SERO destroys half of the unmined tokens, and the public chain also changes the total amount like the exchange?

Author | 黄 雪 姣 Source | Odaily Planet Daily (ID: o-daily)

After a lapse of six months, Super Zero Coin SERO re-entered "Hot Search".

Half a year ago, because the IEO went online, the currency price doubled twice for two weeks, attracting a lot of currency users and miners; this time, it was because the SERO Foundation suddenly announced the destruction of the remaining half of the unproduced tokens.

This can't help but be reminiscent of the recent wave of "destroyment" of the platform currency, but after all, the platform currency of the exchange is similar to brokerage stocks, with exchange revenue as the support, and the token output of the public chain project can be said change"?

Do the miners agree? Does the community agree? Why did you make this change?

Voice of doubt: contrary to the spirit of the code, miners' revenues have dropped sharply?

SERO, the full name of Super Zero (Super Zero Coin), was created in early 2018, and subsequently received angel investment from former IDG partners Zhang Suyang, Lide Capital and Quantum Fund.

According to the SERO white paper, it is positioned as an anonymous coin based on zk-SNARKs (zero-knowledge proof protocol) and supports Turing's complete smart contract operation. Called "Black Ethereum."

It is reported that in July 2019, the SERO mainnet was officially launched. With its improved Super-ZK technology, the single transaction encryption speed can reach 20 times that of Zcash. At the same time, developers are allowed to create contracts / DApps and publish anonymous digital assets.

Recently attracting attention is that on February 18th, the SERO Foundation issued an announcement saying that after the community and the foundation have decided, the remaining half of the unproduced tokens will be destroyed, including the part destroyed in the previous mining, a total of about 350 million. This means that the total amount of SERO will be sharply reduced from 1 billion to 650 million.

The main reason given by SERO is that the current supply of tokens exceeds market demand in terms of market performance. As for tokens with more instrumental attributes, this state is not conducive to the healthy development of ecology.

Although reducing total supply seems to be good news for deflation in the future, it also raises many questions.

The first is that this is still in line with the spirit of the public chain "Code is law"?

The public chain's token distribution is related to all investors on this chain, and it usually does not change once it is determined. The reason why Bitcoin has become "digital gold" and highly respected is the scarcity. The blockchain technology that represents "code is law" has also become the perfect endorsement of this feature. Most of the current public chains also pay tribute to and imitate Bitcoin in the design of economic models.

Artificially adjusting the money supply is a typical traditional currency operation logic. Does this apply to the blockchain?

The second is that SERO destroyed the remaining tokens that should have been produced by mining, which is directly related to the mining income of the miners on the chain.

According to the SERO white paper, the total amount of SERO is 1 billion, of which 800 million is produced by POW / POS mining, 100 million is used as a team incentive token, and the mining block is released in the same proportion, and the final 100 million is allocated to early investors.

After more than half a year of hard work by miners, about 100 million SEROs have been mined so far, and half of the remaining 700 million will be destroyed after the implementation of this resolution. To be straightforward, the miner's income will be halved in the future (of course, the proportion of the output of some tokens of the team in the block will also be reduced accordingly).

It is worth noting that there are two types of miners mentioned here. SERO is a hybrid consensus. Blocks are hashed by POW to determine the validity of the block. The ratio of block rewards obtained by POW and POS miners is about 1: 1 (nearly two "miners" split block rewards) .

Coupled with SERO's natural halving in April, by then, miners' earnings will also be halved. SERO's upcoming two major changes, from the perspective of the currency standard, will make miners' mining revenue sharply cut by 75%.

In the short term, the currency price has not been significantly boosted, and some participants in the community are worried that the destruction may cause some miners to leave the site, which will cause the not-so-high network hashrate to drop sharply. In theory, it may endanger the security of the network , Allowing people to launch a 51% hashrate attack at a lower cost.

According to F2Pool data, SERO's current mining profit is between 2-8 yuan / day

Thirdly, Odaily Planet Daily learned from the community that some participants were worried that miners would leave the market and dump their SERO, which caused huge short-term selling pressure on the secondary market.

Non-small data shows that SERO has increased by 2% in the past 6 months. Some miners who have been mining in this half of the year may be waiting for the opportunity for its rise and realization.

For the various questions inside and outside the community, Odaily Planet Daily interviewed Pope of the SERO Foundation for the first time yesterday, and he responded to these questions.

SERO responds to everything

From the starting point of the destruction decision, why is SERO eager to reduce the total amount of tokens?

"The role of boosting the currency price will be, but this is not the starting point for us to consider adjustments." Pope said: "The main reason is that the inflation rate set at the start of the project is too high (SERO inflation before the third halving) (The rate reached 60% to 70%), but after actually experiencing a period of development, the data show that the current inflation rate is not conducive to the healthy development of ecology. "

For these participants, SERO is an asset and a commodity. For example, if you pledge SERO to participate in the verification block, you can get more SERO. At this time, SERO is similar to a financial product.

In the short term, the price of people who buy later is much worse than those who buy before (for example, the price of the currency later has fallen sharply due to high inflation), so even if this product is just needed for the ecology, the user ’s motivation will be reduced. Eventually it will affect the vitality of the ecology, and vice versa.

Secondly, when this kind of commodity shows oversupply, and overcapacity cannot be digested, it will embark on the old path of the traditional economy, enter a continuous story-making, boast of exaggerating the long-term value of the commodity, and thus increase the viciousness of the price by simply changing hands In a cycle, such results often end in a price rout.

"We don't want that," Pope bluntly said.

"But I still want to explain that the inflation rate set by SERO in the early days was based on the comprehensive judgment of the cultivation of nodes, community activity, and secondary market liquidity. From the main Internet to the present, SERO has grown from small to large. The growth stage of the process and the pursuit of scale. How long this stage lasts depends on the dynamic changes of various participants in the economic ecology. There is no pre-set inflation ratio that can cover such changes and development. Therefore, after weighing, we believe that SERO ’s inflation rate has reached a point where structural adjustments are needed. ”SERO Global Chief Strategy Officer Tony added.

According to reports, after the destruction and natural halving, the inflation rate of SERO will drop to 10-17%, which is still at a relatively high level among the existing mainstream currencies. This shows that the current destruction is necessary to increase the ecological attractiveness.

Looking at the possible negative impacts of destruction, Pope said that it would not actually be as serious as some people worry.

"The short-term earnings of POW miners may be slightly reduced, but long-term profits may be due to the return of SERO inflation to a reasonable level, the gradual increase in ecological demand, and the improvement of the fundamentals. Finally, the market value continues to increase, and greater profits are obtained. But it cannot be ruled out that , There will be some miners leaving and causing a decline in computing power. At this time, the mining difficulty of the entire network will decrease, and the remaining miners' income will rise again. This will be an automatic balance adjustment process. "

"Because of the network security issues caused by short-term computing power changes, SERO's ability to resist risks at this point will be much stronger. Under the hybrid consensus mechanism, every block production of POW will need to be randomly verified by POS miners. With 51% of the computing power of POW and controlling POS 2/3 nodes, the cost is too high; assuming someone really has this ability, there is no motivation to attack from the perspective of a rational person. "

There doesn't seem to be a need to worry about secondary market selling. According to Pope, the current "mining, selling and raising" tendency of POW miners is more obvious, and the proportion of changing the mining output every day is relatively high. Therefore, the reduction in production will reduce this selling pressure.

As for the profit of POS miners, according to Pope, its moving average 12-month annualized interest after the destruction is about 10-12%, which is still higher than the current annualized rate of 4-8% of other mainstream POS currencies.

Therefore, the SERO community generally believes that, whether it is POW or POS miners, they will, with these adjustments, have greater confidence in forward currency holdings and jump out of the "mining, selling and raising" cycle.

Based on the above answers, we can see that this "artificial halving" is a necessary short-term measure based on long-term conditions.

Public chain reform rules: the law needs to be revised, so is the code

From the economic model, SERO answered the question, so from the perspective of the blockchain?

The four words of public chain governance have always been a problem that mystery in this industry cannot avoid.

The mystery is that different people judge this differently. Just as the legal and rational arguments have their own advantages and disadvantages, they need to take into account each other's needs, and it is necessary to maintain a delicate balance in different cases according to the circumstances. Otherwise, it may have a huge impact on reputation and standards.

Whether the code is the only "law" and under what circumstances can it be modified has also been one of the focus of debate in the crypto industry.

Putting aside disputes to see reality, mainstream currencies including BTC, ETH, BCH, etc. have all modified their own code. In addition to optimization and upgrading, some modifications may also break important settings of the initial version, especially in terms of economic models.

For example, the Segregated Witness solution finally supported on BTC is inconsistent with Satoshi's expansion route. The difficulty bomb that ETH should have detonated has been repeatedly delayed. The block reward given to miners on BCH may be forcibly donated to the development in the future. In addition, ZCash, which has recently extended the "tax collection system", has found that the rewards of the founding team that has expired are extended infinitely, and miners pay.

Since the code is not the only "law" and the code can be modified has been practiced by so many "consensus" mainstream digital currencies, this explains to some extent the need to modify the rules. No modification makes more sense.

In the way of modifying the rules, the benevolent sees the benevolent and the wise sees the wisdom.

According to the observation of Odaily Planet Daily, the current governance model of the public chain is mainly divided into two categories, of course, corresponding to different code modification methods:

  • The first type is the operation team and foundation-led governance.

Most public chains, including Bitcoin, Ethereum, and EOS, have adopted this model and have some centralization. For example, BTC's Segregated Witness is deployed by Bitcoin Core. This governance model of the elite representative system can bring certain efficiency and promote the sustainable development of the community; however, it may also lead to forks because of the neglect of the voices and interests of the minority people in the community, such as the emergence of fork coins BCH and ETC.

  • The second type is a proposal type and community participation governance type;

Typical are DASH, DCR, etc., which have a proposal + voting system, which has a wide democratic coverage and is also efficient.

It seems that the public chain adopting the second model is more "blockchain". Of course, this is also a model gradually formed by the above two chains in continuous exploration. Other public chains have either not considered this issue in the early stage or are still in the slow transition.

Back to SERO, how does the total amount of tokens change?

According to Pope, SERO's approach to this decision is somewhere in between.

First, this proposal was initiated by a community member, not the SERO team.

On February 10, a community member initiated a vote to destroy the remaining half of the tokens in an app called "Vote" and called for a "referendum" that caught the attention of the SERO Foundation.

Vote is a tool developed based on SERO, which is added to SERO's decentralized wallet. Community members usually use it to post voting tasks that require the entire community members to participate.

"Of course, not every voting issue will be discussed at the foundation level. However, this destruction proposal has aroused heated discussion in the community, and from the voting results, it has also received the majority of people's support (the ratio of positive and negative is 10: 1. Voting requires a certain amount of SERO). Therefore, we have carefully evaluated this proposal, especially the minority opposition in the community, including the concerns mentioned above, and finally formally discussed and voted at the foundation level, so This proposal was approved, "Pope told Odaily.

According to SERO's official introduction, its foundation has a total of 15 members from South Korea, India, Australia, Hong Kong and mainland China, representing ecological participants in different regions and fields.

Pope believes that after a certain degree of "consensus" in the community and the decision of the foundation's representatives, the destruction decision made by SERO is quite "decentralized". After completing the first large-scale "consensus", SERO can better "Vote" in future development decisions.

SERO past: skyrocketing on-line, over 10,000 communities

Indeed, most public chains wrote a complete white paper when they were born, but the plan was unable to keep up with the changes, the industry was changing rapidly, and timely adjustments were necessary.

"Community governance" is a real issue that the public chain faces all year round. SERO has a say in this regard.

In June 2019, SERO launched Gate.io as an IEO project, raised over 50 times, and skyrocketed after the opening transaction. The currency price doubled two times in two weeks. It can be described as "famous in the First World War", attracting countless coins and miners. It was also heard that the hashrate of the entire network was increased by 7 times in half a month, and exchanges such as matcha, Biki, and Kucoin rushed to list …

One of the more interesting aspects of SERO is that there are many "milk kings" and diehard fans in the community.

One of the milk kings and the media blogger Donkey turned his head on, and silently "preached" and broadcasted "consensus" as early as 2019, generating a thousand fans for SERO.

The donkey told Odaily Planet Daily that SERO can sing along all the way, and it is inseparable from the management behind the plan, because "after many contacts, the project team is mainly studying technology."

What Donkey likes about the project side is that it attaches great importance to the community and flexible strategy.

The donkey gave an example. Initially, SERO planned to combine a consensus algorithm similar to Algorand, but the algorithm was not sufficiently verified and there were problems, so the team quickly modified the algorithm. Later, community discussions held that POS mining can lower the threshold for mining and expand consensus participants. Participants such as management and exchanges can join, so it is recommended that the team add a POS mechanism.

"The project was soon implemented. Six developers, launched POS within two months, are expensive and fast, it is indeed rare."

After the "high light moment", in the past six months, SERO has released two decentralized wallets and held the first developer conference in South Korea. According to Pope, the number of people in the SERO community now exceeds 100,000, and the ratio of the number of people at home and abroad is about 7: 3.

Recently, in preparation for destruction, SERO also needs to invest in the research and development of published technology routes, including oracles, cross-chains, Layer2, and stablecoins.

"These are the plans that need to be implemented in the first half of this year. Therefore, the destruction and halving is not an important node event for the overall progress of SERO. On the contrary, the iteration of the previous technology will have a greater impact on ecological applications. "Said Pope.

On the other hand, like all public chains, focusing on expanding the application landing is also on SERO's agenda. However, it is surprising that this private public chain that has been officially launched for six months has deployed hundreds of contracts and issued more than 200 types of tokens.

According to Pope, the self-developed applications of the SERO official team include 4 wallets with different functions, two DAPPs (Vote mentioned above and a smart contract query tool), and the rest are from third-party developers.

At the end of the interview, Pope told us that for this destruction, SERO will release a new version of the client to ensure that all nodes are notified in a timely manner, including exchanges, full nodes, POW and POS mining pools, solo miners, and those who install full node wallets. user.

"Although we didn't choose the time on purpose, but later found this date to be very interesting. February 29 as a day in the leap year is a bit like the part of the token to be destroyed this time, which is an extra part." Pope laughed.