Coin Economics Minter Article
I. Custom coins of the Minter network.
The uniqueness of the Minter network is that any user can create a custom coin and instantly exchange it for both BIP and any other coin on the network. This instant liquidity became possible due to the fact that each coin is provided with a reserve in BIP. A reserve is created when a coin is issued. It increases when it is bought (emission) and accordingly decreases when it is sold (burning).
Due to the formation of the reserve in BIP, the rate of any coin of the Minter network to BIP is determined by accurate mathematical calculation. Knowing the parameters of the custom coin that are in the public domain, users can make thoughtful, balanced and, most importantly, profitable decisions.
Any coin in the Minter network created by the user is called custom.
If you do not yet have your own wallet and / or you are new to the Minter network, we suggest that you familiarize yourself with the following instructions and the main project documentation, which details the mechanisms for working with the Minter blockchain.
II. How to create a custom coin.
Any Minter network user who has his own unique address (wallet) can create his own custom coin in the official Console in the coin creation section:
Here the user needs to fill in the following fields:
1. The name of the coin. In this section you need to specify the full name of the coin, and there is also the possibility of a brief description. Maximum 64 characters.
2. Ticker coins. You must write the full name of the coin or its abbreviation. The ticker will be used to identify your coin in the Minter network, when buying, selling, exchanging and any other actions with the coin.
Depending on the length of the Ticker, the following commission will be charged when creating a coin:
- 3 characters – 1 000 000 BIP;
- 4 characters – 1 00 000 BIP;
- 5 characters – 10,000 BIP;
- 6 characters – 1,000 BIP;
- 7-10 characters – 100 BIP.
Note: The coin ticker must be unique and consist only of letters of the Latin alphabet and numbers.
Using the example of a POPE coin, let’s see how the Ticker of a coin differs from its name:
POPE is an upper case, which is a Ticker.
The Pope of Minter – lower case, which is the name of the coin and / or its short description.
3. The number of issues. The initial quantity (issue) of coins is indicated here, which will be issued immediately after the creation of the custom coin.
Note: All initial emission remains with the coin maker. The minimum issue amount is 1 (one) coin.
4. The number of reserved BIP. It is necessary to indicate the number of BIPs that will be in the reserve of the coin and ensure its value in BIP.
In order to understand how this works, consider the following example:
You create a new coin. Next, indicate the issue amount – 1,000 coins, and reserve 1,000 BIP.
Thus, the following parameter appears – the price for the creator. It is calculated as a simple arithmetic mean. The number of reserved BIP is divided by the number of coins issued. In our example, the price for the creator is 1 BIP = 1,000 BIP / 1,000 coins.
Depending on the CRR indicator you have chosen, the initial coin price will be generated for other users of the Minter network.
It is important to understand that the price of a coin in BIP is minimal for the creator and it can never be cheaper.
Note: The minimum reserve when creating a coin is 1,000 BIP.
5. CRR (from the English Constant Reserve Ratio – constant relation to the reserve) is responsible for the coefficient of constant reserve by BIP coins as part of the new issued coin. The higher the coefficient, the greater the security, and therefore, the less volatility. And vice versa.
Note: set as a percentage, valid value: from 10 to 100.
In simple words, CRR determines how much the price of each new issued (purchased) custom coin will increase after it is created, and how much this price will decrease when it is sold.
Before creating your own coin, we recommend that you study the following section: Economics Minter. For a more detailed understanding of the CRR parameter, see this article: CRR.
6. Advanced mode.
After all the fields are filled, it is possible to switch to advanced mode:
Here you will be asked to leave a message where you can describe in more detail the coin being issued.
Note: The maximum number of characters in a message is 1024. In addition to the standard commission for a Ticker, an additional fee is charged, which depends on the number of characters in a message.
Important! After the coin is created, all the specified data will be written to the blockchain and it will not be possible to change it. The only way to make changes is to completely remove the custom coin.
A custom coin is deleted in the following cases:
- Coin reserve is less than 100 BIP;
- The number of coins issued is less than 1;
- The cost of 1 coin is less than 0.0001 BIP.
Summary. Anyone can create their own coin in the Minter network. To do this, you need only 1,100 BIPs. (100 bip – commission for a Ticker from 7 to 10 characters, 1,000 bip – minimum reserve). At the same time, you do not need to have any special knowledge. All that is required of you is desire and a clear understanding of why and why you are creating your own custom coin.
III. Selection of initial coin parameters.
- Basic Minter Formulas.
From the selection of such initial parameters as:
- Release quantity;
- The number of reserved BIP;
it depends on how volatile your coin is. Although CRR is the most important parameter responsible for coin volatility, the initial number of coins issued and the initial reserve of BIP also affect the further vector of the change in the price of your coin.
For example, coins A and B have the same CRR of 75% and the price for the creator is 1 bip.
However, coin A has a reserve of 1,000 BIP and an initial issue of 1,000 coins, and coin B 10,000 each.
Buying the next 10,000 coins A will cost users 23,464 BIPs, and only 15,198 BIPs will be required to buy the same amount of coin B.
This is due to the fact that the basic minter formulas are non-linear:
Calculation of the purchase price of a custom coin =
Reserve * (((wantReceive + supply) / supply ^ (100 / CRR)-1)
- Reserve – current reserve in BIP;
- wantReceive – the number of coins to buy;
- Supply – the total number of coins;
- CRR – Constant Reserve Ratio.
Calculation of the sale price of a custom coin =
Reserve * (1 – (1 – sellAmount / supply) ^ (100 / CRR))
- Reserve – current reserve in BIP,
- sellAmount – the number of coins to sell,
- supply – the total number of coins,
- CRR – Constant Reserve Ratio.
In both formulas, parameters such as: the number of coins issued, the reserve in BIP and CRR are involved. By setting these parameters, the creator of a new custom coin programs how its value will change. Thus, you can create such an algorithm that suits the economy of your project.
Note: the above formulas are publicly available on github
Thanks to the basic formulas, there is instant liquidity of all custom coins in the Minter network. For example, coin A costs 2 bip, and coin B costs 1 bip. Coin A can be instantly exchanged for both 2 BIP and 2 coins B.
In this case, you reduce the total volume of coin A and its reserve BIP, and accordingly increase the emission of coin B and its reserve in BIP.
2. A few observations about CRR.
Since the CRR parameter has a crucial role in determining the value of a coin in BIP and is responsible for its volatility, it also determines how specifically BIP each new issued coin will be more expensive than the previous one.
Based on the percentage of CRR, all coins of the Mnter network can be divided into 4 groups:
- CRR 100%
Coins with such indicators are an exception, since they are not subject to volatility, and their value will not change. A real stable coin in relation to BIP.
Price dependence on the volume of issued coins:
- CRR 51-99%
For these coins, the difference in price between the previous and the next, with each new issued coin will decrease.
Thus, sooner or later, all coins having a CRR in the range from 51% to 99% when reaching a certain reserve size in BIP become practically stable coin with respect to the beep. Since with each new coin issued, the difference in their value decreases and in order to significantly change the value of the coin, you need to have very large volumes of BIP.
Price dependence on the volume of issued coins:
- CRR 50%
These coins are also an exception, since the difference in price between the previous and subsequent coins will be constant.
Price dependence on the volume of issued coins:
Note: TON Gram has some similarities with 50% CRR coins.
- CRR 10-49%
For these coins, the price difference between the previous and the next, with each new issued coin will increase.
Price dependence on the volume of issued coins:
Check the above observation.
Create 3 coins:
- One coin from reserves of 1,000 BIP and CRR 49%;
- One coin from reserves of 1,000 BIP and CRR 50%;
- One coin from reserves of 1,000 BIP and CRR 51%;
The cost to their creator is 1,000 BIP.
We buy 3 coins each:
- The price of the first coin with a CRR of 49% after its creation is 3 114.78 BIP. The difference between the value of the first coin and the price for the creator will be:
- 3 144,78 BIP – 1 000 BIP = 2 144,78 BIP
The difference between the second and the first = 2 183.19 BIP
The difference between the third and second = 2 220,71 BIP
- The price of the first coin with a CRR of 50% after creation will be 3,000 BIP. The difference between the value of the first coin and the price for the creator will be:
- 3 000 BIP – 1 000 BIP = 2 000 BIP
The difference between the second and first = 2,000 BIP
The difference between the third and second = 2,000 BIP
- The price of the first coin with a CRR of 51% after its creation is 2,892.74 BIP. The difference between the value of the first coin and the price for the creator will be:
- 2 892,74 BIP – 1 000 BIP = 1 892,74 BIP
The difference between the second and the first = 1 835.01 BIP
The difference between the third and second = 1 805.15 BIP
After a little calculation using the Minter Calculator, we made sure that the CRR observations are correct.
You can use the Minter Calculator to model various development options for your future coin.
3. Brief conclusions
The higher the CRR and the initial volume of the issued coin, the less its volatility. Thus, over time, replenishment of a reserve of a coin in BIP by purchasing it will have a greater impact on its volume than on its value.
And vice versa:
The lower the CRR and the initial volume of the issued coin, the greater its volatility. Thus, over time, replenishment of a reserve of a coin in BIP by purchasing it will have a greater impact on its value than on its volume.
IV. Economic models of custom coins of the Minter network.
If you do not plan to use all the features and benefits of the Minter network, such as DPoS mining and instant liquidity of all custom coins, but simply use the Minter blockchain as a convenient and transparent tool for receiving payments to pay for your services, we recommend that you wait for an upcoming update in which a limited issue of custom coins will be introduced. Or use unlimited emission by tying the cost of your service to the bip or dollar rates. In this case, it will not be at all important for you what parameters your coin will have, you can always accept your own coins at an understandable and transparent rate for both BIP and any other currency.
For those who want to get the maximum of the possibilities from their custom coin that the Minter blockchain provides now, we offer you to get acquainted with the following models of custom coins that currently exist on the Minter network.
- The percentage of delegation.
Before starting to study economic models, it is worth recalling that in addition to the above parameters of the coin, there is another very important parameter, such as the percentage of delegation of the coin.
Note: if you have not yet reviewed the Minter Economics section, we strongly recommend that you study the following articles:
- Determining the value of a coin during delegation
The main income of ordinary users of the Minter network at the moment is delegation. However, they know that delegating custom coins can be much more profitable than delegating BIP itself. For example, having bought 1,000 coins X for 1,000 BIPs, their value during delegation will be only 750 BIPs and at the moment this is a disadvantageous decision. But with the popularity of coin X, its value will also grow, and after a certain time, the value of 1,000 coins X will also increase when delegated. Your 1,000 BIPs can turn into 2,000, 5,000 or maybe 10,000 BIPs.
The lower the percentage of delegation of a coin, the greater its value when delegating.
At the same time, the percentage of delegation is responsible for the liquidity of the coin, namely for its ability to be quickly sold. Thus, the greater the percentage of delegation, the smaller the volume of coins can be sold immediately after you buy it. Accordingly, buying such a coin is much safer.
At the moment, there are two main economic models of custom coins in the Minter network:
- Buy and use BNU (Buy and Use) – not for Minter network users.
- Buy and Delegate BND (Buy and Delegate) – for Minter network users.
2. Buy and use BNU (Buy and Use) – not for Minter network users.
Coins with a CRR below 50% are more suitable for this economic model. The lower the CRR, the more efficient this model will work, and also the coin will be less attractive to users of the Minter network, who in principle are superfluous in this model.
The end user of this coin should be the user of your project, and not the Minter network.
The main essence of the model is as follows:
For example, you have a game project. And only your coin allows you to access the game, buy unique ammunition, etc.
You issue 10,000 BNUcoin, with a reserve of 10,000 BIP, with a CRR of 25%, immediately delegate them. In this case, your 10,000 BNUcoin will have a delegation cost of 10,000 BIP, i.e. In any case, you as a creator do not lose anything. According to established practice, coins with a CRR of 25% do not cause much interest among users of the Minter network, since it will be very unprofitable to delegate it. You can not give any information about the coin, which will further push users away from buying your coin.
Thus, the users of your project are the only source of demand for your coin.
Then your project develops, and users buy 20,000 BNUcoin for a total of 800,000 BIP. All coins are in their hands and participate in game processes. As a result, your delegated 10,000 BNUcoin already have a delegation cost of not 10,000 BIP, but 650,000 BIP. So, instead of getting instant one-time profit for the sale of coins, you created yourself a good source of passive income.
If a BNUcoin coin had a 75% CRR, then taking into account its purchase by your project users for 800,000 BIP, instead of 650,000 BIP, 10,000 BNUcoin would have a delegation cost of only 39,751 bip.
The question may arise at what cost to sell / exchange coins, since at a CRR of 25% the volatility is very high and for each user the value of the coin will be different.
- The easiest, but at the same time the most inconvenient and not effective way, is to use instant liquidity in the Minter network and accept coins at the BIP rate.
For example, the value of your coin is 50 BIP. One game costs you the same – 50 BIP. Thus, the user can pay for the game with a coin.
If the coin cruise in relation to BIP changes, and becomes for example 25 BIP, then you will already take 2 coins for the game, or vice versa, the coin will go up in price and will cost 100 BIP, then you can take only half the coin for the game.
In this case, at least the integrity and uniqueness of your coin is lost.
- You can sell coins at an average rate. Again, remember ICO TON. Despite the fact that each new Gram costs one billionth more than the previous one, in all rounds, the Gram price was considered as the arithmetic average, according to which it was implemented. In our case, 800,000 BIP / 20,000 BNUcoin and we get the average coin price of 40 BIP. For implementation, additional service will be required. For example, you will accept any currency from your users and give them your coin. Convert the currency to BIP, and then to your coin. In addition, if you accept payments at an average price, at the start you will have BIP surpluses that can be delegated, or you can immediately buy your own coins with a reserve for subsequent sale.
If you have a sufficient amount of BIP, then an ideal option would be to buy 20,000 BNUcoin immediately after its release. Firstly, it will be additional protection against speculators of the Minter network, and secondly, you will have control over your own coin in a free market.
Also, you can sell a coin not at 40 BIP but at 50 or any other price, because your user is guided by the price that you specify. Besides the fact that your initial delegated steak will work 65 times more efficiently, you will also earn extra money by selling coins.
- After introducing the ability to limit the issuance of custom coins in the Minter network, you will be able to completely isolate your coin from users of the Minter network (unless of course they are users of your project) and really establish your own rules of the game!
Note: if you want the user of your project not to touch the Minter bolchain, then in any case you will have to do an additional service for receiving payments. Or you can use the services of third-party projects that provide such services and are already working on the Minter network.
3. BND (Buy and Delegate) buy and delegate – for users of the Minter network.
This model is based on an alternative to a simple coin hold – buy and delegate strategy.
In fact, this is a challenge to the usual “coaxing”, when the coins at the address are in the hope of growth. From the very beginning, Minter has been optimized to give users the maximum of their capabilities with the highest efficiency (minimum commissions, fast distribution of rewards). Amid declining rewards from rewards, the most profitable long-term strategy is Buy and Delegate.
Coins with a CRR above 50% are suitable for this economic model, since it is the antipode of the previously considered BNU model. The main goal of BND is to attract the attention of users of the MInter network.
In order for your coin to interest users, you need to identify how it fits the BND strategy, and why it is a better solution than the BIP delegation.
The main task of the coin creator is to give confidence to users that the value of the coin will grow. This can be done using the following algorithm:
- After creating the coin, immediately delegate it in full. The higher the percentage of delegation, the safer it is to buy your coin, since delegated coins cannot be sold, and accordingly, the value of the coin will not decrease. To sell delegated coins, you first need to make an unbond that lasts 30 days. And only after that the user will be able to dispose of their coins.
- Rewards or some part of the rewards received for delegating your coin must be spent on its purchase with subsequent delegation. Thus, the user will understand that buying your coin today is beneficial to delegate, because tomorrow the value of the coin will increase, because the creator is constantly increasing its reserve by purchasing and at least gives a 30-day guarantee that it will not be sold as it delegates it.
- If you provide some service and accept BIP as a payment, you can spend part of the profit on maintaining the growth of the value of the coin. In addition, you can accept your own coin as payment. In this case, it becomes important not for its course, but for the process of buying a coin, since this leads to an increase in its value. In addition, you can indicate that when paying for services with a coin, a discount is provided, which, in turn, can become an additional impulse for its purchase.
Summarizing the above, this model helps you create a source of passive income, to the main type of your activity. In addition, you can always be sure for the safety of your funds, since at any time you can convert your coins to BIP.
You guarantee to users an increase in the value of your coin, and users, in turn, buying it, make your delegated steak more effective.
The BND model at first glance seems less efficient than the BNU, but at the same time it is much simpler. This model can be used by anyone who provides any paid services and has basic knowledge of the Minter network.
Note: many Minter network validators have their own custom coin and use this economic model.
A few coin recommendations for the BND strategy:
- CRR 50%:
– low volatility;
– more attractive for long-term investment;
– less interesting for speculators.
- A large percentage of delegation:
– fewer coins will be sold
– the rate of coins will drop slightly.
- The creator himself constantly buys a coin:
– the course increases;
– the coin is delegated;
– a guarantee of protection against subsidence.
The Minter blockchain is constantly evolving. With the introduction of new tools and capabilities, new models and strategies for custom coins will appear. Already today you can combine BNU and BND, creating truly unique economic models of coins.
Posted by: Vladimir Rodinka
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