#Decrease land fuel production and 5% ratio

1 messages · Page 1 of 1 (latest)

gleaming yew
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There are a few threads going right now about fuel and I thought I’d throw out an idea.

Right now, we are currently in a situation where landowners are undercutting each other because the demand for fuel is lower than the land fuel supply.

As more land reach maximum fuel output, we are increasing supply. In the future with new ideas are implemented we do not know how much new demand for fuel there will be.

Hence, we have IIP-39, when times are bad it allows the team to decrease land fuel production.

Some of us are wondering about the 5% ratio that has been set. I understand that it has been set and an argument needs to be made for us to think about changing that ratio.

After many discussions on many threads, here is my argument. I think that the 5% ratio should also be something that the team can adjust in times of need and should be added to IIP-39.

The reason for this:
We need the undercutting to stop

  1. The lower fuel prices, landowners make less.
  2. This will drop land prices, which hurts secondary sales. This is not good for DAO and token holders. Not to mention, that you couldn’t have land sales without really decreasing land prices, which again hurts the DAO and token holders.
  3. It hurts the DAO and token holders directly with fuel sales. If you need to do a stage 3 run at 1350 fuel, you currently only need to purchase 450 fuels (or less). The DAO is getting 95%, but it’s of a much smaller piece of pie.

Right now, with supply being way bigger than demand, undercutting is hurting all parties.

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The solution that I’ve heard is to decrease land fuel production. But if you decrease land fuel production too far, it will hurt land prices, which effects the overall economy.

Currently there have been no numbers given to the public so I’m going to have to use hypotheticals.

The reason why only being able to adjust the land fuel production hurts all parties is that adjustment needs to be huge.

For instance, let us say right now that daily land fuel supply is two times as large as demand (hypothetical). Two times just makes the math easy.

For you to match daily supply with demand, you’d have to cut land fuel production by 50%. If you don’t cut to meet demand, then you will still have undercutting and as stated above, bad for all parties.

If you were however to change the ratio to match demand, you’d only need to go from 5 to 10%. As this would double the amount of land fuel being sold. That would mean DAO is still getting 90% but since there is no undercutting (or less undercutting), they would essentially have 90% of a larger piece of pie. Less bonus, and more fuel being sold. Even though the ratio has changed they could be making the same or more.

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Before everyone goes crazy. My suggestion is not to go from 5% to 10% ratio. It’s only to point out that instead of having to make super large changes to land fuel production you could make small changes to the ratio.

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Here is my proposal:

If you slightly changed IIP-39, so that both land fuel production and the ratio could be adjusted.

  1. In times of need where supply is much larger than demand, you would adjust both. Decrease land fuel production and increase the ratio. The goal being to adjust so that supply and demand are relatively close.
    This way you are not making a huge change to land fuel production, which hurts all parties. But making smaller adjustments to both. Hopefully it makes sense this is not a 1:1 ratio, but proportional to their impact on fuel sales. In my hypothetical 10% land fuel production decrease is the same as 1% ratio increase.

  2. When new developments happen, such as burning mechanism, leader boards, competitive arena, or any of the multiple things the team are working on, that help increase demand. As demand increases, then you can start to decrease this ratio back to 5% and increasing land fuel production back to normal.

  3. If demand is good, and you get back to 5%, and the threshold for increasing land fuel production has been reached, then you do a land sale. Landowners should be happy, as at this point, they have maxed out profits, and the DAO/token holders are happy, as land sales mean big profits.

  4. Since you can adjust both, you can be making changes more often that don’t affect the overall economy. If you adjust land fuel production by decreasing 20% that’s a huge change and it will have huge negative effects. But if you adjust land fuel production by decreasing 10% and increasing the ratio by 1%, that will have fewer negative effects.

  5. Once an equilibrium has been reached, then each week you are only having to make very small changes that people won’t even realize. For instance, plus or minus 1% fuel production and a 0.1% ratio change, won’t mean much for all of us individually, but it will help to stabilizing fuel economy.

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Footnote: I used demand equaling supply, but you wouldn’t need it to be exactly equal. I’m not sure exactly at what point you’d stop seeing undercutting, but it’d assume it’d be close to when they are equal.

Again, these are all hypotheticals. I hope we don’t need to cut land fuel production in half to meet demand. But if we do, or it’s worse than that, at least being able to adjust both can minimize the impact on the overall economy.

grizzled wigeon
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I don't think you have any idea into what muddy waters you're getting into. It's not as simple as that to change the 5% ratio. You'll be taking away from the ILV stakers revdis %.

stark ravine
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My thoughts on this is that the oversupply can also reworked by removing the 1:19 ratio. You can set it that its produced by the landowners but the caveat is that they only get 5% of the revenue of what they sell. Im just pretty sure landholders will hate it lol.

grizzled wigeon
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if we reduce it to a 1:1 ratio the oversupply of fuel is instantly fixed. We could also remove this 'bonus' system based on the arbitrary top rail-guard and start making things properly like adults in web3. A free market with order books visible to everyone and ideally a price history chart.

stark ravine
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That would be my preference. Id like to include, if ever, a safeguard against cartels. Will there be a scenario where DAO would need to produce the fuel should the supply be too low whether from high demand or from cartels not selling

grizzled wigeon
gleaming yew
grizzled wigeon
gleaming yew
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Okay but they just cut fuel production by 4x. That is going to hurt land prices hard. This is going to affect the overall prices of everything

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4x is 25%, that could of been achieved with a mixture of 15% decrease of fuel production and 1% increase to ratio. Or 12.5% decrease of fuel and 1.25% increase to ratio. Both less impact on the entire economy than 25%.

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Again with the confines of our current system it had to be done. But if things don’t turn around soon, their only option will be to continue to reduce land fuel production which is not great for the total economy.

drifting vapor
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I agree: A 10:1 ratio DAO production cut (50%) ….AND…. a 50% fuel pump/Converter production cut would be a better option to maintain the credibility/appeal/benefit of owning land.

drifting vapor
grizzled wigeon
drifting vapor
gleaming yew
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Raising the lower rail would only create a stockpile at the bottom. People would be even more upset as their fuel might not sell for days.

drifting vapor
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“Big Time” did this mistake. Was still better ROI even after they fricken nuked it.

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The DAO ratio should come down a little bit, maybe not 50%, but from 95% to even 80% would’ve been nice to see them making an effort.
I still have faith in the project!!!!

gleaming yew
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I read it wrong. Fuel production is down 75%. That’s just a stupid amount and is going to cause such a large impact over the next few days to weeks. This is exactly why you need to be able to adjust both. If it’s okay for them to say this is temporary, I’m not sure why changing the ratio temporary is a problem.

eager pulsar
gleaming yew
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Who are you asking? I’m a land owner

eager pulsar
grizzled wigeon
eager pulsar