As a result of endless online debates in the Gulden community the GAB (Gulden Advisory Board) recently asked the development team to investigate a few options to cut rewards and total supply.
The development team swiftly reacted and agreed upon reducing the Total Supply to 750 Million coins from 1,68 billion. This was done a few weeks ago and already had a, for many, pleasant uptick in price as a result. The narrative is that with a lower total supply, the amount of circulating supply is bigger now (percentage wise), creating more scarcity in line with the project wanting to become not just an easy to use payment system, but also a store of value for generations to come.
The GAB requested the development team to also look into the rewards. The argument here is that the daily inflow of coins is to high and not supporting the scarcity model. To increase scarcity the rewards must be lowered, the GAB and community argued.
The current rewards are as follows:
- Mining 50 NLG
- Witness 30 NLG
- GAB rewards 80 NLG
- Total: 160 NLG.
The GAB proposed:
- Mining 20 NLG
- Witness 30 NLG
- GAB rewards 70 NLG
- Total 120 NLG which is a 25% reduction from current situation.
The development team was unable to respond immediately to above request because they where working on the Witness synch update and promised that it needed thorough investigation. This because changing mining and witness rewards could implicate changes to the safety of the coin.
Today the GAB and community received a proposal for reward changes from the development team.
We understand the community’s wish (via the Advisory Board) for a specification for Gulden that fits in with the Store of Value concept. A specification that creates less selling pressure and more scarcity. We approached the proposal with this in mind and looked at what was possible. We came to the conclusion that the proposal did not go far enough and that if we were to make such a drastic change, we should do it properly from the start. So that in the future there will be no desire to change it again. Not even for future Gulden owners. That is why this is our proposal:
- Mining 10 NLG
- Witness 15 NLG
- GAB rewards 65 NLG -for listings/marketing/dev salaries/ help to 3rd parties etc..
- Total 90 NLG, a reduction of nearly 45%!
More mining rewards than necessary is not just excess energy consumption but also inefficiency in terms of network running costs.
The overwhelming message from the community has been that they think that lower running costs will be beneficial for the price, and price in turn affects security so I (Malcolm red.) think it would be short sighted to ignore this. Should they be right then after the equilibrium settles the number of miners will be almost identical. Should they be wrong the network still has the capacity to handle that while remaining secure, even if not 100% ideal. Lower mining rewards can also mean that it’s less profitable for people who try to run large setups and more profitable for people who run hobbyist setups off excess (free) electricity that they have from their home solar setups.
In the longer term, we will investigate whether a variable mining reward is possible that is more linked to value. If the value is higher, the reward can be reduced, so that the network remains efficient and energy consumption low, even at a higher value, and the selling pressure can be reduced even further. This is something for the longer term, as it obviously needs to be researched and tested.
For the full proposal read this PDF from the Development team:
P.S.: The GAB has confirmed that they support the proposal! So the changes in rewards will be implemented in Q3 in one big update/fork as is the witness synch functionality.