KASPA's monetary policy by @ deshe

in crypto •  3 years ago 

repost from discord:

In the following days, Kaspa's instigator @ hashdag will publish a long post outlining our general philosophy regarding monetary policies and the cryptocurrency world in general, and how a deflationary economy fits into this vision. The bottom line of the post is the following concrete monetary policy.

The monetary policy has two phases

  1. The pre-deflationary phase is the phase we are currently in. Rewards will remain at a constant 500 KAS per second. This stage will last until it has been six months since the network has started.
  2. The chromatic phase in which block rewards geometrically decrease. The block reward will be halved once per year, but smoothly: every month, we will decrease the block reward by a factor of (1/2)^(1/12). (this means that the ratio of block rewards in consecutive months is exactly the same as the ratio of the frequencies of two semitones in a tempered chromatic scale, whereby the name. The analogy would've been even nicer if the initial block reward was 440 🎹).

Note that the policy dictates how many coins are minted per second regardless of the block rate. Should we change the block rate in the future, the reward will be adjusted accordingly to maintain the same emission rate.

During the pre-deflationary phase (that is, now), we generate about 1.314 Billion Kaspa per month, or about 7.88 Billion Kaspa in total.
The rest of the emission throughout the chromatic phase will total in about 23.4 Billion Kaspa.
Hence, the supply cap is about 31.3 Billion (give or take about 100 Million which depend on exactly when the deflationary HF will kick in).

The graph below plots the emission rate vs. total supply for the next 10 years, after which the block reward will be about 0.7 Kas and the remaining unminted supply will be about 32 Million KAS.

image.png

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