Note: This article is out of date. We are still considering methods of rewarding Omni holders through upgraded functionality but have not yet decided upon the proper course of action.
One question I hear over and over in our community is “Why will Mastercoins have value when there are so many coins in the Master Protocol ecosystem people could use?”
Up until now, our answer has always been a combination of 1) Preferential treatment for Mastercoin when using advanced features combined with 2) burning Mastercoin for anti-spam fees. Unfortunately, these answers always felt a bit . . . insufficient.
Today I am excited to share a MAJOR improvement to how we will increase the value of Mastercoin. When you use our advanced features (fundraisers, betting, distributed exchange, etc) you will never pay a fee when using Mastercoin. If you use another coin (for instance, a USDCoin pegged to the U.S. Dollar), a small fee (0.3%) will be deducted by the protocol. You might assume that the fee will go to the Mastercoin Foundation, but you would be wrong. The fee will be automatically sold on the distributed exchange . . . for Mastercoin . . . which will be BURNED.
That’s right. The protocol will automatically buy up Mastercoins using these fees, and destroy them forever.
Credit for this idea goes to Dominik (I first heard it from Ron, but Dom came up with it first), and the idea is pure, elegant, simple genius.
Take a moment to appreciate how genius this is:
- Users don’t actually have to hold any Mastercoins. They can exclusively use other coins, and still be burning Mastercoins.
- No extra weight in the bitcoin block chain (the fee, sale, and burning happens automatically in our system as we process transactions)
- People have a small incentive to use Mastercoin, but Mastercoin holders benefit no matter which currency people use
- We don’t have to encumber our features with Mastercoin favoritism
- Mastercoin supply decreases the more other coins are used in our ecosystem
- Once the metacoin distributed exchange (metadex) is live, this fee will automatically be charged to every other currency using advanced features in our ecosystem, including fundraisers accepting bitcoin!
- The size of the fee (0.3%) is not a “magic number”. It can be changed in the future by a vote of MSC holders, hopefully using a voting feature in our protocol which will allow voting on parameters such as this.
Some transactions are exempt from the fee:
- Simple sends (so you can still move your coins around for free).
- Any advanced transaction which directly uses Mastercoin, for instance:
- Trading Mastercoin against MaidSafeCoin on the distributed exchange
- Accepting Mastercoins when crowd-funding
- Placing a bet denominated in Mastercoin
Examples of transactions subject to the fee:
- Trading USDCoin against MaidSafeCoin on the distributed exchange
- Coins sent to fundraisers in currencies other than Mastercoin (including bitcoin)
- Placing bets denominated in USDCoin or MaidSafeCoin
Mastercoin has ALWAYS been designed to be “insanely deflationary”, and this is a HUGE step in that direction. So in the future, when you see people asking why Mastercoins will be valuable, please point them to this blog post!
You can follow progress on this change on github here: https://github.com/mastercoin-MSC/spec/issues/193#issuecomment-45377270
We have some wonkier text about why Mastercoin will have value in the future here (work in progress): https://github.com/mastercoin-MSC/spec/blob/master/WhyMastercoinsHaveValue.md
Speaking of being on fire, huge props to our team, which has been making blazing fast progress lately on a universal, cross-platform, exchange-friendly Mastercoin implementation. News coming about that soon.
Also, props to Zalgo for the b̹̫̞͛͗͑̚u̯̖ͨ̇ͮͅr̪̘̫͗n̝͈̠ͮ̆̏ï̝͆̌n̰̠̘̦̿ͭ͑͒g̫̦͇̲̣ͅ text, and photofunia for the burning Mastercoin symbol.
edit: Ron asked me to mention that some details of this mechanism are not considered final, and may change based on internal discussion and community feedback.
10 thoughts on “Mastercoin is for B̷̡̍̑ͬ̈̓̊̋̾̐̓ͫͮͣ̚͝U̶̵̷ͩ͑ͤ͛͏R͆̓ͪ͒ͣ̒͗͟͝N̡̈ͯ̿ͧ̋ͬ͆̿ͩͤ̑ͧ̅͢Į̸͑ͪ͐͌ͣͮͮ̿̌̋̽͟͞Ņ̶͗̓̈̿͋̿ͩ̓͒ͣ̎Gͤ̉͒̇̋͜͠”
J.R – please refrain from writing “X will happen with the spec” when that hasn’t been decided yet. it’s a suggestion and it will be discussed and reviewed by the community.
I’ll add something about the details still being subject to change. We did approve this announcement in the all-hands meeting. I agree that we can be flexible based on community feedback we receive.
It is super important to me that everyone understands that we’re building the protocol with a vision, but always looking to get as much consensus as possible before making sensitive decision. Thanks for updating the language of the post to reflect that.
P.S I added a link from https://github.com/mastercoin-MSC/spec/blob/master/WhyMastercoinsHaveValue.md
Why not send the 0.3% to the mastercoin fundation and they/you can burn it as you wish or use it for further devellopment.
We prefer the burning be built-in – it gives the market confidence. Also, the Foundation has plenty of MSC already.
Also, it’s possible that it’s easier, regulatory wise, to burn it.
What happens if there are not master coins anymore to burn? I know this is a theoretical question, but if your assume that mastercoin will be used for a long time. its quite possible.
MSC is divisible to 8 decimal places, and could easily be made more divisible if we started running out.
You do realize that this scenario would make MSC holders the wealthiest people in the world by several orders of magnitude, right? 🙂
True so, but the current problem with MSC i see right now is that the development outcome is not visible yet. Everything in mastercoin is currently to cumbersome to use. See NXT, they had way less time and focused on simplicity and it just works and is fun (though the security is not tested)
I would like to see MSC coming up with easy to use APIs and interfaces. Integration has to be as simple as possible, only then it will be chosen as the standard top layer protocol for bitcoin.
Focus on features, that bitcoin AND others can’t do already.
My two cents..
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