The proof of bounty does not work, proof of burn (POB) and trade may. Also, BTC model not good for mining by POB on Ethereum.
As an anti-thesis to XIO, I have started a new token called Krakin’t (pronounced as Crackin’ it). Briefly, XIO is a token which relies on the bounties and rewards people by getting involved with the community. Their first project was a deflationary token called The Bomb Token, with a purpose to get the community running and engaged. However, something did not work as expected. I have also made two more tokens only to confirm that expecting the community to contribute to a project does not work. To summarize the experience, it all comes down to one point: — If you want something to be done (properly), do it yourself. Therefore, the community will get engaged only if there is work being done or money investment made. As soon as it is stopped, they stop like the project never existed.
While running the ButtCoin token, I have made it 100% independent of the centralized authority (that is, the contract owner). I have also made another token called Hertz token, with the forever-increasing price that is neither a security nor the ponzi-scheme (an ideal investment!). ButtCoin had a plenty of audience, while Hertz did not. For approximately one year, I have simply let the things develop on their own, ignored ButtCoin like I didn’t know about it, and did not get involved with any of the tokens. The result was that simply nobody got involved or did anything at all. The only reason why the price was constantly rising was because Ethereum’s price was rising, while there was no market trade.
The conclusion is, if I want the token to work, I must expect nothing from the community. Community is there to give cheers and likes, watch their small investments (if any) grow. Furthermore, the project does need a central authority and an authority figure to make the project appear like it is heading somewhere, and in the right direction. This is in contradiction with the concept and idea of the decentralization, and is certainly not what the crypto-pioneers stood for. Perhaps this is why many people start off with the YouTube videos, so that people can learn the non-verbal cues, gain the trust and become the followers. This is also one of the reasons why I do not want to make YouTube videos, and run the propaganda machine. Decentralization is about not having to deal with the trust and anyone’s trust issues.
The solution is therefore to either narrow down things to one and a simple bounty or not make any bounty at all. The first idea I had was to make the token mined by people making a transfer from any account to any account. This would work if there weren’t token farms and bots meant to collect the tokens. This happened with the ButtCoin, while by design, ButtCoin rewards 1% to a previous account that made a transfer, so it has left a big-fat trail that cannot be erased by the token-farms. I am happy that ButtCoin was just for fun, because it were a small business, it would have been wrecked and drained from all the money.
Perhaps the simplest solution is to focus on the transfers (transfer-from and transfer-to) between certain accounts only. Those accounts can be address(0) which is used for burning, any address that is used by decentralized exchanges, or by donating a token to a registered project’s address (which may or may not imply the centralized authority and the gate-keeping that I wish to avoid for all costs).
Now, assuming that this is the best and the simplest solution, how will the mining model work? I am not certain about the model. There are a few models coming to my mind (Bancor Network for example), but I do know that BTC model will not work. If we made a betting-game and said that tokens will be distributed according to a burn-ratio per address, it would act as a psychological catalyst and people would burn tokens according to how much they think the burning is worth. However, since all contract interactions with Ethereum are open, this kind of betting would become biased, while the early miners would have the most power to control the project and the token prices. In other words, they would manipulate the project regardless their good intentions. Therefore, BTC model is a good start but it looks like it is missing several variables and a few computations to make it work for Krakin’t.
I will be investigating which mining model to apply or what kind of changes to make to a BTC model, while I hope that I will solve the immutability and be able to release the token, independently, with a limited pre-minted amount that can be swapped with the ButtCoin.