Economics

[royokello]

What makes a good economy?

• Stability & Growth

What is Stability?

• Inflation of Transaction Values. Storage, Compute & Networking and other Network Service Prices are encapsulated,

What is Growth?

• Number of Transactions per Block & Amount of Solar Used per Block

How to achieve a good economy?

• Influence the amount of Solar in Accounts & The Treasury

How to influence Account Balances?

• Rates paid to Balances in the Treasury
• Rates paid by Borrowers, Fully Collateralized by Tokens (Collateral Portfolio maintains Mean-Variance Optimization and Maybe some Risk Aversion & Hedging)

How to determine Rates algorithmically?

• The Taylor Rule (maybe)

Another Reason Rates?

• Perpetual Storage Contract Costs are determined by Rates, Discounted Future Cash Flows the system pays to Storage Providers

How are Storage Fees determined?

• Storage Providers submit prices and space-proofs

What about Compute & Network Fees?

• On-chain Compute is through Auction while off-chain fees are privately negotiated and automatable. Networking Fees are also privately negotiated.