I have been following koinos from the sidelines, and this is the first time I understand the Proof of Burn concept and the burn to mine.
It is an interesting concept, although I'm curious what is the math behind it?
I guess all the inflation goes to miners, so if there is a small amount/share burned for mining at the beginning, the APR for the first miners will be high ... as more come along it should go down. The comparison with Bitcoin miners is not a 100%, since you can sell the miners. Can you sell the virtual hash power? Is it transferable? Maybe the account that has that hash?
Also not a lot is mentioned about scalability here. I know there was talks that it is scalable. What is the block size? What are the technical requirements to run a miner, beside the tokens?
Thanks for the grounded explanation :)
Thanks for the question. @toni.point answered it pretty well already but I can elaborate a little more. It is a set 2% inflation per year (can be changed by governance if necessary but unlikely). That equals 4% APY per year for miners as long as we're at the "target burn rate" of 50% of the supply burnt. This is where it gets interesting though: if the amount burnt is below 50% of the supply, then the APY for miners will be higher than 4%. That's incentive for more people to burn and how the system keeps equilibrium. The same happens in reverse - if there's more than 50% of the supply burnt then the APY will go below 4% causing fewer people to participate in block production. That would also cause a deflationary scenario because more Koin would be being burnt than being added to the supply every year. In either case, the max added to the supply every year is 2% of the total supply. As @toni.point mentioned VHP (virtual hash power) is actually a token that can be traded which would be similar to Bitcoin miners selling their equipment. Since it's a standard Koinos token it could be added to exchanges but it's likely that the first place you'll be able to trade it is on KoinDX (like uniswap). Speaking of standards, there's now a place to propose and discuss those so that new contracts/tokens can be aggregated by interfaces and listed by exchanges: https://github.com/koinos/koinos-contract-standards
On the point about miners making more early on as less people were participating: Koin started as an ERC-20 to feed the initial supply. It has to be claimed on Koinos main net for it to become part of the supply. So even though there are 100m total possible Koins in the supply, there is currently only 38m of that claimed. The 2% per year can only be that of what is already claimed. This was done to avoid a "Steemit like scenario" early on. The amount burnt has stayed between 38%-50% since day 1 so so far it is working as intended. You can see stats at https://koiner.app/
Inflation is 2% of VHP+KOIN. Currently there is 40% burned so yield is about 5% for miners. VHP is just a normal token that can sold/transfered just fine.
For scaling there have tested it with 150+ tps on testnet without any optimizations.
On what market?
Currently there is no market for it yet. You would have to sell it OTC. But some people are working on a uniswap clone called koinDx. Should release very soon.https://koindx.com/