Earlier today the burn rate hit 10 Trillion Cycles per second. It got me wondering, is there an optimal burn rate for the network? Deflation of the ICP token is good for holders, so perhaps an ideal burn rate would stay relatively stable at a point where theres a good deflation rate (maybe 1% a year or something?)
I’m not sure if theres any major negative effects of having a high cycle burn rate, but rampant deflation is probably not ideal just as rampant inflation isn’t.
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As far as I recall, the inflation goal for ICP by Dfinity is 5%. Most economic systems do not benefit from deflation, because it encourages saving (sitting on wealth) and discourages entrepreneurial activity (risk taking).
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Deflation is bad for currencies, but definitely not bad for crypto tokens. In economies at large, spending is inflationary (more demand for goods and services drives up prices). On the ICP, saving (staking, getting voting rewards) is inflationary, while spending (cycle burn, transaction fees) is deflationary. In the economy at large more deflation is worse, on the ICP network, the more deflation the better.
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I agree with @Moschus that deflation is often pretty good tokenomics. Deflation is good for investors and more money pouring in means more demand for dapps and innovation which drives network growth.
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Agree with @Skyclad0bserver that deflation is good for ICP, look what happens to Bitcoin! Its price depends on global monetary cycles (money stock/flow) and trust in BTC or seasonal fear/greed.
Currently BOB is just facing the first distrust symptom like bitcoin in the early phases.
People will flock in again as soon as they see there is growing interest in BOB again.
I’m curious will BOB survive the first halving!
If so, it forges a symbiotic relationship with ICP and Dominic’s vision of Blockchain singularity becomes a reality.
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Bob is facing distrust because its closed source and likely doesn’t actually do proof of work like it claims to on the site. Bitcoin was never closed source and people even in 2009 could verify how it worked.
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Agree, I’m for open source too. How can one check that proof of work is not done as claimed?
Has dfinity team managed to get in contact with Bob dev person/team?
Interesting, just read the whole thread in the other topic “Introducing BOB” and didn’t find any single response from @bobdotfun to any of the other members’ concerns!! That’s a red flag.
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