Expediting Deflation

Keeping Money Moving

Perhaps one of the greatest challenges of deflationary tokens is to keep money moving. In inflationary systems, the inflation ensures that people will always look to put their money to work in places that will deflate in relation to where they were before. Deflationary systems see the opposing behaviour: People don’t want to sell. For that reason, it is very much a challenge to develop deflationary systems that increase wealth without ultimately destroying it.

MetaWhales deflate all the way to its established minimum supply. As an example, if that minimum supply is equal 1 then How can MetaWhales deflate all the way to 1, if someone else buys and holds 100 tokens?

That question is very important and to solve this problem, MetaWhales have a set of systems to ensure the monetary policy is and remains prioritary above any individual.

The PRIA Inactivity Burn System [Case Study]

PRIA has been the first experiment in DEFI to implement inactivity burns with the aim of expediting deflationary cycles. If a person doesn’t make a trade of any size within 35 days, anyone can call an inactivity burn on that address, which will burn 25% of that person’s account. If a person doesn’t make a trade of any size within 60 days, then 100% can be burned, and the system is cleared of that blockage.

Over 100 days has passed since PRIA deployed, and so far we can verify a number of benefits to this system.

First, it ensures that deflation to lower supply is inevitable, which a deflationary deterministic system like MetaWhale requires. Second, it single-handedly made PRIA the asset with the most accurate circulating supply on the crypto market. No one can account for how much Bitcoin has already been lost. How much dust? No one can tell objectively. And it’s not only Bitcoin, but almost all forms of money that suffer from this inaccuracy. Therefore, the circulating supply of any given crypto is vastly erroneous and cannot be trusted. With PRIA, we know that every wallet represents an active user, otherwise, it would be burned.

PRIA holders who have been around long enough to experience the inactive burn system in action understand why it’s required, have grown confident in it, and absolutely love it. Imagine, if a PRIA holder dies, the tokens don’t stay around to account for circulating supply. Someone will burn them and clean the system of inactive tokens. Likewise, there are always people who send tokens to contracts and then become unretrievable. With the burn system in place, tokens stuck in contracts will never affect the project’s tokenomics.

But are there any downsides to this system? Yes. Some people are afraid they will forget to manage their tokens within the time frame, or they actually prefer to forget about their tokens for long periods of time. Other people are irresponsible and don’t read the warnings, though they are repeated several times on the main web page. In this regard, we have found the PRIA Inactivity Burn System to be ruthless and unforgiving. This system is not a playground. It is a system designed to make deflation a never-ending success.

One other point is that the model did not include rewards for the people calling the functions, although we can verify that the lack of monetary incentive has not stopped people from burning inactive addresses. Interestingly, people seem to compete for the burns, with the reward being a psychological one (either the internal satisfaction of contributing to the velocity of the deflation and/or some kind of savage instinct to burn).

A More Forgiving Inactivity System for MetaWhale [Implemented Systems]

Taking into account our experience with PRIA, we came up with a more forgiving system to keep MetaWhale going where it needs to go. MetaWhale will be handling thousands to millions of dollars in value and possibly locking in its reserves just as much. We cannot make any compromises that would jeopardize the deflationary road to minimum supply.

Therefore, we refined the inactivity system with two new controls:

Forced Sell

  • Within 35 days, if a sell, or transfer isn’t made with over 6% of the total address balance, anyone will be able to call a function that sells 5% of their MetaWhale tokens to wETH and transfers 1% to the caller as a reward. If this person doesn’t make a sell, or transfer for another 35 days, someone can call the function to sell 5% and transfer 1% again, and so on. A Forced Sell does not reset the Inactivity Burn timer. The dashboard has tools to assist anyone taking note of the status of their wallets in order to avoid forced sells. img

Inactivity Burn (revised)

  • If a single sell, or transfer isn’t made in 121 days (4 months), anyone can call the inactivity burn function, which will remove 100% of the MetaWhale balance from that wallet. 50% will be burned from that address balance and 50% will be transferred to the person who called the burn function, as a reward. The dashboard has tools to assist anyone taking note of the status of their wallets in order to avoid inactivity sells. img

These 2 control systems are present in MetaWhales and will allow inactive people to take profits when they’re unaware of their positions, putting a portion of their holdings safely in wETH. The inactivity burn (50% burn, 50% caller reward) remains, however, to prevent the inevitability of some permanently abandoned wallets. However, 121 days (4 months) will provide ample management time for anyone who’s a bit forgetful about their own positions.

Note: All addresses get initialized automatically when they do their first trade or transfer. If an address hasn’t been initialized and is being sent MetaWhales, then the transaction won’t occur successfully until the receiver has done its first trade or transfer. Initialization meaning registering and starting the counters for the forced sell and inactivity burn eligibility.

One very important note about these systems:

These systems are there to make it inevitable that 1 MetaWhale will be equal to the total value of its reserves at its conclusion time (an “unstable” stable-coin). These systems will force everyone to move. As such, MetaWhale requires a different mindset, seeing it for what it is: a tool for inflation arbitrage. A market participant buys it, consolidates a position, and discards it. If a market participant wants to re-enter the market, he/she can do so even if the price will be higher, but the core fundamentals won’t have changed, and the inevitability that 1 MetaWhale = Reserves Value will hold. The market participant is merely rebasing his/her own position by consolidating his/her own previous positions.

Example of resetting the Force Sell and Inactivity Burn counters on your address

Imagine MetaWhale Gold ($MWG) is priced at $1 and that you hold 100 MWG. To reset your forced sell counter you’d be required to sell, or transfer over 6% of your total MWG. Upon making a sell, or transfer of 6.1 MWG (6.1% of your total MWG balance = $6.1) your force sell timer should be reset to allow for 35 days of inactivity. Likewise, your inactivity burn gets reset to allow you 121 days (4 months) of inactivity from that date. Make sure to verify the dates on the dashboard after a transaction is made so you’re absolutely sure of your date limits, especially if you’re a new user. You can also transfer to yourself to reset the timers.

Alternatively, you can reset the timers using the dashboard.