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Author Topic: [LECTURE] Why Instamining is BAD and why you shouldn't allow it when you Launch  (Read 1259 times)
hendo420
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January 12, 2014, 07:50:31 PM
 #1

Instamining(defined by me because its not in the dictionary): Launching a coin at low difficulty with the normal block reward and having a weeks worth of blocks mined in 20 minutes leaving only a few lucky miners with a ton of coins while the rest are left with a high difficulty and low amount of coins.

This happens with nearly every new coin launch and it must STOP.

Here is what normally happens.

A new coin launches called Fcoin.

Miner A has 5mh/s and starts mining Fcoin at launch. It is an instamine. He makes 500,000 coins at a difficulty of 0.002 or less in the span of about 10 minutes. Miner B has 5mh/s and likes the new Fcoin but is finding out about it 30 minutes after launch. He gets on and mines for the next 3 days and mines only 5,000 coins.

All of the Miner B's push Fcoin to an exchange because they think it has promise and that other people will want to buy it.

When it gets to the exchange it gets some cryptocoin buyers attention and they put up multiple Bitcoin buy orders. Some as high as 0.0001btc per coin.

Miner A is a pro and he watches the exchanges like a hawk so of course he notices the minute it goes to an exchange. He then waits until those big buy orders are set up. Then he Dumps all 500,000 Fcoins on the exchange dropping the price to a fraction of what it was.

Miner B misses the boat and feels screwed.

I have seen this same situation happen on atleast 100 coins.

Instamining hurts a coins long term potential and hurts its short term value as well.



The way it should be done.

Depending on your block time and difficulty retarget time and % up/down you will have to modify your coin to hit the sweet spot.

Make the first so many coins a minimal block reward, something like 0.0001

This means that the network has time to reach its optimum block time before any blocks pay out and the 0.0001 allows miners to know that they are set up correctly to mine and the pools are working.

This is done by going to the main.cpp file and adding a few lines.
Code:
if (nHeight < 1000)
{
nSubsidy = 0.0001 * COIN;
}
In context
Code:

static const int64 nDiffChangeTarget = 600000;

int64 static GetBlockValue(int nHeight, int64 nFees)
{
    int64 nSubsidy = 40 * COIN;
if (nHeight < 1000)
{
nSubsidy = 0.0001 * COIN;
}

    // Subsidy is cut in half every 1051200 blocks, which will occur approximately every 1 year
    nSubsidy >>= (nHeight / 1051200);

    return nSubsidy + nFees;
}


If every coin that launched followed this procedure I believe that we would not see as many coins becoming just pump&dump right out of the gate.


If you agree with me can I get a HELL YEAH?

42 The Meaning of Life and CryptoCurrency       http://www.coingig.com/Hendo420
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Aliencoin
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January 12, 2014, 07:54:03 PM
 #2

HELL YEAH! Aliencoin = 1000blocks which was reduced to 0.0001 for the initial launch and it returns to its original reward of 40.

https://bitcointalk.org/index.php?board=159.0
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January 12, 2014, 07:54:20 PM
 #3

You are right but...crapcoin devs dont care about the instamining because they are the ones doing it in order to dump it. They're going to instamine/premine anyway and hope they can dump before anyone notices.
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January 12, 2014, 07:54:29 PM
 #4

Hell Yeah,


if you have an Instamine as part of your coin setup,  Your coin is already in trouble.

if you have to have premine,   Your coin is in serious serious trouble.



j

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January 12, 2014, 07:58:59 PM
 #5

no. 

In some cases, 0 premine results in no bounties, no promotion or project funding (e.g. wallets, pools, billboards, etc.).

In other cases, 0 premine + instamining does result in bounties, promotion, and resource for project funding.

If the dev cannot get hype for the coin during its launch, when it is most critical, they will never get interest for the coin later.  it's dead on the vine if you cut off the initial interest.

DC2ngEGbd1ZUKyj8aSzrP1W5TXs5WmPuiR wow need noms
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January 12, 2014, 07:59:29 PM
 #6

hendo420: i agree!
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January 12, 2014, 08:05:03 PM
 #7

I have been part of many coins release that had no premine and many of them have succeeded,  if you need  alot of premine your already in alot of trouble.




and all that stuff about needing things,  the developer should just mine like everyone else and use that for giveaways, that way no one can confuse their motivations.

j

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hendo420
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January 12, 2014, 08:09:54 PM
 #8

I have been part of many coins release that had no premine and many of them have succeeded,  if you need  alot of premine your already in alot of trouble.




and all that stuff about needing things,  the developer should just mine like everyone else and use that for giveaways, that way no one can confuse their motivations.

j

Wanna guess how much Aliencoin I have mined since launch?

40.0087 total

Its a good thing I'm not the one running the giveaways. Its a good thing the guy running Aliencoin has a small premine for giveaway/bountys because he tells me he hasn't mined any yet. So I guess I'm lucky  Grin

42 The Meaning of Life and CryptoCurrency       http://www.coingig.com/Hendo420
markjamrobin
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January 12, 2014, 08:13:54 PM
 #9

Then problem with this, is many miners won't "tune-in" till after the adjustment period, because mining for .0001 block reward isn't as beneficial as doing it for 50.

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January 12, 2014, 08:16:45 PM
 #10

I partially agree...but HELL YEAH  Grin

While it does lessen the impact of insta-mining, it does not alleviate it enough IMO.  There is still a fair rush on mining as the block reward changes to it's higher level and this creates an "insta-mine" of sorts.  I think having a step-up block reward would be a better option.  Something like this:

Blocks 1-100 = .00001
Blocks 101-200 = .0002
Blocks 201-300 = .004
Blocks 301-400 = .06

But just like you said, depending on your block time and difficulty retarget time and % up/down you will have to modify your coin to hit the sweet spot.


Nobody wants to mine something with an incredibly low block reward only to be shat upon when the real rewards kick in and everybody jumps on it. 
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January 12, 2014, 08:20:02 PM
 #11

Then problem with this, is many miners won't "tune-in" till after the adjustment period, because mining for .0001 block reward isn't as beneficial as doing it for 50.

stablecoin did this type of launch and it worked perfectly...miners will still mine the coin even with low blocks.

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hendo420
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January 12, 2014, 08:20:24 PM
 #12

I partially agree...but HELL YEAH  Grin

While it does lessen the impact of insta-mining, it does not alleviate it enough IMO.  There is still a fair rush on mining as the block reward changes to it's higher level and this creates an "insta-mine" of sorts.  I think having a step-up block reward would be a better option.  Something like this:

Blocks 1-100 = .00001
Blocks 101-200 = .0002
Blocks 201-300 = .004
Blocks 301-400 = .06

But just like you said, depending on your block time and difficulty retarget time and % up/down you will have to modify your coin to hit the sweet spot.


Nobody wants to mine something with an incredibly low block reward only to be shat upon when the real rewards kick in and everybody jumps on it. 

There are many ways to go about it but the end goal is the same.  Grin

42 The Meaning of Life and CryptoCurrency       http://www.coingig.com/Hendo420
hendo420
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January 13, 2014, 04:42:04 AM
 #13

bumped back to the first page because more ppl need to read this.

42 The Meaning of Life and CryptoCurrency       http://www.coingig.com/Hendo420
CoinManiac
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January 13, 2014, 04:49:28 AM
 #14

Damn ri8 !! Instamined, then sell at lower prices. The end of the coin

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January 13, 2014, 06:23:36 AM
 #15

this doesn't solve anything

what if miner A have 700kh/s..
and miner B have 5Mh/s

shouldn't miner A be awarded for being an early adopter ?
over time miner B will still get a lot more than miner A... and will dump more (duh)

people without lot of hashrate won't dump something that was so difficult to obtain.. usually

with the low rewards at launch - people with low hashrate are out of the game completely. and the coin will be monopolized by the hashrate monsters

but HELL YEAH anyway for trying to make things fair - but it won't solve anything Smiley
hendo420
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January 13, 2014, 07:44:26 AM
 #16

this doesn't solve anything

what if miner A have 700kh/s..
and miner B have 5Mh/s

shouldn't miner A be awarded for being an early adopter ?
over time miner B will still get a lot more than miner A... and will dump more (duh)

people without lot of hashrate won't dump something that was so difficult to obtain.. usually

with the low rewards at launch - people with low hashrate are out of the game completely. and the coin will be monopolized by the hashrate monsters

but HELL YEAH anyway for trying to make things fair - but it won't solve anything Smiley

If miner A and miner B both get on at launch. Miner B will cause Miner A to have a ton of orphans. Just the way it works with the blocks being solved so fast.

42 The Meaning of Life and CryptoCurrency       http://www.coingig.com/Hendo420
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January 13, 2014, 02:57:18 PM
 #17

interesting , i learned alot from this subject
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January 28, 2014, 03:14:32 PM
 #18

Great writeup. It explains clearly what I needed to know.

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January 28, 2014, 03:19:23 PM
 #19

Your premine was any better? Huh

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January 28, 2014, 03:48:59 PM
 #20

Thank you. You also included a how to guide for the code Smiley

I hope it is implemented with all coins.
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