Submitted by: BowTiedMooneeb
Decentralized CityCoins Activation Proposal We are drafting a proposal on a mechanism for the decentralized activation of new CityCoins. Specifically, we are proposing a curated city registry that lists potential candidate cities. For each new city that is registered, an escrow contract would be deployed that serves as a custodian of the funds that are committed to mining the new CityCoin at activation. Any STX holder can signal support for the launch of their city of choice by committing STX to the escrow contract for that city.
Activation Mechanics When a predefined activation threshold is met, the escrow contract would initiate the launch of the new CityCoin and deploy the STX into mining the new token. If that activation threshold is not met within a predefined the STX would be returned to contributors. The appropriate activation threshold and activation window are open for discussion. We would propose $2 million worth of STX for the threshold. The USD value of STX in escrow is now calculable within a smart contract thanks to the new STX price oracle from RedStone: https://stacks.org/redstone. For the activation window, we would also propose ~12,600 blocks which is the equivalent of 6 stacking cycles and approximately 3 months.
Escrow Mining Mechanics The way that escrow contract funds are deployed into mining requires some discussion. We have considered two approaches to how these funds are deployed, both with meaningful implications for any new CityCoin’s mining market dynamics.
A. Funds are deployed over a predefined number of blocks Under this option, $2 million worth of STX would be evenly bid over a predefined number of blocks. Let’s consider two examples, assuming the price of STX = $1.
Deployed over 1 cycle: If the escrow funds are deployed over the first cycle (Cycle 0), then the escrow contract would bid ~950 STX per block for 2100 blocks. This is a seemingly high bid, and exposes city activation contributors to the risk of overpaying for blocks.
Deployed over 10 cycles: If the escrow funds are deployed over the first 10 cycles, then the escrow contract would bid ~95 STX per block for 21,000 blocks. This bid could potentially be too low, exposing city activation contributors to the risk of sub-optimal stacking yields relative to more aggressive early miners.
In both cases, early supporters of a new CityCoin that contribute funds to the escrow are taking additional risk (compared to other miners that do not escrow) by locking their STX for up to 3 months and deploying across a fixed number of blocks into an uncertain mining market. Option B below is an attempt to mitigate these risks for early supporters of a new CityCoin activation.
B. Escrow contract matches total bids per block until escrow funds are depleted
In this case, total bids from miners for a particular block would be matched with funds from the escrow.
- Let’s assume total bids for a particular block are 100 STX. The escrow contract would then match this bid and the total bid for that block would be 200 STX.
- The long-term outcome of this approach is that early supporters that staked their STX on a new city activation would receive close to ~50% of all new CityCoins until those funds are depleted.
- The % of the total bid that the escrow contract matches could be modified (i.e. instead of matching miner bids 100%, it could be 50%).
- For this approach to work, the escrow contract would have to be embedded within the new CityCoin contracts to ensure that miner bids are appropriately matched.
Option B has some interesting implications for the game theory around mining.
- Miners that did not contribute to the new city activation are forced to weigh their expectation for future stacking rewards against the immediately higher cost basis triggered from their mining bids.
- This could incentivize miners that did not contribute to activation to bid smaller amounts early on and higher amounts after the escrow account has been fully deployed.
- Additionally, some of the economic risk of over/under-bidding for blocks present in option A is transferred to miners that did not contribute to activation. In this way, those that DID contribute to activations receive some benefit, specifically a nearly guaranteed % of CityCoins mined with the first few million dollars worth of STX.
We are currently seeking YOUR feedback on this proposed mechanism. Open to other ideas. Please share! Looking forward to the discussion. $STX to $100