The Old Radix Economics – a retrospective
The newest version of the Radix Economics is now out!
You Spoke, We Listened
Our newest version of the Radix Economics is much, much simpler than the previous version. While we still believe that a decentralised stable store of value for the world is incredibly important, we listened carefully to your feedback. We looked at the list of all the other things we wanted to deliver to make this technology work for the world and decided that the fundamental token that powered the Radix network did not need to be a stable value token for the network to work.
One of the principal concerns raised by the community was the privileged position of the “approved minters”. In the previous version of the Economics, these “approved minters” were designed to allow the direct creation of store-of-value tokens within the Radix network via the creation of a diversified stable coin (XRI). We, of course, smiled a little when Project Libra was announced by Facebook as the entire system had some pretty close similarities to what we had already designed and shared publicly!
Unfortunately, such systems hold a degree of centralised risk with every single “approved minter”, as these institutions have to be the trusted custodian of all the money that is on-ramped into the system. While the risk is diversified, it is not truly decentralised; and as Libra is now also showing us, the regulatory problems around the issuance of such a token is not insignificant either!
Another concern raised by the community was that an elastic supply token may be gameable. While we had less immediate concerns about this aspect; it did rely on several other major components to be built before the network could be launched, which would have created extra dependencies in our project delivery.
As a result the new Radix Economics removes the elastic supply token and instead focuses on fixed supply as the starting point.
The New Economics
To keep things simple, “approved minters” have now been removed from the system, as have any diversified stable coins. In the newest Economic model, the Radix token, the XRD, is a fixed supply, strictly deflationary currency, with 12,000,000,000 XRD (100% of supply) issued at genesis. With each use of the token, 50% of the transaction fee will be removed from circulation, creating a relationship between the use of the network and circulating supply.
Rather than relying on the Radix Token to have a consistent and stable value, the Radix Token will be fully free floating. To make sure the cost of using the network is still predictable for developers and other high volume users of the network, network fees will be set at least daily in USD, but payable in Radix Tokens. Eventually we will be able to fully decentralise this function via the Decentralised Exchange.
To learn more about our new Economics, please see our mini primer here.
Or grab a full copy of the Economics here.
Get involved in the conversation!
As always, we invite you to join our community to discuss any aspect of the Radix ecosystem:
You can also go to our developers’ knowledge base to discover how you can start building on top of the Radix protocol.
By Radix DLT