How to change Ravencoin’s 500 RVN asset cost for the future & how it helps EVERYONE

WARNING THIS POST IS WAY TOO LONG TL;DR at the bottom, but reading the entire post will give you the best perspective

(Section 1 Starts Here)

It’s time to tackle one of the most brought up issues with Ravencoin: “If the price were to increase to $10, I would never burn $5000 worth of RVN to create a main asset”

This post is a hypothetical way to decrease the barriers of entry for creating assets on the Ravencoin blockchain as supply becomes more scarce and spread out between miners, speculative buyers, and holders due to Ravencoin’s upcoming halving, increased mining difficulty, etc.

As Ravencoin’s price increases, so does the value of the RVN you burn to create assets on the Ravencoin blockchain. The more assets that are created, the more coins that are burned from Ravencoin’s maximum supply of 21 billion. 500 RVN burn = Main Asset, 100 RVN burn = Sub Asset, 5 RVN burn = Unique Asset/NFT, etc.

At $0.10 per RVN, a main asset costs $50 to create for someone brand new to the Ravencoin blockchain who has no previous holdings. At $1 per RVN, a main asset would cost $500 to create. $500 is a hefty cost for the average person to throw around for a main asset, but there is currently no way around this if the price per RVN does reach $1 in the near future.

The Ravencoin blockchain should scale to encourage miners to mine more, holders to hold, AND new buyers of RVN to not be afraid to create assets due to high burn costs.

I propose a method to dynamically change asset burn rates that are correlated to the mining difficulty of the Ravencoin network. This will benefit miners AND holders. I also hope it will encourage MORE mining and MORE holding (as stated before).

First, I want to set in stone that 500 RVN should be the baseline amount of Ravencoin needed to be burned to create a main asset to stick with the Developers’ incredible vision of this blockchain. Other asset type’s baselines should be the same. As mining difficulty increases, the amount to burn for each type of asset should decrease.

Here is my logic behind this:

Higher mining difficulty comes from more miners on the Ravencoin network. More miners = less mining rewards per miner = higher RVN price due to scarcity among the mining population (typically this is how it goes for all POW coins, as we have seen lately with many different coin network hashrates jumping along with their relative prices due to Ethereum’s London Hard Fork implementing EIP-1559. There is also the thought process of “Why would I sell something that is scarce if it will be worth more in the future?”)

Main idea from the previous statement: More miners = higher mining difficulty = less mining rewards per miner = higher RVN price due to scarcity (hopefully)

Because of Ravencoin being harder to acquire either through mining or price per RVN, the Ravencoin blockchain should account for this by lowering the amount of RVN needed to burn to create assets. This amount will be correlated to the network mining difficulty because it’s a number that updates every block (1 minute).

This benefits miners in 2 ways. First, when someone contributes their hashrate to the Ravencoin network, they are personally lowering the RVN needed for assets (by a tiny fraction most likely). Second, as they are lowering the required RVN needed for assets, they are acquiring more RVN through mining which helps them more easily afford assets. This might encourage people to mine more. As difficulty increases, individual mining rewards decrease as well. Lowering the RVN needed to burn to create assets while network difficulty is rising is a huge benefit for miners. If mining difficulty decreases substantially, RVN burn rates per asset will increase but each miner will get more coins per day. It balances itself out to a degree.

This benefits holders and buyers(non-miners) as well. As network difficulty increases, they will be able to create more assets with their holdings. Given the logic that RVN price increases at the same time, their holdings are more valueable too. If you don’t hold, you can’t appreciate the future value of your holdings and asset creation power you may gain in the future. Brand new buyers of Ravencoin can feel good that they can buy less Ravencoin than 500 to create a main asset (or whichever asset they’re looking to create). In the case that mining difficulty decreases and RVN is at the 500 burn max for an asset, price is most likely dropping so it’s easier and less costly for buyers and holders to create assets, but their holdings are less valuable (I obviously probably don’t need to say that last part)

The correlation between RVN needed for assets and mining difficulty should be non-linear, and asymptotic to a certain point, similar to how mining rewards work with difficulty:

At 50k difficulty, let’s say I earn 50 coins per day. At 100k, I earn 25 per day. At 200k, I earn 12.5 per day. At 400k, I earn 6.25… and it keeps going (yes, this is how it works). As mining difficulty increases, my mining rewards are decreasing but at a slower and slower rate, so the burn rate to create an asset should also decrease at a slower and slower rate.

If we used a linear formula to correlate mining difficulty to RVN burned for assets, and the difficulty gets too high, it would cost almost no RVN to burn to create an asset. This wouldn’t help the deflationary nature of Ravencoin.

Obviously, I don’t know where the baseline mining difficulty should start at for a maximum of 500 RVN burned for a main asset, I think the devs can figure out something (I would propose 100k difficulty to make it simple, but I’m probably wrong).

This can also fix the issue of “Raven can never be $100 per coin cause who would pay $50,000 for a main asset.” This is a great point and I also think this myself. If the Ravencoin blockchain scales asset burn rate, this issue is fixed (to a degree).

There are 2 other methods of fixing this that are talked about a lot in the Ravencoin community.

First, every Ravencoin halving the cost to create assets also halves. But in 2 years after the first halving, if Raven is $3, it would still cost someone $750 to create a main asset (250 RVN burn), and they would have to wait about another 2 years for the price to half again assuming RVN prices stays at $3. RVN price would have to stabilize for this to be effective.

Second, asset cost is linked to a fiat amount, let’s say it’s $50 for a main asset. This would keep the price stable and turn asset burn rates into a dynamic number that correlates with RVN price. There is a positive and negative to this method.

The positive is that asset price is stable. Holders benefit from RVN price increases because they have to spend less of their holdings to create an asset. New buyers are unaffected because the price is always going to be $50. The negative is that it’s linked to FIAT which is VERY INFLATIONARY as we’ve all come to learn. $50 could become nothing in the future and potentially way too many assets could be created on the blockchain than intended by the developers (assuming Ravencoin price increases as a hedge against inflation due to Ravencoin’s deflationary nature). This decreases the value of each asset due to increased supply of assets.

If you just read the entire post, thanks and I would love to hear from the community what they think of this. Healthy discussion is encouraged. Now, for the MUCH NEEDED TL;DR

TL;DR 500 RVN is a large amount of Ravencoin needed to burn to create a main asset. The burn rate should correlate to the networks mining difficulty. High difficulty usually means more miners, which leads to less block rewards per miner and more scarcity among the mining population. The RVN burn rate per asset should decrease exponentially (decrease slower and slower as the amount of RVN needed to create an asset approaches an asymptote). This benefits miners, holders, speculative buyers of Ravencoin in many ways (starting at section 11 of the post). Ultimately, the barriers of entry are lowered for creating assets on the Ravencoin blockchain by encouraging mining and holding and accounting for scarcity of Ravencoin over time.