EIP-33 Token burning during rent collection

[umbral sparrow]

Discussions around what to do with tokens during rent collection

https://github.com/ergoplatform/eips/pull/68

Discussion here (5/10/22)

#🛠│development message

[mighty raptor]

How will a token burn help? Does someone have access to the token burn address?

[zinc reef]

I think we should implement burning as a first step, protecting dapp security and token values

That's definitely better than allowing miners to take

[umbral sparrow]

See EIP/Discussion - burning is just a quick fix to prevent dealing with some issues which potential solutions for are being discussed

[mighty raptor]

How? If burnt it’s gone. Miner may take pitty and give back,no?

[mighty raptor]

How do you prove none has access to burn address?

[umbral sparrow]

wouldn't be a very good burn address otherwise

[zinc reef]

Burning in ergo doesn't send tokens to an address, it removes them from the tx outputs

[mighty raptor]

But can it be proven?

[umbral sparrow]

^

[zinc reef]

Miner likely won't, if its a token powering a dapp the dapp is stolen, if its tokens with value they could dump on market and ruin a perfectly good chart

[mighty raptor]

So say I loose my ergopad stake token to burn. What’s the difference to miner taking it?

[zinc reef]

They unstake tokens and dump on market, which is worse for the token than it being burned imo

[mighty raptor]

So it’s not about the person who lost the money?

[umbral sparrow]

maybe worse for holders, a good incentive for mining though if properly handled/distributed

[zinc reef]

No, to the user owning the SR'd box there is no practical difference is miner takes / tokens are burned

[toxic fern]

I don't see how dumping the token is something exclusive to miners, or why it should even be considered in the first place. Token value seems pretty arbitrary here imo. The rentOrBurn flag might be a good idea but not sure how that would work on the protocol level.

[mighty raptor]

Sorry I don’t see who we are trying to protect here then with this proposal

[zinc reef]

If the box is say, a multi-sig addr with 80% of token supply, that's a problem

[toxic fern]

I would hope a box with such a high value would then back it with 10 or so ERG so that its tokens are not taken for 50 years. Not to mention that any time the box is spent and recreated the counter would reset.

Bigger issue to me is the security in smart contracts

[zinc reef]

Ah yeah, in my highly unlikely scenario 2 of 3 multi sig holders have sadly passed away

[mighty raptor]

It’s a sad part of life. But again it’s responsibility to pass on this to others if they had some to pass to, else the funds etc gets recycled into the system like most compost bins

I don’t see why it should just be lost.

[toxic fern]

Somewhat unrelated, but assuming the tokens aren't burnt, this got me thinking that it would be a good place for a decentralized mining pool to trustlessly re-distribute the assets back to miners on the pool 🤔

[umbral sparrow]

Every edge case, DAO tokens that control funds, access keys to dApps with personal information, etc.

[mighty raptor]

Yeah. Or maybe like some charity address they go to. A valid one obviously

[zinc reef]

I think it's worth a mention that a little loophole or two in storage rent is preferable to users losing their funds. Imo ergo should be for people to use and rely on, not for always making perfect economic sense at protocol level. Currently miners are mining at loss, and the network is still being mined, so that's evidence we can have some economic issues and everything be fine.

[umbral sparrow]

I imagine the bulk is free/cheap electricity or solar and in profit tbh. People won't mine at a loss when they can buy cheaper other than hobbyists

[mighty raptor]

Incorrect. I mined 6GHs at loss to get the EIP in

And I’m in UK. So when I say loss I mean loss

[umbral sparrow]

I'm sure plenty did, but don't think it's the bulk. Bulk doesn't check chats or care if we hit 51%

[mighty raptor]

That is true

[umbral sparrow]

and getblok would be a lot more popular ^^

[zinc reef]

I like the idea of sending tokens to a DAO, it is keeping tvl stable. If enough sigusd is burnt, would it lose parity?

I think no, it would just make the reserves the burned tokens pertained to irretrievable

[umbral sparrow]

Yeah good for RSV/protocol if anything

[umbral sparrow]

managed by who though? Maybe all ERG holders using ergo-team?

[zinc reef]

That'd be the best governance for a DAO solution, tho I still don't like the idea of users losing massive tokens positions if held in ergopad stake keys etc

[umbral sparrow]

Don't see how that can be prevented other than wallets warning users for old UTXOs and maybe 'ERGless' UTXOs (containing tokens)?

[zinc reef]

This is a weird idea but hear me out, is there a way we can define a 'collateral' box that is always depleted before the utxo's timing out under an address?

There's variations on this, like take the Ergs from the timing out box, but send the tokens to the users collateral box

In theory their timing-out box would then be extended by 4 years. It doesn't require the full storage rent amt to send the tokens in a timing out box back to the user, just 0.001 erg out of the 0.12

So the miner takes a tiny bit less but the user keeps their tokens for another 4 years. When the new box times out it'll be spent fully and no tokens back to user, they get burnt / kept by miner / go to dao

[limber sierra]

I'm jumping in (first post). Imo buring tokens is against what ergo stands for. (work!)

[limber sierra]

There are a lot of workers out of a job right now, that would be offended about talking about burning tokens. Just saying

[limber sierra]

What I have been taught is that it is natural for things to return to where they came from, to be recycled, as this maintains a fluid system. (biology relies on it)

But you can't just take from somebody and burn it. That's confiscation, it's not going back to where it came from, then it's a form of punishment. It's pretty cut and dry become confiscation for bad behavior; rather than rent for the sake of itself; it's deflation for the sake of outside perceptions.

Even if you could positively effect the market through pruning it's inactive parts, the act of pruning something that you don't own will have unintended negative side-effects.

[dire drum]

Building on this idea, maybe a „recycle bin“ contract can be put into place? The concept should be familiar and easily explainable to most users, even in the heat of just having „lost“ their assets. Miners would spend an eligible box containing assets (but not enough erg for storage rent) and receive the rent from the contracts reserves. The user assets would be protected by the contract for an additional time period, like 4 years more. The users can recover their assets by paying the storage rent + a small fee to the contract. The fee goes to the „recycle bins“ liquidity/reserve providers. If the user does not claim the tokens after x years, some other action can happen, like burning or they could be auctioned?

[ivory sleet]

I like the idea of tokens being flagged as either burned or mined when minted. Another option would be for users to be able to flag their wallet addresses as burn or mine also. A third would be a check in the storage rent code for the date of when a box was last referenced (in addition to the creation date), so any tokens being actively referenced by DApps for whatever reason wouldn't be captured by storage rent (my understanding is that boxes can be referenced without being spent?)

[limber sierra]

There's a book, called the Tao te Ching that discusses how to make a great nation (as the book was written for a King in China).

In the book the author has three precious tenants. The second of these tenets is economy and the conservation thereof. It cautions never to give away or destroy anything, but instead to always help with the natural development of all things (enemies included) and always stay out of the light in doing so.

It calls this 'hiding the light of your procedure', and is also known as effortless action (wu wei).

"The work is done, but how no one can see;
'Tis this that makes the power not cease to be."