Dynamic Curation Tax

Research & Development
19

Thanks for replying.

Continous Organisations are interesting. However, most of the whitepaper is not applicable to The Graph:

A Continuous Organization is an organization type that issues securities through a Continuous Securities Offering by funneling part or all of its realized revenues to a specific type of smart-contract called a Decentralized Autonomous Trust"


Let us break down some of the features of Continuous Organizations:

  • Different Buy Price Function and Sell Price Function

    • An investor buys shares at a higher price f(x), than they are able to sell them g(x). This can be seen as an immediate decrease in value, or a “tax”. Solving for this tax:

    • Given the following:

    • Buy Price Function f(x)= ax

    • Sell Price Function g(x)= bx

    • We see that

      image
      image735×146 5.62 KB

    • Since a and b are constants, this equals a constant tax of 1-b/a.

    • In other words, having a different Buy Price Function and Sell Price Function would be the same as adjusting the curation tax. However, unlike Dynamic Curation Tax, which would be limited to x amount of days after a subgraph has been published, this tax would persist.

    • We could choose to use a completely different price function for either or both the price functions. However, this may result in a “dynamic tax” that is dependent on how many curation shares are minted. I believe this would be very difficult for curators to work with.

    • Having a high curation tax that persists throughout the lifecycle of a subgraph will decrease the sensitivity of the curation signal.

  • Initialization period with a flat price.

    • My concern here is not just with backrunning bots. Any Curator that are part of the “Showroom”/ Initialization period are able to sell their shares at a profit. And they will rush to do so, decreasing the value of the remaining curation shares. (Unless a steep tax is imposed on the showroom). I explained this attack here Subgraph Showroom - #45 by Slimchance.

    • Regarding your example. We can not open the protocol to economic attacks, and then expect subgraph developers to cover this cost by buying and burning shares on their subgraph.


Edit: Let’s try to keep this thread about the pros and cons of Reverse Auction / Dynamic Curation Tax. If you’d like to dive deeper into Continuous Organizations, lets discuss it in the Thread about Continuous Organizations.

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