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fip title author discussions-to status type category created
0093
Set the Mining Reserve to Zero
jnthnvctr (@jnthnvctr)
Draft
Technical
Core
2024-07-25

FIP-0093: Set the Mining Reserve to Zero

Simple Summary

This proposal aims to remove the mining reserve tokens. This does not preclude other FIPs from being proposed to create new tokens (as future incentives, funding iniatives etc). After this FIP, the total supply of FIL should be ~1717066618.96 (2b minus the current amt in f090) - though future FIPs may change this number.

Abstract

The mining reserve was intended to be a reserve of tokens to incentivize future types of mining. In the spec, this is noted to potentially "[not] be enough" and that the community will "decide... whether to make adjustments with unmined tokens" (last line of the paragraph on the mining reserve).

This proposal seeks to remove the mining reserve by setting f090 to have a balance of 0. This does not preclude new tokens from being created - rather that any new incentives should be created at the point when new forms of mining are introduced rather than relying on a set of pre-minted tokens.

Change Motivation

There are a number of reasons why the mining reserve can be viewed as a net cost:

  1. The role of the mining reserve is non-standard - at the time of authoring, no other L1 has this amount of supply left up to potential release (~50% of the current supply, 15% of the total max supply) which creates a large gap between the FDV and Market Cap.
  2. The mining reserve requires a FIP to use (the same process for creating new tokens) - in the event these tokens are needed; its unclear there would be any less pushback in the community if were to create new sources of dilution.

Spec

  1. Set balance of f090 to 0.
  2. Adjust all circulating supply dependencies and the invariant checks to recognize the total supply is no longer 2b given the mining reserve has been set to 0.

Rationale

The proposal aims to move away from relying a fixed amount of tokens in the mining reserve that might be used for new mining, to having new FIPs be proposed explicitly creating (or redistributing existing) incentives.

There has been some discussion about whether this should be achieved by setting f090 to 0 or by burning the tokens in f090.

One pro to burning is that there is a "narrative" value to saying the network is burning 15% of its max supply. However, this has a related con - in that it may overly anchor the ecosystem to only destroying tokens without considering how inflation can be used to productively grow the ecosystem. Specifically, others in the community have proposed repurposing the Mining Reserve to incentvize other parts of the "value chain" - eg incentives to bring paid revenue on chain, acquire / incorporate protocols, fund future research and development. If the tokens are simply burned (and the community anchors to 2b as the max supply), these initiatives may be harder to fund in the future.

One pro to setting f090 to 0 is that it functionally has the same effect as burning - without the same connotations of simply destroying tokens for the sake of it. If the goal is to not anchor heavily to 2b, this nudges slightly closer to treating the supply as a dynamic number. One slight con, is that it may not have the same "shock" value as saying burn.

For the intended purposes, listed above in Change Motivation, setting the mining reserve to 0 achieves the main goals (and in the author's opinion doesn't substantially sacrifice a narrative goal as the total supply of the network is still decreasing). However, it should be noted that the difference between these two in practical terms seems very slight and is mostly subjective.

Product Considerations

Depending on perspective this may affect the product. These tokens were intended to be used to incentivize future types of mining. However, any future proposal that might need new sources of inflation is not blocked from including new incentives in their proposals - and this could include using incentives for other forms of more productive activity (that are not specifically mining - e.g. a product development funds)

Security Considerations

This should not affect the security as these tokens are not used to incentivize any action. Any future proposal that might need new sources of inflation to help incentivize / secure new mechanisms are not blocked from including new incentives in their proposals.

Incentive Considerations

The proposed change requires future explicit proposals (aiming to incentivize new forms of mining) to explicitly mint new tokens. This should not change the difficulty of making such proposals, as both (using the mining reserve, creating new tokens) would have the short term effect of diluting stakeholders. This changes the optics of having large amounts of potential dilution that do not have a definite time horizon to entering the supply (which can have a negative signal).

Implementations

  1. Set the balance of f090 to 0.
  2. Adjust all circulating supply dependencies and the invariant checks to recognize the total supply is no longer 2b given the mining reserve has been set to 0. The total supply of the token should be the total supply of FIL should be ~1717066618.96 (2b minus the current amt in f090).

Copyright Waiver

Copyright and related rights waived via CC0.