PIP-0035: final edits

PIP/PIP-0035.md

@@ -1,6 +1,6 @@
 <pre>
   PIP: PIP-0035
-  Title: Block Policy: Layer-1 Governance (Velocity Cash)
+  Title: Block Policy: A New Vision
   Type: User Interface
   Impact: None
   Author(s): Herman Schoenfeld <[email protected]>
@@ -17,14 +17,16 @@ A simple and efficient layer-1 governance model is proposed called "Block Policy
 
 ## Re-brand & License
 
-If adopted, this proposal will fundamentally change the original vision of PascalCoin. As a result, a re-brand is now warranted and fully justified. The proposed new brand for the project is "Velocity Cash" and domain names and web-assets have been secured for the re-branding. Also, since the author has [contributed significantly][1] to PascalCoin's architecture and code, the author imposes the following conditions on the adoption of this proposal:
+If adopted, this proposal will fundamentally change the original vision of PascalCoin. As a result, a re-brand is now warranted and fully justified. Also, since the author has [contributed significantly][1] to PascalCoin's architecture and code, the author imposes the following conditions on the adoption of this proposal:
 * Block Policy is adopted fully or not at all;
-* PascalCoin is re-branded to Velocity Cash;
-* The author shall be legally considered a "co-founder" of Velocity Cash.
+* PascalCoin is re-branded;
+* The author shall be legally considered a "co-founder".
 
 No part of this proposal may be disregarded in the implementation without the consent of the author. Apart from this condition, GNU Public License applies.
 
-For the remainder of this document, PascalCoin will herein be referred to as "Velocity Cash".
+A proposed new brand for the project is "Velocity Cash" and domain names and web-assets have been secured for this re-branding. However, the author is flexible on alternative re-brands and will work closely with the PascalCoin community to reach a re-brand consensus assuming approval of this pip.
+
+In the interim, PascalCoin will herein be referred to as "Velocity Cash" for the remainder of this document even though it may be subject to a different re-brand.
 
 ## Layer-1 Governance
 
@@ -36,7 +38,6 @@ In short, the proposal is to:
 * Allow these variables to change on a block-by-block basis, enabling real-time governance.
 * No longer award new accounts to miners, instead issue them without ownership and list them for public sale at a floating price. 
 
-
 #### Diagram
 
 ![Layer 1 Voting](resources/PIP-0035/Layer-1-Voting.png)
@@ -171,6 +172,32 @@ Post-implementation, the following methodologies are to be researched and develo
 
 Vote tallying methodologies are crucial for security, so as to prevent malicious actors from seizing control of the protocol.
 
+## Governance Security
+
+A major concern with the implementation of Block Policy is preventing the hijacking, attack and seizure of the policy by malcious actors or economically disproportionate actors ("whales").
+
+This can be achieved by employing implementing this feature in the following manner:
+
+1. **Autocratic Model**: In the initial implementation, the account 0-10 (controlled by Albert Molina) defined the block policy. This will remain in effect until a suitable time that dust settles from this change. During this period, the community can socially organize on Discord/Social Media to determine minor policy adjustments and Albert implements them.  Minor development/infrastructure adjustments can be made to fund specific projects during this period.
+
+2. **Aristocratic Model**: After some time, this model is enabled allowing account holders to vote on policy on a 1 PASC = 1 VOTE basis. Conceptually this will work because it's the same a Delegated Proof-of-Stake used in EOS and other billion dollar coins. 
+
+3. During (2), we allow a 2-year period where the Aristocratic model can be changed back to Autocratic using account 0-10. This is to ensure the protocol can be recovered in case the Block Policy is attacked, hijacked or mismanaged.
+
+After a suitable period with significant R&D, the final and permanent governance model is rolled out.
+
+4. **Democratic Model**: this works on 1 USER = 1 VOTE governance system for determining Block Policy. The author has significant R&d here to achieve this. Users could always vote to rollback to Aristocratic in case something goes wrong.
+
+**NOTE** in between (3) and (4) there are also **Nobility Model** which can be rolled out. The Nobility Model encompasses a set of methodologies that represent a logical interpolation between Aristocratic to Democratic systems.
+
+## Policy Limits
+
+In order to prevent catastrophic failure such as issuing a billion new coins in a block, the byte lengths of policy variables are chosen so as to impose **natural limits** on the policy values.
+
+For example, the miner reward is a 1 byte variable which constrains from 0 to 255 PASC. At any time, a maximum of 255 PASC can be issued as the miner reward. Even if the policy were temporarily hi-jacked by a mining pool, it would not be possible to cause any significant harm to eco-system in the time intervention was applied.
+
+If byte lengths are insufficient to impose limits, hard-coded rule-based limits can be imposed on variables.
+
 ## Benefits
 
 The benefits of this change are profound in nature and includes the following benefits:
@@ -179,7 +206,7 @@ The benefits of this change are profound in nature and includes the following be
 
 This proposal introduces in-protocol real-time governance in layer-1 and establishes a cryptographically secure voting mechanism that can be audited by anyone, anytime, permission-free and instantly. By moving economic constants from the source-code and into the Block Policy, the layer-1 protocol is now fundamentally enhanced with "external-world feedback". This has far-reaching consequences at every level of the project including security, usability, adoption, governance and market-price.
 
-Also, this proposal puts control of the protocol squarely in the hands of the users who can hire and fire developers and infrastructure providers via voting. It puts the economic power in the hands of the users since they can influence the price of the cryptocurrency via real-time adjustments to inflation. Over time, this role can be delegated to AI-trained bots who regulate the protocol for the benefit of the community using neural networks trained on past behaviour.
+Also, this proposal puts control of the protocol squarely in the hands of the users who can hire and fire developers and infrastructure providers via voting. It puts the economic power in the hands of the users since they can influence the price of the cryptocurrency via real-time adjustments to inflation. In the future, this role may optionally - depending on the community's approval - be delegated to AI-trained bots who regulate the protocol for the benefit of the community using neural networks trained on past behaviour.
 
 ### Crypto-Political Parties
 
@@ -199,7 +226,7 @@ By funding miners, developers and infrastructure directly from the protocol, a d
 
 ### Dynamic-Inflation 
 
-By enabling onthe community to vote on what the miner, developer and infrastructure rewards should be for the next block, the issuance-model of Velocity Cash is fundamentally changed from a "gold-like" model to a "fiat-like" model. Whilst many in cryptocurrency may consider this sacrilege, the reader is encouraged to understand the difference between "negative fiat" and "positive fiat" currencies. In the modern era, national central banks (with the exception of Iran) issue fiat currency as a debt-based instrument into the economy. In this model, the newly issued fiat currency represents a debt which must be repaid later by future issuance of this debt-based fiat (but compounded with interest). Such debt-based currency represents a "negative value" which almost always results in a pyramid-scheme style collapse causing the familiar negative economic outcomes of bankruptcy, recession, capital hoarding and centralization. In the "positive fiat-currency" model, the currency is issued as credit-based instrument that attains a "positive value" determined purely by the market supply/demand (just as cryptocurrencies are today). This "positive fiat-currency" model has historically successful precedents such as the [Colonial Scrip][3] which effectively built the American Colonies and the [Tally-Stick][4] system which effectively built the British Empire (before it collapsed soon after the introduction of the debt-based "British Pound").
+By enabling on the community to vote on what the miner, developer and infrastructure rewards should be for the next block, the issuance-model of Velocity Cash is fundamentally changed from a "gold-like" model to a "fiat-like" model. Whilst many in cryptocurrency may consider this sacrilege, the reader is encouraged to understand the difference between "negative fiat" and "positive fiat" currencies. In the modern era, national central banks (with the exception of Iran) issue fiat currency as a debt-based instrument into the economy. In this model, the newly issued fiat currency represents a debt which must be repaid later by future issuance of this debt-based fiat (but compounded with interest). Such debt-based currency represents a "negative value" which almost always results in a pyramid-scheme style collapse causing the familiar negative economic outcomes of bankruptcy, recession, capital hoarding and centralization. In the "positive fiat-currency" model, the currency is issued as credit-based instrument that attains a "positive value" determined purely by the market supply/demand (just as cryptocurrencies are today). This "positive fiat-currency" model has historically successful precedents such as the [Colonial Scrip][3] which effectively built the American Colonies and the [Tally-Stick][4] system which effectively built the British Empire (before it collapsed soon after the introduction of the debt-based "British Pound").
 
 The point here is that the negative outcomes commonly associated with "fiat currencies" are more to do with the "debt-based" aspect than the "fiat" aspect. This is an important and nuanced point.
 
@@ -207,23 +234,31 @@ The point here is that the negative outcomes commonly associated with "fiat curr
 
 One of the biggest flaws in cryptocurrency architecture today is the inflation distribution. Most cryptocurrencies simply distribute the new inflation to the miners who then act as first source of value utilization (usually for dumping on markets). This gives miners a disproportionately biased economic role within the eco-system. Miners only secure the network, they do not write the code, design the protocol, develop wallets or run exchanges. Yet they receive all the new inflation. By distributing the new inflation between miners, developers and infrastructure a more balanced distribution is achieved resulting in more efficient utilization of the newly created value.
 
-### First True Stable-Coin
+### Long-Term Stable Value
+
+Much in the same way that central banks have proven they can stabilize the value of national currencies through monetary policy, it is expected that the community can similarly stabilize the cryptocurrency value using the tools of real-time dynamic inflation adjustments. It should be stressed that Velocity Cash is not a stablecoin in the traditional sense. It is not strictly pegged to any price. Rather, it follows a piecewise price trajectory depending on the social contract. 
+
+For example, if the Block Policy agrees that the monetary policy should attain $100 then the inflation would be at a bare minimum in order to support the miners, developers, and infrastructure providers. If the price at last attains $100, then inflation would increase in order to signal both an economic and a psychological deterrent for further price growth. However, if there is significantly more demand for Velocity Cash then the "soft" peg to $100 could then be allowed to adjust upwards subject to the Block Policy. An infinite ROI due to a forever increasing price is inherently unsustainable and harmful to the cryptocurrency; as a result, the Block Policy offers the opportunity and tool to serve as a soft stabilizer for Velocity Cash's price especially at a high market capitalization.
+
+To promote a stable value in the other direction, the Block Policy also involves deflation adjustments through controlled burning of already circulating coin supply. The following sources of burning can be achieved:
+
+1. **Coinrot**: coins on abandoned accounts due to user death/lost keys are considered rotten coins. Instead of awarding expired PASAs and their PASC to miners, the OP_RECOVER can be changed to simply burn these coins 
 
-Much in the same way that central banks have proven they can stabilize the value of national currencies through monetary policy, it is expected that the community can similarly stabilize the cryptocurrency value using the tools of real-time dynamic inflation adjustments. Over-time, this task can be delegated to an AI-driven bot that adjusts inflation variables in real-time based on neural networks trained with historical  market data in order to achieve super-stability with controlled value appreciation (i.e. 10% per/annum). Once this system is built, users can simply vote to activate it.
+2. **Transaction Fees**: since miners are guaranteed miner reward, the transaction fee is no longer needed to incentivize mining. Instead, these fees are burnt and serve as a drain to extinguish coin supply.
 
-A fundamental achievement here is the first true stablecoin that attains it's stability intrinsically **without** dependence on an external backing commodity.
+3. Other multiple sources, not disclosed in this pip but will be revealed if/when after PIP approval.
 
 ![Stable Coin](resources/PIP-0035/StableCoin.png)
 
-### Solves the Pump-n-Dump Problem
+#### Deterrent to Pump-n-Dump Problem
 
 Much in the same way that the threat of force by law-enforcement prevents crimes from occurring, the threat of real-time inflation-intervention via community governance thwarts market manipulation. As a result, "whale" activity, hoarding and pump-n-dumping problems are expected to be greatly diminished.
 
 ![Why Real Time Voting Is Better](resources/PIP-0035/WhyRealTimeVotingBetter.png)
 
-### Trading-Pair for DEX
+### Reserve-Currency for a DEX
 
-If Velocity Cash can achieves stablecoin status, it will be the ideal base currency for a decentralized-exchange (DEX). The author of this PIP has designed a high-frequency DEX, and with the recently added [atomic swap functionality][1], Velocity Cash is perfectly positioned for this role.
+If Velocity Cash can achieves "soft stablecoin" status, it can serve as an ideal base currency in a decentralized-exchange (DEX), much in the same way that USDT serves this purpose today. The fundamental difference is that it is **not** "stablecoin" in the sense of having a fixed-value based on external backing, instead it's value is sensibly stablized via social consensus of the eco-system of users of the currency. The author of this PIP has designed a high-frequency DEX, and with the recently added [atomic swap functionality][1], Velocity Cash is perfectly positioned for this role.
 
 ### Currency for Commerce
 
@@ -249,6 +284,15 @@ In the same way PASA issuance can be increased to support new adoption, it can a
 
 Since new PASA will no longer be issued to miners, they need to be purchased from day 1. Also, since PASA issuance is dynamic and controlled by the community, their prices will always be low. This disincentives PASA hoarding completely.
 
+## Upcoming PIP Disclosures
+
+The following will be disclosed in full pending pip approval:
+
+1. Security against gaming the Block Policy via an Aristocratic voting methodology.
+2. Technical implementation of the Democratic voting methodology.
+3. Sources of deflation control.
+4. Others.
+
 ## Rationale
 
 Since Block Policy is a simple change that fits naturally into the SafeBox model, it is proposed for upcoming V5 release.
@@ -256,7 +300,11 @@ Since Block Policy is a simple change that fits naturally into the SafeBox model
 ## Backwards Compatibility
 
 This change is not backwards compatible and requires a hard-fork activation. 
- 
+
+## Acknowledgements
+
+* Tyler Swob for follow-up edits, in-depth discussion and helpful suggestions for altering the tone of this proposal.
+
 ## Links
 
 1. [PascalCoin Improvement Proposals][1]