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:
There is a better economic model (for example more funds (maybe even a charity), manual claims (like GoodDollar), etc).
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.
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.
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:
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
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.
@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.
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.
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:
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.
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.
I would prefer that we engineer the burning rather than issuance. The reason to maintain issuance is that there is a good reason to get in early, but it is not that huge, so it is fair to later comers.
And psychologically it just feels right to me that the issuance never changes. Burning somehow seems more ok to manipulate - can’t explain why.
My suggestion for a “small” change that will limit the supply (pr. person):
Add demurrage (tax on holding UBI). Burn this tax. Maybe 5 % annually (but applied more often).
It will fix the max supply pr. person which will happen when issuance equals burning. There is constant redistribution.
This could lead to a scenario where UBI beneficiaries transfer their holdings to a non-human wallet and lower that tax regularly. Not saying its an issue, just a possible emergent scenario, given that the constrain is on the amount of holdings on the beneficiary wallet.
I totally get that. I think that’s why My mind went to a tax when I first started playing with new issuance models! Something just feels wrong about an infinitely inflating currency, which is what we’d get with a constant inflation rate.
The way I am starting to mentally think about it is more as a % of the total supply. It makes a constant inflation rate the same as just redistributing a set % of the network each time step. I also agree that it isn’t as pretty as 1 UBI/person/hr, but it also makes sure that people who join the network in 5 years are still getting a fair slice of the pie.
Yeah, but this could be a problem with your proposal too
That is why I mentioned manual claims GoodDollar - Economic Model Explained - YouTube.
Instead of having to sell, buy or burn UBI to gain more (that if people need it I imagine would chose the first one more often), what if UBI drips in the bucket instead of directly on the account and with a button they can empty the bucket in the wallet. That would make people who want the money the most being benefited from logging in monthly/ weekly/ daily depending on how fast the bucket fills.
I’ll have to look into that mechanism… sounds interesting. Consolidation shouldn’t impact a flat tax model since it would apply to all accounts equally (humans and not). Still there may be a better way to reduce the impact using manual claims!
Rune Christensen (CEO, MakerDAO) wrote in an AMA some years ago:
Dai is right now pegged to the USD because it’s the most used global currency and because of its familiarity. However it has always been the plan that the core stability function of Dai should eventually become independent from USD and instead represent pure stability in terms of consumer prices - a CPI basket. There will still be a USD version of the stablecoin available of course, but by having a CPI pegged stablecoin at the core of our system we would be able to resist any sort of external meltdown, such as the USD or another national currency collapsing.
Other than the familiarity of USD, the other big hurdle is that creating a CPI basket is very difficult. Our approach will be to utilize the decentralized governance process that is also used for risk assessment of Dai collateral, so MKR holders will ultimately have full control over the composition of the CPI basket by working together to create an open source scientific framework. It is obviously very ambitious and won’t happen until several years into the future.
Another interesting intiative
Maybe we should have another workshop on tokenomics, with the focus on coming to a proposal.
@paulaberman: You did a great job at framing the discussion a while back. Perhaps you could host a discussion now that there seems to be some momentum for change.
Thank you Mads. Unfortunately I don’t have the bandwidth right now to organize something like this again, but sharing the workshop report me and David Feld wrote, in case it helps: $UBI issuance rate - #12 by paulaberman
All the best,
Paula
Ok, I have tried setting up a Pol.is conversation to map out the groups of opinions. I added some ideas from this thread to the conversation there. Please, everyone with an interest in this topic - go to pol.is and vote on the ideas and add your own.
I may also post it to the Telegram group when we have a few more ideas submitted to the pol.is.