But don’t forget, the purpose of UBI is to provide a universal income to everyone. It is not to be solely a speculative crypto.
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I totally agree, but the two go hand in hand. With the current rate of 1 UBI per hour it’s kind of a black hole to invest or hold on to the coins right now, as any holding gets heavily diluted the more people join. Which is unfortunate because the underlying tech is awesome and could easily achieve a multi billion $ marketcap.
Having a fixed rate of 1 UBI per hour isn’t really doing anybody a favor… As a recipient I’d rather get like 0.142 UBI at 50$/UBI instead of 1 UBI at 0.03$/UBI
I understand what you mean. I suspect this issue was discussed long and hard when the tokenomics were being decided. No doubt it’s in a white paper somewhere that I haven’t read. 
The decided path for the developers is the Vault where you provide DAI at 7% staking rate, you receive 3,5% and you donate 3,5% for the burning of UBI’s. The front faces of this project must increase the public relations to get more and more funds to this vault.
Being that PoH is a DAO there isn’t really a decided path or “developers”. Several options are being pursued by different contributors.
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The vault was spearhead by @santisiri and is a major part of the way forward. It is gaining steam, the $ubiDAI already has over $200,000. It is believed that $ubiETH deposits will grow even faster. We could always use more marketing.
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Another solution being pursued is issuance. Proposals for changing issuance are being worked on. This is taking some time because crypto economic experts and investors are being included.
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Several utility apps are underway. We are supporting devs building PoH/UBI use cases. One I am excited about is @juanu’s Posta (previously Humanitweet). These projects will support by using UBI as the currency and burning part of it.
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Many other ideas are being vetted - I don’t want to share prematurely because they aren’t mine.
All of the above are being lead by a mix of humans. A thriving UBI will be supported by many solutions.
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Hello, fellow Humans (I swear I am even though I’m not verified!),
Originally made a new topic before realizing this should go here 
This post is lengthy as it is an exploration of an idea… so first TL;DR: I am concerned that a flat-rate issuance model with no formal mechanism to cap supply doesn’t give UBI a sustainable future. I This post outlines some of the number I looked at for the current UBI distribution method and an alternate method with issuance proportional to population. In the alternate model, issuance is funded it through a flat tax rate on all accounts and supply is fixed. It acts as a fair distribution model that trends toward equality over time. Additionally, humans could be incentivized to hold their tokens despite the tax by rewarding them 1:1 with a non-transferable token, like a reputation token, for every UBI taxed.
I was ecstatic when I learned about this project a few weeks ago. I’ve followed a few different projects trying to establish a Proof of Humanity, but this is the first I’ve seen that actually seems sustainable (outside of the current gas prices). My biggest concern after reading and learning more about the project is how distributing value is sustainable over the long term. Regardless of what we want out of UBI, math doesn’t lie and an infinite-supply currency will continue to have less value to other fixed supply items. I am worried that the current model puts a majority of that inflationary burden on the future in the form of sustained token price decreases. What if we could establish tokenomics that would instead explicitly discount the past token supply to keep the future constant?
Currently, UBI is mostly reliant on decreasing supply through burning. I’ve seen past posts here and even a tweet from Vitalik that points out the need for more “sinks” for the UBI token to maintain its value. In my view, these sinks are two-fold. “Temporary sinks” that freeze or take tokens out of circulation by various use cases (i.e. voting mechanisms, staking, other social layers) and “permanent sinks” like burning or recirculating tokens into issuance. What I am going to discuss below is more about “permanent” sinks related to the token supply dynamics, though (as I have seen addressed in other threads) utility on the network will be key in keeping up demand to make any sort of UBI model sustainable.
As a start I want to share some simple modeling about how the inflation rate of UBI changes with time and population growth on the network. POH has one distinct advantage when it comes to exploring different token models - we know the number of registered humans on the network! While this isn’t a perfect proxy for demand, I imagine it is a better direct proxy than we have for most other currencies. In figure 1, I generated a really simple model with 3 periods of growth (accelerating, flat, and decelerating) and made a few observations about the inflation rate (both supply inflation and adjusted per capita). Over time, the inflation rate of the total supply steadily decreases as the time passes. More interestingly, the inflation of supply per capita of every registered human (adjusted for our demand proxy) is greatest when the total supply is low and population growth is low. It is highly-dependent on both time and population growth. Somewhat counter-intuitively the inflation of supply per capita actually decreases with higher population growth. As more people join the network and there is more demand the amount of tokens per person is reduced relative to the inflation per capita at a slower growth rate. This trade-off is interesting, but seems to be reliant on growth to sustain value.
Fig. 1 - Very simple model of current UBI future issuance to test sensitivities to time and population growth over a period of 5 years. Assumptions: 1 UBI per hour, initial population of 10,000, and initial supply of 10,000,000. Inflation rate is front loaded and becomes small as time increases. This could hint that slowing population growth (as proxy for demand) may exacerbate the supply issues later in the life of this project
So, this is what I see as the problem: If the inflation rate per capita is very positive how can we expect to a flat rate issuance to serve its purpose of issuing value to humans over time?
Looking at these metrics got me thinking that alternative supply models could help to limit the perceived inflation rate. What I eventually determined is that the most elegant solution to this problem could be a fixed supply currency that is constantly taxed at a fixed flat rate with all the proceeds distributed equally amongst all humans. This effectively takes the future inflation problem and discounts account values to account for the impact. The tax rate effectively becomes the rate at which you devalue issued tokens to issue new ones and can be scaled higher or lower depending on whether the community values savings or fair distribution more. For completeness, below are the 4 models that I experimented with before ending up on this taxation model:
- Current model (fig. 1) of no supply limit and constant issuance (1 UBI per hour)
- Model of fixed supply and constant issuance (1 UBI per hour) supported by a changing tax on all accounts: has a significant issue that the tax (or forced burn rate) grows very high as the population gets larger.
- Model of changing supply (proportional to population) with a changing burn rate to support constant issuance (1 UBI per hour)
- And finally, fixed supply with variable issuance and a fixed tax rate. Issuance is determined by the tax rate and number of humans as
total supply * turnover rate / population
where the turnover rate is the same as a tax rate. I like turnover because it makes it clear that the tokens are being reissued immediately. Tables 1-3 show a couple very simple examples of how this mechanism plays out with multiple accounts. This mechanism of UBI + flat tax rate acts similarly functions like an effectively progressive tax on all accounts to sustain UBI issuance to all humans. The tax/turnover rate could easily be set by the DAO (e.g. 0.00120274% per hour or 10% per annum).
Table 1 - Assuming a fixed supply model where each account is adjusted at each time-step by the formula “new account value = previous account value * (1 - tax rate) + total supply * tax rate / population”. This formula is assessed to an uneven distribution over 5 time-steps assuming a tax rate of 10% per annum.
Table 2 - Effective tax rate for each account per time step calculated from table 1. This makes it clear that the simple model of UBI + tax is similar to a progressive tax system with a negative income tax.
Table 3 - Second example model showing the impact of the same model used in table 1 on a population that had an even distribution but then doubled in size.
The final model is really interesting because it accounts for the time aspect of the UBI token and population aspects of the UBI network directly in the issuance model. Time is no longer an issue because the supply is fixed and each human’s new share of the network is funded by taxing the existing network. Another convenient aspect is that the issuance amount is inversely proportional to population and should scale with potential demand - if demand is high, price is high, less issuance is needed.
Lastly, one possible method to incentivize holding that would be possible in this system (and has been discussed here) is to introduce a second non-transferable utility token that is accrued 1:1 with the amount of UBI taxed from an account. This “reputation” token could potentially be used (staked, delegated, or burned) as a utility token for applications and would provide an incentive for a user to allow their UBI holdings to be taxed.
I believe UBI is bound to have a value trade-off over time - it will either be expressed as inflation or we can explicitly time-discount each unit of account in UBI equally and treat every issuance as a fresh start. Of the token models I played around with, this issuance/taxation model seems the most simple and most elegant, but still adds complexity to the system, especially with the addition of a second token. Will be curious to hear feedback on this spitball idea and I’m excited to be part of this fantastic community!
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Hi @armstrys, welcome to the community!
This is a very interesting post. We’ve been thinking about potential taxing to the token since we’ve seen simulations that even though you might have a fair distribution, over the long term whales end up monopolizing the market.
The idea of using a tax to re-issue tokens as a way to combat inflation makes plenty of sense to me. It would be interesting to see this formalized into a UIP and specifically discussed.
Having a cap is also interesting in the sense that would help meme out there in a similar way to bitcoin. Bottom line is not how many UBIs a person receives, but how much value ($$$) a person gets. So I’m definitely open to explore this.
Do you have this model on an open spreadsheet so we can tinker with it?
I think that the time to improve our issuance model has come. Today we are barely 10k humans, but we must be ready for 100k which could happen sooner than we expect it.
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Sure thing! Very simple spreadsheet here. Let me know if you have trouble accessing it - I added a short page up front with the formulas since the model would be very easy to rebuild in a more flexible way for people who do this more often than I do!
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Hi Armstrys.
From an economic perspective, taxation and inflation are the same.
I.e the economic effect of reducing balance of everyone by 10% is the same as creating an extra 11% of tokens.
The former allows interoperability with other apps (exchanges, bridging to other platforms, etc) while the later breaks it and makes accounting way harder.
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That trade-off makes sense to me, but for the two to really be equivalent don’t you need to also inflate the issuance? Without doing that the issued value will just keep dropping won’t it? You’re probably right that there is a much simpler solution in terms of accounting, but it seems to me that the trade-off is accepting a forever dropping token price and increasing issuance to balance it out.
If you want to avoid the issued value to drop, you can increase the issue value (but that will decrease the price even more), actually that is what the Duniter project is doing.
If your UBI drop by 10% or if 10% of your UBI are taken away from you by taxation, the result is the same.
It does seem that trying to keep UBI issuance value up against inflation is going to be a never ending battle. I think the difference I see between a tax and accepting inflation is psychological. Stable numbers and a tax might be more acceptable to the general population than an extremely inflationary currency even if they are mathematically the same.
That said, I totally understand that the logistics and interoperability are a huge challenge, especially since infrastructure for the token already exists
@clesaege it took me a while to wrap my head around the implications of your comments but I finally got there. I think the model above actually has a mathematical equivalent without tax, which is setting a constant inflation rate through the DAO and dividing the total issuance among all people. Just wanted to add that comment here for completeness and thanks for the feedback!
Isn’t the best for the longterm to pause the dripping of UBI? Until:
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There is a better economic model (for example more funds (maybe even a charity), manual claims (like GoodDollar), etc).
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It reaches more people, specifically in lower socioeconomic status. I think there is not only the barrier of entry fees, but more importantly the technological one, that is composed of a complicated procedure to enter PoH and knowing how to fully use a crypto wallet without a clear, translated explanation of all. Luckily this would lower itself as crypto gains popularity, but in the meantime I would imagine that UBI is being taken mostly by geeks with free time (and I think they’re aslo concentrated in Argentina lol).
Of course that the fact that UBI will not get distributed yet and we don’t know if it would be able of return the initial investment should be really clear, but I’m not sure if the second thing is already happening.
The thing I’m pretty sure is that a project in crypto in which you have to pay (and i guess give up a little of privacy) to be a part of and it promises you more money without examples of people in poverty that are getting helped, a deflationary token and a lot of people in pending/ vouching phase that are not being allowed to enter for the people that benefit from that is not the best look.
I prefer a longtermist approach, and the look of PoH as a platform growing little by little, without the pressure of entering before the token devaluate itself, via social media or mouth to mouth, by people that can afford it or are donated to, with a promising future of democracy and UBI.
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Hi all,
I agree with Patodesu. I think we should stop the issuance of UBI until we figure out a way to improve its tokenomics.
In regards to that, I believe that one just cannot generate value out of nothing and distribute it. As the many argentinians involved in this project probably already know, financing the spending (ie. UBI) without taxation leads to ramping inflation and that is what we have seen so far. So we should find a way to get that taxation (or donations). Dreaming for the long term, it would be amazing if, say, 1% of the Eth burnt in every tx were instead destined to buy and burn UBI. Of course, that is something that should be discussed in another forum, but maybe we could twist that idea and fly lower for a start.
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I believe that stoping issueance would be a hard decision. We could potentially throttle down the issueance without completely stopping it.
Following are some thoughts and ideas based on the current UBI contract, but first, some key points to take into account:
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The dripping works thanks to a function on the contract that allows to accrue UBI from the last time the account’s balance was consolidated. (See
[getAccruedValue](https://github.com/DemocracyEarth/ubi/blob/6c266b93a570ab569a544d4d39c7c2eec3a426fa/contracts/UBI.sol#L283)) -
I like to think of buckets 🪣 on the UBI contract as the place where the accrued value (pre consolidated) is stored, since it actually works as such (storing driped
UBI). -
Consolidation happens when an account transfers
or burns 
some UBI. (This empties the account’s accruing bucket🪣) -
On the current UBI contract, there is 1 infinite bucket per human (
🪣🧍). The accrued value never stops . -
Using EIP-1559 as inspiration: we could implement some sort of “burn on issuance
” where the burn actually happens on the accruance under some rules.
Here are thoughts on doing that:
Idea 1: MAX CAP ON BUCKET 🪣🛑:
Put a max value to this bucket accruance so they can only continue accruing as long as the user has done some sort of movement on their account to consolidate the balance (which empties the bucket).
This would actually play as burning 100% of the ubiPerSecond as long as the bucket is fill to its max.
Idea 2: ISSUANCE AS A FUNCTION OF ACCRUED
Accrue on the buckets with a function that decreases the amount accrued per second, as the accrued value increases.This would play as burning UBI: The more value is accrued on the bucket, the more is burned and the less is accrued.
I will leave the math to the experts for this one, the following is just as an example, not to be taken as the actual implementation: accrued value = sqrt(block.timestamp - accruedSince ) * accruedPerSecond
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Interesting! I need to go look into the smart contracts (and learn more Solidity), but it definitely seems like increasing issuance by targeting an inflation rate could be the easiest way to effectively apply a tax.
Then the biggest battle to fight becomes education around why UBI needs a constant inflation rate and what it means - lower token price, larger issuance but constant wealth redistribution. Added a tab to this Google Sheet showing what a no-tax model would look like with a constant inflation rate.
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@juanu these are very relevant approaches. i think both avenues make sense and are worth exploring on a UIP.
some sort of bonding curve applied to the accrual could work very well.
also, we could take uniswap price data as an oracle and get a bonding curve applied to the accrual of ubi dynamically adapt… turning ubi effectively into an algorithmic stablecoin like AMPL or others.
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Yes, if you switch to a fixed issuance model (eg. 10,000 tokens per hour, divided between however many users there are), then that isn’t quite the same thing as an ongoing tax. The inflation in the money supply (effectively the “tax rate”) will start out super high, but slowly asymptote to 0 over time.
Inflation eventually asymptoting at 0% may be good news for early speculators, but it totally defeats the purpose of an UBI, because that means you have 0 value to redistribute! So instead, what you need to do is slowly increase your issuance each year, so that in the long term the total issuance is a small, flat percentage of the total supply. That issuance is your UBI budget.
I have a post here where I demonstrate that if you start with any arbitrary issuance level and then increase it by 2.34% every year, you get a long-term inflation rate of 2.28% in the money supply.
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I’m kind of skeptical about algorithmic stablecoins in general. Maintaining a peg to a currency you don’t control is a really hard thing to do—every central bank that has tried it eventually had their peg broken, and DAI came so close to breaking they had to move much of their collateral to USDC, turning them into a backed stablecoin in practice.
But one idea I’ve been musing on that I think tries to solve the same problem is a dynamic issuance rate based on the price of a basket of goods. It would work kind of like this:
- Decide on a target annual inflation rate (eg. 3%).
- Define a “basic goods basket.” This could be something like the population-weighted average price of shelter, food, and maybe basic medicine across a bunch of representative countries.
- Track the price index of the basic goods basket in UBI over time.
- In months where the basic goods basket is more expensive than average (either because UBI has dropped in value, or some crisis has caused goods to become more scarce), increase UBI issuance, up to a limit of eg. 5%. In months where the basket is cheaper than average, drop UBI issuance, to a limit of eg. 1%.
This proposal should look pretty familiar if you’ve been exposed to macroeconomics – it’s basically an algorithmic form of stimulus spending. There’s a bunch of hand-waving here (particularly around how the basket of goods is defined, and the correct relationship between basket price and UBI issuance to ensure the long-term target inflation rate is hit), but I think the principle is interesting.
I should note that this doesn’t try to solve the “coin loses its value” problem, it’s instead trying to solve the “UBI isn’t a dependable source of income” problem. It actually makes inflation worse during a crisis, since issuance increases when the UBI token falls in value. But it should make the actual spending power of your basic income somewhat more stable over time.
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I really like that you explicitly brought this up… Unfortunately, due to the nature of UBI these two are always going to be issues and the solution to one is often the cause of the other. Probably helpful to keep them broken out explicitly when discussing these things!
At risk of sounding like a pessimist, I think one likely outcome is that UBI has to forfeit the “maintains value over time” aspect and embrace the ability to give everyone income that can be used in the short term. In other words, the human-agnostic chains (ethereum, bitcoin) are the savings accounts and UBI is fiat (inflating away but actually distributed and governed fairly this time).
I do think the AMPL model of using an oracle to target a peg is interesting - actually, the UBI implementation could be more interesting than AMPL since POH can be used in the model. AMPL basically just puts the market cap volatility into supply instead of price and doesn’t really impact account value. That said, I think moving away from 1 UBI/hr will already be a tough sell and I’m not sure too many layers of complexity will help in the short term.