Jump to content

Burnt model for XRP ledger (minted-at-cost)


buh
 Share

Recommended Posts

For developers working on the XRPL I wanted to share an interesting project that started some months ago running on the ethereum blockchain and that one can figure it could be a vary valuable concept to transpose to the XRP ledger.

 

The project’s name is vether (https://vetherasset.org/)

 

“Vether is designed to be a store-of-value with properties of strict scarcity, unforgeable costliness and a fixed emission schedule. Vether mimics characteristics of Bitcoin, where miners compete to expend capital to acquire newly-minted coins and chase ever-decreasing margins. Instead of expending capital, Vether participants compete to purchase it by destroying capital on-chain. As a result, all units of Vether are acquired at-cost and by anyone. This mechanism is called Proof-of-Value.”

 

There is a daily emission of vether (currently at only 2080 coins) that participants acquire them by burning ethereum (so deflating the circulating ethereum in existence). Daily burn acquisition is fair because its emission of value is pooled out of the number of participants for that day (e.g. if you burn 1 eth, and you are the single participant, you receive all its 2080 vether for that day; however if 10 participants with 1 eth each enter (burn them), you receive 10% of that pool [i.e. 208 vether]). A day is 23hours and 30min and halving occurs every 244 days. The first halving is expected for 5 January 2021. The “secret” to acquire vether is continuously daily burning of 1 to 2eth, because the protocol decreases proportionally with potential vether if one decides to burn 5 to 10 eth in one go. In other words, to obtain vether’s daily emission, burning 5 eth in one go is not the same as burning 5x one single ethereum.

 

What if something along the lines could be developed into the XRPledger? So (1) burn XRP to mint this daily coin, but with another add-on (2) part of the proceedings for the “burning” instead of being burnt are sent to an escrow to fund XRP validators? So something like 80% of XRP directly burnt and 20% to pay XRP validators.

 

After some days and weeks of daily emission of this new “burnt”-derived XRP (Let us call it bXRP for now), participants either wait for daily emission of burning (to acquire bXRP) or decide to trade (buy) the existing (circulating) ones out of the XRP DEX (bXRP/XRP). In other words, participants that already acquired burnt (daily) XRP from previous days can trade them (sell) for XRP.

 

The emission in vether is scheduled to run for 10 years.

 

What advantages would this new “burnt”-derived XRP be good for? First, bXRP could be a store of value coin (because it is in low and with fixed supply; maybe 1 million coins, 21 million coins?) minted at cost by burning XRP. Second, deflating further the supply of circulating XRP because it is needed to acquire bXRP.

 

Ok long-term potencial of bXRP, into defi projects.

 

The above example of vether is to sub-serve a new upcoming Defi project called Vader.

 

Vader Pools (the new Defi)

1 Vether Burned = 1 Vader (you need to then burn vether to obtain Vader; so one burns initially ethereum to obtain vether, and then vether supply is burnt to obtain Vader)

 

“VADER is a new form of liquidity protocol that seeks to be self-serving. It uses its own liquidity and awareness of asset purchasing power to support virtual assets, as well as lending and derivatives. It has a fair and transparent liquidity incentive strategy to maximise the depth of liquidity pools and the creation of virtual assets. It uses a liquidity-sensitive fee to ensure safe and sustainable creation of debt.”

 

In many ways, such a proposal would be similar to the current Flare network, for those current familiar with the process (but with a few [burning] differences:

 

a) XRP collateral served to obtain FXRP to acquire spark.

 

b) Ethereum burnt to obtain vether, and vether burnt to acquire Vader.

 

I think of such a minted/burnt at cost XRP-derived coin could (1) enhance the decentralization of the XRP ledger (stimulation new/ongoing XRP validators by funding), (2) provide interoperability with other XRP networks (like Flare networks; e.g. directly trading bXRP with spark or burn bXRP to obtain spark) [maybe have some people from Flare looking into this forum post?]), (3) reduce the supply of XRP further, (4) in the process increasing XRP liquidity with this burnt-at-cost model to obtain bXRP which is traded in the XRP DEX (and other exchanges) and (5) in the process create a real store of value with much lower supply and much better initial distribution model of a token than XRP ever had since its inception.

 

For developers operating the XRP ledger, researching and looking out for potential positive projects, maybe such potential is worth brainstorming about?

 

Vether’s white paper (3 pages long and reads well; highly advisable to read): https://vetherasset.org/whitepaper

 

Vader’s white paper is currently hidden; this is because it was recently carbon copied by another project (the Spartan Project) that recently launched in the binance chain. Since then the white paper draft is offline (but maybe you can get ideas of Vader from the copied Spartan protocol https://medium.com/spartanprotocol/announcing-the-spartan-protocol-e15af93a8a8f)

 

Cheers.

Edited by buh
(insert links)
Link to comment
Share on other sites

Sounds like Vether is neither here, nor ether.

Edited by EcneitapLatnem
sorry, have no idea how to read technicals... just thought the pun was profound! Also, not sure what a pun is... nor the meaning of profound... good luck!
Link to comment
Share on other sites

The idea is interesting I assume it could work as well in the XRP ecosystem but with all properties of XRP.

 

Reading vether website and discord # daily emissions of vether are “fixed”/limited due to ether gas fees. Reason people decide to do a single burn apparently (gas fees in ether are averaging 5-10$ lately). This would not be a limitation for XRP per se but would create difficulties that one XRP account could do several burns consecutively without “gas”/drops cost attached to it and lack on incurring proportional decline. You know where I am going here?How would you solve for that?

 

an interesting thing comparing to ether is that the daily burn goes to this address that is not really burnes (it does not technically disappear) 0x0111011001100001011011000111010101100101

 

Ether is never burned so to XRP that function actually exist. That is positive.

 

the reduction in circulating XRP supply is highly advisable, the funding of validators so badly needed and bXRP would be a new liquid asset with its intrinsic value pegged to XRP. Thumbs up!

 

regarding usage to Defi it is a bit outside of my field of expertise. But ringing some guys from Sologenic and Flare here would be  helpful.

Edited by Balzerp
Link to comment
Share on other sites

4 hours ago, Balzerp said:

Reading vether website and discord # daily emissions of vether are “fixed”/limited due to ether gas fees. Reason people decide to do a single burn apparently (gas fees in ether are averaging 5-10$ lately). This would not be a limitation for XRP per se but would create difficulties that one XRP account could do several burns consecutively without “gas”/drops cost attached to it and lack on incurring proportional decline. You know where I am going here?How would you solve for that?

Thanks for the input. I honestly did not consider about the gas-to-drops fee difference but potentially one could have the contract “mark” the specific XRP address for the daily limit. In other words, the contract would verify – during bXRP distribution for the day – if one address burnt more times and proportionally adequate/equilibrate pool distribution.

 

Certainly someone could have more XRP addresses performing the daily burn and not have their address “marked” by the contract. But anyhow, that same XRP holder would have to take into account the 20 XRP reserve for the new wallet, plus on top the 5 XRP reserve for the trustline. Not really a problem along the lines but still discouraging XRP holders with multiple burning accounts because of the 25 XRP reserve.

 

Another aspect of this fair distribution scenario that is worth stressing regards the issuing of IOUs onto the XRP ledger. Every trustline has a counterparty issuer that "controlstechnically all self-created IOUs in the XRP ledger. They can block/freeze the tokens they created. The existence of bXRP would fall outside said jurisdiction because there would be no party controller but instead an escrow emitting/minting them daily. That in my opinion is a strong aspect for bXRP hodlers.

 

Aside from XRP, bXRP would then be the other only asset without counterparty-risk or issuer, living in the XRP ledger. That is truly an interesting scenario to consider.

 

bXRP scenario, in more detail:

Each day a certain amount of bXRP is mint per the escrow-contract emission schedule. bXRP mint occurs from exhausting capital (burning XRP). Similar to vether/bitcoin, there is a halving scheduled that decreases incoming supply and increases what is known as stock-to-flow model (see please here https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25) . The best current stock-to-flow model exists with gold, which makes it the commodity with the lowest price elasticity of supply. Similar to vether, bXRP could have some of the best scarcity to supply model (assuming low supply, either 1million or 21 million coins bXRP. I am here thinking of "pegging" it psycologically to the number of bitcoins that will ever be avaiable).

 

At the end of each day, the amount of XRP one address burns, amounts to the total % pooled of burnt XRP for that day. For vether, that % amounts to the total of 2048 daily emission. Similar tokenomics would exist for bXRP.

 

In vether, each halving is called an era and currently we are in era 1 (first 244 days). In era 2 that daily emission becomes 1024 and so on. After 10 years those emissions will stop. So similar tokenomics for bXRP could be created but dependent on the desired total supply of bXRP from inception detailed in the escrow-contract.

 

Acquired new bXRP coins at the end of each day can then be sold to the public market (ethereum has Uniswap protocols, which is a very cool tool). Vether also has its own vether pools similar to Uniswap, where poolers that provide liquidity can earn fees for swapping transactions (i.e., liquidity providers). A Uniswap type of liquidity provider coul be created for the XRP ecosystem. Not specific for bXRP altough (i am here thinking for other XRP-derived tokens on the XRP ledger). But such uniswap type of protocol could be created for the bXRP project - bXRP liquidity pool (bXRP pools). Traders could buy and sell bXRP for XRP. (but again, once created such pool, it could "harvest" other XRP-derived assests already in existence.

 

Considering that the XRP ledger has its own DEX, both bXRP pools/(uniswap type of protocol)  and XRP DEX could work to acquire bXRP. The bXRP liquidity pool could power-up the XRP DEX and vice versa.

 

A close correlation between bXRP implied value at the end of each daily burnt and the public swap market price would exist; in other words, the market would equilibrate price ranges via arbitrage and slippage (e.g., trading via bXRP pools and XRP DEX), but also via acquiring daily bXRP via burning XRP (daily burnt of XRP creates an implied value for bXRP).

 

bXRP would have all its own properties (already mentioned in the first post)

"I think of such a minted/burnt at cost XRP-derived coin could (1) enhance the decentralization of the XRP ledger (stimulation new/ongoing XRP validators by funding), (2) provide interoperability with other XRP networks (like Flare networks; e.g. directly trading bXRP with spark or burn bXRP to obtain spark) [maybe have some people from Flare looking into this forum post?]), (3) reduce the supply of XRP further, (4) in the process increasing XRP liquidity with this burnt-at-cost model to obtain bXRP which is traded in the XRP DEX (and other exchanges) and (5) in the process create a real store of value with much lower supply and much better initial distribution model of a token than XRP ever had since its inception."

 

but additionally sub-serve other projects like Flare, and as you mentioned, the sologenic ecosystem for instance. In the current Flare ecosystem XRP collaterals are used in a 1:1 ratio to obtain FXRP as to later obtain Spark. An additional – secondary - scenario could be created where bXRP could be directly traded and/or swapped against Spark. Directly via bXRP liquidity pools and/or XRP DEX (i.e., bXRP/Spark) and other incoming/welcoming exchanges. bXRP would provide/boost liquidity to Spark.

 

Food for thought.

 

Link to comment
Share on other sites

4 hours ago, buh said:

Thanks for the input. I honestly did not consider about the gas-to-drops fee difference but potentially one could have the contract “mark” the specific XRP address for the daily limit. In other words, the contract would verify – during bXRP distribution for the day – if one address burnt more times and proportionally adequate/equilibrate pool distribution

That is an alternative and adds up. 

 

What i I like the most is the non-jurisdictional IOU implications and being simultaneous a liquidity provider. A uniswap model is highly recommended and would attract market makers. Together with the XRP DEX.. what a tag team.

 

there is a lot to digest from your text, understand some of it, but others (like the stock-to-flow model) need to research more.

 

But the way I see it there is a huge hurdle to such bXRP even to start or ever to exist in the XRP ledger. As far as it goes for vether the main coder is anonymous.. almost reminiscent of Satoshi. The XRP ledger is infamous for coders like other blockchains (here ethereum), asides from ripple, XRP labs and now maybe Flare (?). But let alone this would require an altruistic author putting his own resources to code, attract people, since there is no ore-funding for the project. Unless somehow Ripple/Xpring or the new XRP foundation ship in and separately fund someone. 

 

Well in an ideal scenario this concept would be beautiful to have into XRP, but personally I don’t see it ever digging of the ground. Unfortunately like you (I assume you are also no coder) I don’t have the skills to do it, and there are still very few techies independently working in the XRP ledger.

Link to comment
Share on other sites

21 hours ago, Balzerp said:

But the way I see it there is a huge hurdle to such bXRP even to start or ever to exist in the XRP ledger. As far as it goes for vether the main coder is anonymous.. almost reminiscent of Satoshi. The XRP ledger is infamous for coders like other blockchains (here ethereum), asides from ripple, XRP labs and now maybe Flare (?). But let alone this would require an altruistic author putting his own resources to code, attract people, since there is no ore-funding for the project. Unless somehow Ripple/Xpring or the new XRP foundation ship in and separately fund someone. 

 

Well in an ideal scenario this concept would be beautiful to have into XRP, but personally I don’t see it ever digging of the ground. Unfortunately like you (I assume you are also no coder) I don’t have the skills to do it, and there are still very few techies independently working in the XRP ledger.

+1 no coder.

Hope you are wrong, but I am afraid you are right. Thanks for the help with triming ideas.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.