond the 82-year schedule. - Steady Tail Emission: Maintain the emission rate already defined for the final 78 years of the current schedule. Impact on Tokenomics - Short Term (Next 80 Years): No changes; the current emission schedule remains intact. - Long Term (Beyond 80 Years): Tail emissions provide ongoing rewards to maintain miner incentives and secure the network. Alephium’s unique deflationary mechanisms, such as transaction fee burning, PoLW burning, and contract minimum deposit locking mechanisms, may neutralize the effect of tail emissions over time, ensuring the system remains sustainable while preserving token value. Impact on Metrics - Fully Diluted Valuation (FDV): Aligns with the circulating supply, resolving the perception gap. - Max Supply: Platforms like CoinMarketCap and CoinGecko will show the max supply as ∞, similar to Monero and Ethereum. Why This Makes Sense This approach aligns with our roadmap and ensures long-term sustainability by adapting to evolving market needs. Tail emission models, used successfully by Monero and Ethereum, have proven to work well in production. Moreover, Alephium’s deflationary mechanisms provide a significant advantage, offsetting tail emissions over time and ensuring long-term value preservation alongside miner incentives. Even in Bitcoin’s case, advocates like Peter Todd are in favor of tail emissions: Lastttt We welcome your feedback and discussion to refine this proposal and ensure it meets the needs of the community and ALPH’s long-term vision.

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