Proof-of-burn is a consensus algorithm that exists on top of previously existing decentralized flat-architecture. In order for proof-of-burn to be possible, one must destroy (prove destruction) of a previously existing asset.
We can think of proof-of-burn as a second-layer consensus mechanic. Valuable assets must be destroyed in order to create other valuable assets. This gives the new assets created automatic scarcity and value, regardless of their additional functionality.
Additional Functionality
Destroying an asset for another asset makes no sense unless the new asset has properties that the old one does not. Perhaps I'll even go so far as the coin the term POB² (proof-of-brain-squared), meaning a token that employs both proof-of-burn in combination with proof-of-brain. I'll leave that discussion for another rabbit-hole.
Another form of functionality (the one I plan on attempting) would be a governance token for a basic card game (@smartasscards). In addition to that, the cards themselves would be non-fungible tokens (NFT) that were also generated by destroying assets.
In the context of Hive this entails vaporizing HBD by sending it to @null.
Why HBD?
Technically, we could also prove a burn has happened by destroying Hive as well. However, my focus will be purely on HBD for a variety of reasons.
- HBD is the debt of Hive and we should aim to destroy that debt.
- Authors and Devs on Hive are paid directly in HBD. Therefore increasing the value of HBD makes pretty much everyone on the network a happy camper.
- If I'm able to pump the value of HBD with a proof-of-burn concept I can also continue to push the idea and politics of CDP loans in the bank accounts that allow anyone to create HBD out of thin air (stabilizing the price).
- It makes more sense to burn a more stable asset when dealing with business models like this (card games, farming games, and the like). No one wants to spend Hive on something and then realize it was overvalued and lose 90% on the asset they just created.
- Centralizing the burn to a single asset makes everything simpler. We no longer have to worry about conversions/arbitrage or burning the wrong token at the wrong time.
@smartasscards business model
I started working on this project ages ago. I got pretty far and just gave up after one of Steem's many hardforks. Whatever hardfork it was broke the SteemJ wrapper I was using. This wrapper allowed me to write everything is Java. I even started learning Android programming and still have the test app on my phone. Really shows you how many more devs we need around here. To date I still have no idea how I would use Java here and it is the default language for Android development.
Long story short long
I originally envisioned the game to be a simple Card's Against Humanity clone. However, instead of cards that were premade by a centralized authority, the Hive community would create the cards and get tipped for making funny combinations and making players laugh and whatnot.
The biggest problem I realized with this is that there would be full freedom of speech and zero censorship. This path was almost guaranteed to fill up with a bunch of trolls generating super offensive content impossible to regulate. For a while I was fine with that.
Another problem is plagiarism and relying on altruistic tips to satisfy the proof-of brain mechanic. We've all seen these setbacks firsthand with blogging.
However, now I've had a long long time to think about it and I believe to have discovered a better way of doing things. Proof-of-burn is a big part of this new model.
By forcing players to burn HBD in order to create cards we can create a system where users provably own their card. All cards would be unique and no one else would be able to own the same card. Anyone who wanted to use a card they didn't own would have to pay the owner a small fee to buy the property rights permissions.
Under a system like this, proof-of-brain is combined with proof-of-burn (POB²). Except, it's even better than the way Hive runs things, because the proof-of-brain is forced rather than an optional tip. If you want to use a certain card you are FORCED to pay the owner of that card or the network will not allow you to use that card. This gives much more incentive to burn tokens and participate in the experiment.
Governance token.
Burning HBD to create cards also generates the governance token. I'm thinking about re-branding the name from @smartasscards (SMRT) to X-Deck (XD) (shortened from Hexdeck because of the newfound @hextech witness). Truth be told, branding and IP are pretty meaningless in this emergent open-source economy. It doesn't really matter what you call things until they appear in the Web 2.0 legacy economy.
In any case, the governance coin would be used for a variety of things. As a base-pair in a basic DEX that connects to Hive to all of the community decisions that need to be made revolving around the game.
Community decisions
- How much should it cost to create a card and claim ownership?
- How much should it cost someone to copy a card owned by someone else?
- Which words should we allow into the whitelist for card creation?
- Which words should be free-to-play?
All of these questions and more can be voted on and answered, not by me (the creator of the game), but by the community that owns the game. That is the power of decentralization. Decentralize the ownership of the product and it gives everyone incentive to work much harder to build value.
The amazing thing about proof-of-burn is that not only can it generate it's own value from within, but it is also guaranteed to bring value to the token that's being destroyed (in this case HBD). Because HBD is intrinsically linked to Hive increasing the value of HBD will automatically increase the value of Hive itself. Everybody wins. That's the name of the crypto game.
Conclusion
Truly, I have a lot more to say here about all of this, but I really don't want to give everything away just yet and turn this post into a jumbled mess by describing all the logistics. Just trust that I've been thinking about this like everyday and I'm making slow progress and a few breakthroughs on the concept.
I've talked in great detail about how POB applies to my specific project, but it can also obviously apply to many many other tokens and ideas on the Hive blockchain. Because POB doesn't involve complex inflation or curation mechanics, we can employ it much more simply and without burdening the scalability of the network. Most importantly, we may begin the process permissionlessly without the approval of the network or the witnesses as we prototype the technology.
Please forgive and indulge my ignorant question(s) here. I still don't quite grasp this and the more I reread the first post the more I became aware of my ignorance. The questions I have come from a feeling of unease with your proposition, so I will begin with my limited take on this and hopefully it will shed light to you on my disconnect.
It seems to me part of the problem with Hive (and Steem before that) is the majority of users choose not to invest for a plethora of reasons. Either they view the chain as income they need, don't have much money to invest or are wary of the steps involved in investing that is wrought with a lot of KYC bullshit coupled with shady shit the exchanges pull.
Whatever the reason, the majority of investing from outside is taking place by the minority of people. I somehow was able to muster up courage 3-4 times to make meager investments that accounts currently for about 55% of my stake. And while I am quickly approaching Dolphin status, I'm under no illusion that it's any real amount compared to many here like yourself and higher. While I do plan on investing a little more over time (once I figure out a way that is least frightening), the fact remains I want my holdings to grow here in Hive. I point all this out, because according to the Hive page for my account, it is ranking me at around 2327. I'm assuming that means that there are only 2326 accounts with more staked power than myself.
That number betrays the fact I've noticed since joining, and that's most aren't investing anything other than time into this project, which is why demand is such that we aren't where we should be as a chain.
Sorry this is taking so long, trying to frame this correctly by explaining my thoughts on burning. Now that I have the foundation of my understanding, will get to the not understanding.
It seems to me that the majority of people would not want to burn their assets for a more speculatory asset such as you propose. It would seem that if it caught on, most if not all participants would be those who have extraordinary means already and are the current holders responsible for the primary chain (Hive) having any real monetary valuation at all. Wouldn't the success/burden of such a chain be derived solely from the participation of these select few holders of majority stake, and without their investment in the idea be doomed to failure? I ask, because my focus since joining has been to scrape what little I can from my piss poor economic status into this main chain, intent on growing it best I can for myself and those I appreciate as my self designated community. The idea of destroying/slowing my growth here for a POB idea doesn't make sense to me.
I still find myself lost here despite typing so much. I guess I'm wondering why someone who has invested a little like myself (and the majority who have actually reached into their pocket for small amounts they could afford) to the many who never have put a dime in nor plan to would want to burn their growth. It would seem detrimental for those of us of small means who have cared enough to try to contribute financially to the chain, and more so for those who only view the chain as something to take from.
Appreciate any insight you can give. I really want to understand why the majority would want this to be a thing (as opposed to this being a dynamic that the responsibility for once again falls onto the larger stakeholders). I read your conversation with FTG in your last thread, and the passion both of you have for this has kept me from dismissing it outright as my limited understanding wants me to do. I hold both of you in high regard so really wish to understand if possible.
Hey there, interesting concept!
How much should it cost to create a card and claim ownership?
I think 0.2 HBD is reasonable for a start.
How much should it cost someone to copy a card owned by someone else?
Not sure. But I think the cost should increase with every new copy make so that it incentivizes early creators to think of something good. Side-tracking, won't it be great if the original creator get to earn some royalties from subsequent copies?
Which words should we allow into the whitelist for card creation?
No preference
Which words should be free-to-play?
No preference
Personally I'm thinking about setting the price to create a card high and static. Something like 1 HBD per card. Because creating cards generates the governance token and copying cards does not, I think I can get away with this.
I honestly think it might be a really bad idea to allow the governance token to affect the price of card ownership, because the oligarchy formed could choose to lower the price and then jack it up later and lock everyone else out after they scoop up a ton of cheap cards.
You might be misunderstanding me. No one can create a copy from a copy. All "proxy cards" (copies) can only be created by paying the owner of the original. I wouldn't want the price to go up because then players would get priced out of copying the most popular cards. Interesting idea though.
Ah.. I missed out on the governance part. In that case, does it make sense to increase the cost of generating a new card + governance token as more cards are minted? Somewhat like a bonding curve? But most other bonding curves I know will allow minters to sell back the tokens.
As for the copies, if cost of subsequent copies are paid to the owner then perhaps it makes sense for the owner to be allowed to set the price? If he/she sets it too high, nobody will buy it. If set too low, then he/she misses out on the profits. This will make it more market-driven in a sense.
Indeed, I considered this for many hours while I was droning away at work. In the end I decided it wasn't a good idea because it would allow trolls to snipe cards and jack up the prices just so no one else could use them.
It would also allow people to set the price dirt cheap (or free) which also undermines the economy. In the end I determined that this price should be constant across all cards, and that the metric of success would simply be how many people paid to copy a single card.
It would also allow a combination of the two. Imagine creating really popular cards and letting all your friends buy them for cheap before you jack up the prices. Also imagine creating alt accounts and paying yourself to copy cards (I have a solution to this). You can now sell the alt accounts for whatever and that would be the only way to get access to these cards.
We can't have any of this nonsense.
A system like that would get gamed pretty bad.
Perhaps you can tell I've thought about this a lot :D
Thanks for bringing this issue up in the comments though... as it is one of many small parts of the logistics of the game that I absolutely had no opportunity to discuss in the OP.
Very interesting idea.
I am looking forward to see what you come up with, with this.
Even though I don't know much about proof-of-burn, or proof-of-brain for that matter, I feel like these last two posts have given me a really good idea of the concept of it as well as the concept of combining them (POB2).
By the time this goes somewhere I may even be able to accrue enough value to participate :D
Regardless, I will be keeping my eyes on this for the foreseeable future.
If it works out the way I want it to you'll actually be able to make some money if you can think of cards that other people want to buy (or if speculation on the governance token is solid).
looking forward :)