Not all of the burned ICP (72K) are due to compute / storage cost. Most of that (72k) is due to Sonic. I think that real number range is 220-1000 ICP spend to burn 1 ICP for compute/storage.
oh dear that certainly means there is some imbalance that needs to be corrected.
how do we get more sonics 
Most of that (72k) is due to Sonic.
How do you know that? I’m curious.
looks like the nightmare scenario is unfolding $7 today … god only knows how far all this will sink 
let’s hope we don’t need cartloads of ICP to buy bread
Regarding this mythical death spiral…
Let’s say that hypothetically, the average ICP price over the next month was $3. That would result in higher node provider rewards than in the past, but the total rewards (node provider + voting) would create approximately the same level of ICP inflation that we had last summer. Even if the average ICP price was $2, total rewards would be only about 8.5% higher than they were last August.
The reason for this is that voting rewards decrease over time (see attached image), so voting rewards are significantly lower now than they were a year ago, and they will continue to decrease over time.
I won’t attempt to perform an in-depth analysis, as @Kyle_Langham so expertly does, but there are other factors at play regarding sell pressure as well, such as the amount of ICP dissolving off of the NNS. As his Supply Analysis Update article describes, we are now entering what he calls “Zone 2”, where the amount of ICP dissolving off the NNS will significantly decrease.
In summary, even if the ICP price were to drop significantly from its current level, down to where some people would be yelling “death spiral”, the total amount of ICP entering the liquid supply each month could very well be lower than it was a year ago.
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I should have been more specific. Sonic burnt ICP for cycles to create an AMM. By Jan 2022, they burnt 33k icp.
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but what happens when icp gets to 50 cents? 5 cents?
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why are you rewarding nodes that haven’t been deployed and aren’t doing anything… i don;t understand. how do i get on this list of node providers that get paid without even providing a node or validating transactions?
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rewarding nodes that aren’t deployed, what a joke. It’s literally impossible to justify that.
The short answer here is: it’s a temporary measure. It’s a legacy from bootstrapping the network. It’s phased out and will not be done that way going forward; all the nodes that are paid are currently in the process of being provisioned and are planned to be added to the network in the course of this year.
So why did we do this at all? The answer is: Bootstrapping a decentralized system is hard. The IC needed nodes to run on from day 1, decentralized to the best-possible extent. Independent NPs accepted the risk of investing into node hardware and data center contracts prior to the network even being operational. It’s those nodes that stem from these pre-genesis times that do receive rewards right now, independently of whether they are actually contributing to any subnet.
Now there are of course questions like: Why are so many of those nodes not up and running after one year? To which IMO the answer a mixture of the IC anyway not running at capacity right now, and consistent improvements of the rollout process that make the process much easier now than it was a year ago.
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It makes complete sense that you would need to do this in order to bootstrap the chain at launch.
Also if rewards really started to run away, wouldn’t we as a community consider using the NNS to temporarily off-board node operators and shrink the network to cope with the inflation? I feel like there are many options available to us in that situation, it wouldn’t just happen without us being able to intervene.
For example, if node provider rewards were running away at horrible rates, we could shrink subnet sizes and possibly even remove data centers, all temporarily, to the minimum amount needed to keep the current canisters running. Then we could very slowly add new operators as ICP price improves and as demand increases.
We might want to think about these kinds of contingency plans just in case.
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I agree 100% with @lastmjs
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Yes, I agree that such actions could be taken if this ever became a real concern, like for the “What if 5 cents?” scenario asked about above, where the total market cap would be only about $24M. Personally, I’m not worried about it.
All blockchain networks need a model for incentivizing node providers/validators/miners, and those models are going to be challenged when the overall value of the network drops very low.
I think the ICP node provider rewards model is good. If some who are spreading “death spiral” FUD had their way, node provider rewards could already be lower than node provider expenses, in which case everyone might have turned off their nodes by now.
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I also agree 100% with @Dylan
What charts? I don’t think this is the right avenue to spread FUD. Perhaps Twitter and Reddit would suit your purpose better.
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no fud, just thought the “8 year gang” deserved some apologies (or thanks for providing exit liquidity).
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we literally just watched a marketcap drop from ~30b to 45million in days because of a runaway inflation mechanism, so to think it could never happen to the IC is naive as long as such a mechanism exists. Why wait till it becomes a massive issue instead of cutting nodes now so it never becomes one?
In fact, why don’t we cut all of the dfinity appointed nodes and send them to the back of the line of the nns approval process like everyone else? can’t really claim any of those nodes are decentralized when they were all appointed by the central foundation, so any claims of decentralization are tainted as long as they exist
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Regarding inflation: I don’t think the cases are comparable. Node rewards are paid once a month, based on the average ICP price over the last 30 days. This also means that even a few days ahead of the reward payment, we can make very good estimates about the expected increase and the NNS still has enough time to react, even in the context of major market shifts. I also really suggest reading Kyle’s excellent post, where he sets things into perspective.
Regarding re-validating pre-genesis nodes: I think that is an interesting idea. For bootstrapping, the Foundation validated the NPs because, well, the IC did not exist yet. Going forward, this task is squarely in the realm of the decentralized governance system. Re-validating the existing NPs is an option we should discuss, since I agree it improves the decentralization guarantees. CC: @Luis
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