Ether-1 Kronos Fork & Monetary Policy Proposal

With several major updates under development by the team we have begun preparation for a fork that will incorporate and enable these updates and help solve some longer term problems that need to be addressed soon.

First is the activation of node revenue sharing. We completed full activation of ethoFS across the network so now is the time to start disbursing any hosting profits generated with participating node owners.

We completed full activation of ethoFS across the network so now is the time to start disbursing any hosting profits generated with participating node owners. Second is the many recent upstream updates with the Ethereum protocol. Several updates have recently been released that we see may be highly beneficial to out community; one most notable is the change to go modules. This update, along with a few other fixes, has substantially decreased sync times across the board

Several updates have recently been released that we see may be highly beneficial to out community; one most notable is the change to go modules. This update, along with a few other fixes, has across the board Third is the consolidation of core nodes. Currently the ETHO team runs a set of nodes that act as bootnodes for the ETHO chain and ethoFS and a set of nodes that help speed up ethoFS upload times (ethoFS bootnodes — we have been calling them wss nodes). With this fork and the work that has been done on the SSL cluster (in testing) we will be able to combine the core node sets into a main cluster that will eventually also double as the SSL cluster/entry point for ethoFS helping us reduce some project running costs and streamline other operations.

Currently the ETHO team runs a set of nodes that act as bootnodes for the ETHO chain and ethoFS and a set of nodes that help speed up ethoFS upload times (ethoFS bootnodes — we have been calling them wss nodes). With this fork and the work that has been done on the SSL cluster (in testing) we will be able to combine the core node sets into a main cluster that will eventually also double as the SSL cluster/entry point for ethoFS helping us reduce some project running costs and streamline other operations. The fourth, and in our opinion, the most important update with the Kronos fork, will be an update to the Ether-1 Monetary Policy and block reward schedule.

Ether-1 Monetary Policy & Community Participation

The Ether-1 Project thrives with community participation. Historical community participation has directly coincided with the overall morale of the community and morale is directly affected by both the price of ETHO and consistent development. With the historically long alt-coin bear market we have seen coin prices drop 95% in some cases resulting in a complete loss in morale among many projects also resulting in community participation rates drying up. While the Ether-1 development team continues to develop the project we are proposing to alter the monetary policy of the coin to ultimately help with community morale and promote more long term participation. Monetary policy is not the only thing that affects morale but it is one of the pieces that we can alter now and allow both continued development along with a tighter version of monetary policy to cultivate more long term community participation. Currently the emission rate of ETHO is highly inflationary resulting in continued long term sell pressure from miners and from ETHO holders who do not want to hold onto a coin maintains such an inflationary track. More ETHO is currently created per block on average than can be absorbed during an average buying day in the open market. We are proposing to put ETHO emission rates on a more deflationary track and allocate a fairer share of minted coins into node holders hands in order to cultivate more of a “hodl” mentality along with long term community participation due to a relief of longer term sell pressure.

Inflation Based Model

In this model, the money printed is intentionally increased year by year. The underlying principle is that the value of your fiat (or crypto) decreases therefore you are more incentivized to spend it now rather than later. This facilitates a spending economy with free-flowing cash. Inflationary economics also tend to be geared toward high leverage practices such as debts, loans, and credit. Collateralized, non-government printed, yet still approved medium of exchange fits into this paradigm as it also increases spending habits.

Deflation Based Model

In this model, less money is printed year by year. The idea is that your fiat (or crypto) will be worth more later than it is now. However, one criticism this model has received is that it creates a hoarding culture so that no one will actually want to spend money that appreciates Inflation economists have long claimed that a deflation based model is impractical; or rather impossible. However, Germany had one of the highest growth rates in the 1980’s within the context of deflation. This is a fact and acts as evidence that deflation is more than just a viable alternative.

How Does This Apply To ETHO?

An ideal inflationary model (similar to USD) maintains an inflation rate of around 3%. Currently the inflation rate of ETHO is at almost 60% meaning that 60% is added to the supply every year. The ideal solution would be to fairly quickly bring us into the 3–4% range of inflation and then allow our monetary policy level off at a much more healthy rate of emission so as time goes on ETHO maintains it’s value and discourages the mining community and others from selling their ETHO on an exchange at such a high rate. This should result in a renewed confidence of value and ultimately result in longer term community participation rates. The second piece of an updated version of monetary policy would be to allocate more of the block reward to node owners in order to reward participation and encourage the “hodl” mentality. Node holders are one of the most valued pieces of the ETHO ecosystem and we need to back that idea up with action.

How Will Mining Be Impacted?

We expect an initial drop in hashrate due to the initial drop in block reward but with longer term price stability will come longer term mining profitability. If we continue operating under such a high inflationary model, mining profits will continue to dwindle as consistent market selling pressure continues to overwhelm the current participation rate and available buyers on the open market. So while some initial pain will be felt, longer term health with mining profitability will continue encouraging project participation among the POW miners.

The Kronos Reward Schedule

Kronos Reward Schedule

Vote Now! And Discuss!

Join our Discord at https://discord.gg/RDDXPMe. This is our main communication platform. Navigate to the #voting channel and cast your vote!

Discord Voting Channel

Everyone is heartily welcomed to discuss this proposal in the #governance channel. Remember, the only thing that makes a crypto project work is its people.