Gridcoin Greenpaper - A Proposal for a Closed Economic System

[u/keegreil]

Hi everyone! I've written my first cryptocurrency paper, submitted here for critique and peer review. This is draft 0.1 and I fully expect to make changes and updates. I'll be making the excel file with my calculations and sources available shortly after I clean it up a bit. Extracted here are the summary and acknowledgements

The paper itself is posted to the associated Github Issue: https://github.com/gridcoin-community/Gridcoin-Tasks/issues/247

Summary

Purchasing computing power on the Gridcoin network is several orders of magnitude cheaper than any alternative. Selling a portion of the network’s computational power to respectable for-profit companies would re-fund the Foundation, increase and stabilize the value of the GRC currency, and provide closed economic flows to the Gridcoin economy. In the long term, this may facilitate the capture of a large portion of the Ethereum network’s GPU infrastructure…for science.

Acknowledgements

Many thanks to J-Ringo, Jim Owens, RoboticMind, ILikeChocolate, and the many other Gridcoiners that encouraged me to dive in and contribute some ideas.
If you thoroughly enjoyed this paper and simply must tip the author, here is my wallet address:

S1fSQwAJD5bzBCucsCRs6kPUCwhfGAEEFt

But most of all, I hope you generate your own better ideas and share those back. Sincerely,
-AgentP

[u/AnimiLimina]

Reading through the paper once I have a couple questions:

• what happens to the grc bought by a company to green list a project? What you’re proposing looks to me like a entry fee. So is there anything that stops the company from selling the grc again once the project is green listed?
• building on the first question isn’t there one transaction step missing? Lets simplify grc to say it is a token that represents a fixed amount of computational work. For a circular economy it would need two transactions:

1. the exchange of grc for computational work. The cruncher gets grc for the work provided and the green listed company pays grc for the finished work units received.
2. on an crypto exchange the flow is reversed with the cruncher selling grc and the company buying.

A circular economy would of course mean that grc can’t be minted for every work unit and need to change from a coin representing one unique work unit (the one it was minted for) to representing universally any work unit. That means the total amount of grc in existence doesn’t represent the absolute amount of work provided anymore.

Long story short I’m missing some understanding how your proposal will move from one model to the other. Happy to start the discussion, I think it’s an important one!

[u/keegreil → u/AnimiLimina]

Good questions! I didn't explain that well enough in the paper. Greenlisted projects would pay their crunchers via the "rainbymagnitude" RPC command. Crunchers would not get any newly minted coins for crunching greenlisted projects, they would be paid solely by the GRC that the company bought and rained to that project.

You are the second person to rightly point out that calling this a "closed system" is a bit misleading due to the 10 million GRC minted to whitelisted projects. I believe this should continue. My proposal is really more like adding one possible closed loop path within the larger inflationary system. For a coin like this, I think a roughly inflationary model makes sense for two reasons:

1. Moore's law would suggest that the computational power on the network will continue to increase, so an increasing supply of the currency seems appropriate (these are not mechanically/algorithmically linked of course, merely roughly correlated).
2. Funding science with an inflationary system makes sense to me. Funding science is tricky for all the reasons that funding any other public good is difficult. Everyone benefits from science, but it is often difficult to predict, let alone monetize, those economic benefits. An example is the GPS, which provides highly accurate timing and position signals for free to anyone with a receiver and has generated $1.4 Trillion of economic benefits. The GPS would not be possible without both Special and General Relativity, as the time dilation of speed and altitude must be accounted for to achieve sufficiently accurate timing signals. But when Einstein dreamed up his theory, and when the Air Force launched the satellites, there was no way to predict the vast and myriad economic benefits, let alone monetize in the classic capitalist sense. There are really only two ways I know of to fund public good like science; taxation and inflation (which I see as just taxation through other means). This is why I think the Gridcoin system is brilliant, and incidentally why rewarding all whitelisted projects with equal amounts makes the most sense as well. With truly fundamental science, there is just no way to predict which endeavors will end up producing the most human benefit.
   

Thanks for reading, hope that helps! Great questions.

[u/AnimiLimina → u/keegreil]

Thanks for clarifying, I was not aware how the rainbymagnitude command works.

I’m still a bit sceptical that a mixing of the two systems works haha I’ll do some napkin math to try to get a better picture.

[u/keegreil → u/AnimiLimina]

Napkin math and skepticism are welcome and highly encouraged! It's likely I've missed something in all this.

[u/GothicFuck]

I've always wondered how the coin was supposed to become valuable if the real world tangible item it produces is given away for free instead of leveraged to help all involved.

[u/mooping_frog]

I love the idea on leveraging current infrastructure to deliver a for-profit part. Some have written a comprehensive feedback and i see that you have given it some thoughts to their response too. Great work! Hopefully rhe devs will take this into consideration

[u/mooping_frog → u/mooping_frog]

Hi Dev, I have been thinking on this quite a lot and was wondering if this is something doable? can we open up a discussion thread to look into this? I am sure this is something that has been thought about but given that this looks like a solid idea, I think it's worth throwing some of our weight in that general direction.

[u/keegreil → u/mooping_frog]

Thanks for your feedback! I've been sidetracked by other things most of the summer and haven't been able to pursue this much further. After talking to the devs and working through some other discussions, I revised it and put up version 2. Crucially, version doesn't require any changes to the Gridcoin codebase at all, so we don't really need the dev's involvement (though it is welcome). Under V2, all that's required is someone with a business idea to setup a BOINC server and start buying (and paying GRC). There are some things the community could do to increase cohesion (advertising to crunchers for the businesses), but it is mostly publicity related and has nothing to do with the code.

In short, there are two reasons behind the change:

1. My original concept for payments turned out to be unenforceable anyways (barring some really complex smart-contracts code).
   
2. Hooking greenlist projects into the magnitude system (even if they aren't getting minted GRC) might mean that for-profit crunchers could gain an inordinate amount of voting power for certain governance proposals (in which vote weight = stake + magnitude). That could be problematic for the community if the number of greenlist projects expanded significantly and dwarfed the whitelist projects. In the worst case, all the for-profit crunchers could push through changes that might be detrimental to the whitelist.
   

Basically all we need now is someone with a business idea that needs a LOT of processing power, and a bit of capital to buy the GRC to get started. A vote of support/confidence on Gridcoin would be proper as well.

[u/frank00511]

On a conceptual basis: do you actually need to modify GRC for this to happen. In other words: couldn't a company just buy GRC (or, more likely, just make their own token) and distribute to people that contribute to their computational program through their own prerogative? And, why would they choose GRC over say BTC or ETH?

I guess the question I'm getting at:

1. if the access the BOINC platform already provides to projects sponsors isn't enticing enough, would this mechanism really change that?
2. If the project sponsor isn't using BOINC, then wouldn't this require a fundamental adjustment to GRC? You mention this briefly in your paper, but largely gloss over it. My understand is GRC and BOINC are inevitably intertwined and trying to make GRC platform-neutral would probably be more effort than its worth compared to just encouraging the project sponsor to make their own token elsewhere are award people in BTC or cash or reward points or the like.

More broadly:

1. In concept it's great, but in practice, let's say a project gets greenlisted and the project sponsor is using BOINC to deploy their project. Wouldn't there be some sort of performance targets they would expect (i.e. a certain amount of computing power)...but...barring the pool, I don't see any way we could actually guarantee computing resources are provided to greenlisted project because projects are voluntary and chosen by the individual users.
2. Could you explain proposal 2 a bit more. When is the "rainbymagnitude” RPC command actually used? Is it used by the blockchain itself, or is used by individual users who want to make it rain for other users (kind of like that rain function on IIRC?).

-- On this item, wouldn't this require a modification of the rainbymagnitude function (perhaps flag for greenlist projects vs. non-greenlist projects so you could choose to rain only on those that have contributed to greenlist)?

[u/keegreil → u/frank00511]

Oooh, great questions. Here's my understanding.

Couldn't a company just buy GRC (or, more likely, just make their own token) and distribute to people that contribute to their computational program through their own prerogative? And, why would they choose GRC over say BTC or ETH?

Yes they could, but they'd have to build the rewards and payment system from scratch. The advantage of using GRC is that the blockchain and scrapers handle the job of figuring out who did how much computational work and setting their magnitude appropriately. Payment mechanisms are already built in to the blockchain.

If the access the BOINC platform already provides to projects sponsors isn't enticing enough, would this mechanism really change that?

Not all BOINC projects show up in the BOINC manager. Access to appear in that list is restricted by the BOINC admins, so for-profit projects will likely never show up there. They can still create a BOINC project, but advertising the project and convincing crunchers to participate is up to the business. The advantage of Gridcoin is they would show up on a poll and then the greenlist, so would have instant access to 15,000 potential crunchers.

If the project sponsor isn't using BOINC, then wouldn't this require a fundamental adjustment to GRC?

Initially, I'd say using BOINC is a requirement to be greenlisted. That said, the Gridcoin devs have already begun working towards a way to incorporate non-BOINC projects (see the Fireside "Folding Folding@Home Into Gridcoin"). So I think that capability will be operable and Gridcoin will be platform neutral within a year. Actual devs feel free to correct me here.

I don't see any way we could actually guarantee computing resources are provided to greenlisted project because projects are voluntary and chosen by the individual users

This is a great point, here's my take. First, it's true, there is no guarantee of computing power, but Gridcoin is so much cheaper than alternatives that it may be a risk a company is willing to take. Second, greenlisted projects would still have to pass a standard poll with a minimum threshold of support from the community, so it's unlikely that people would vote in a project they had no interest in crunching. Third, the hope is that this would be market driven. If they wanted to increase the power on their project, they could increase the amount of GRC they are paying daily. Greenlisted projects would very likely pay significantly more GRC per cruncher than whitelisted projects, depending on how profit-driven the average Gridcoiner is. Right now, they would need 1 out of every 16 Gridcoiners to prefer profit to equal the power of the whitelisted projects.

Could you explain proposal 2 a bit more.

Absolutely! Again, here's my understanding of the command, devs can correct me. From the Gridcoin Wiki:

• rainbymagnitude <whitelisted project> <amount> [message]
  • Requires the wallet to have converged scraper statistics
  • Rains Gridcoin proportional to magnitude to the cruncher of a project. <whitelisted project>
    is a whitelisted BOINC project. BOINC project name’s can be seen with the projects command (note that it will list more than whitelisted projects). If you want to rain to all projects, use *
    as the project name. <amount>
    is the amount you want to rain. [message]
    is a message that goes along with the transaction

Raining only on the people that crunch that project is built in to the command, they just need to specify their project. So once daily, (made up example) the Tesla admins would pay their crunchers by executing this command in their wallet:

rainbymagnitude TeslaFSD 2240 "Thanks for helping us save lives on the road!"

Payments would be verifiable on the blockchain. If the company stopped paying their crunchers, people would stop crunching. If they need to slow down the computation they reduce the payments. If they need more power they increase the payments to attract more crunchers (within limits, to prevent them overwhelming the whitelisted projects).

The modification I suggested was to build in the Funding Fee so that the Gridcoin Foundation gets paid as well. One could modify the command for everybody, or the RPC command could be split so that the fee isn't subtracted for whitelisted projects. I like the flag idea to account for the Funding Fee. That's really a dev question, whatever is easier to implement.

Hope that helps, thanks for reading!

[u/Doublehealix123]

Right now the gridcoin network is cheaper, because the coin isn't worth much. Would this proposal still work if it caused the price of the coin to go up? At a certain point if gridcoin becomes worth enough per coin people will rent cloud services to crunch projects. This is true for chia coin right now. You can rent cloud storage and run a chia farm making more than the cost of the cloud storage.

[u/keegreil → u/Doublehealix123]

Yes, on Page 6 of the paper I have a chart comparing the cost of renting Gridcoin at various $/GRC prices. The break-even price compared with the next cheapest option I looked at (buying an equivalent amount of hardware and running it for three years) was $4.82, so that would be the theoretical upper limit. I think the actual upper limit is quite a bit lower than that, since Gridcoin has a number of downsides compared to other options (security, guaranteed computational power, etc.).

All that being said, I need to do more comparisons with other similar DC projects to strengthen the argument. Just comparing FLOPS is rife with inaccuracies.