Is it possible to shed a little more light on the existence of the investment group? Also, I don't know if we'll attract any major miners without the source available.
The premine scares me a bit and right now we're taking you guys on your word.
.25% premine = 2,500,000 coins x your expected exchange rate of .0015 = 2875btc worth of AIR, once it goes live on an exchange
This causes a little concern for me. I am currently mining and would like to be a big promoter of this coin, however I would like my mind to be put a bit at ease. The concept of AIR is great if everything goes as planned..
I agree with gambit here.
0.25% premine sounds like a very tiny amount but with 1 billion coins total and based on the current reward structure it is HUMONGOUS. 2 mins per block of 3.72 coin means ~2700 coins per day - that's almost 1,000 days before enough coins are mined to equal your 0.25% premine
I realize the block reward will eventually be modified based on current exchange price, but I assume it will probably not be increased, only decreased?
The premine amount is
not to pay individuals for work or is owned by the individuals in the team, this is outlined in the whitepaper. If it goes as planned, it will never leave the market place. It's used as a volume lever to amplify gains so that we can keep up with the growth of the exchange rate and keep it stable. For example:
We could have premined only 500,000 coins. Keeping the block reward the same, this would mean we would have 1/5th less volume investment to move in the market. So for 500,000 to have the same 5% exchange rate rise (buying power) that 2,500,000 coins are, instead of making 5% per week, that investment needs to make 5x more, or,
25% per week. Or, we would have to claim only the ability to raise the exchange rate by 1% per week, instead of 5%. So 5x less premine makes it 5x harder to make the same exchange rate rise, or it makes the resulting reward 5x lower.
Since 5% per week is the average expected gain we expect our traders to reasonably get in the market with that volume, this means that if you want the AIRcoin price to rise at the same rate, we need a premine of around 2,500,000 for the block reward and time we set.
So in other words, to maintain that equilibrium and expectations, we need a ratio of premine volume to expected inflation. If we had premined 5,000,000, to raise the exchange rate the same amount, we would only need to make 2.5%. We figured that beyond 2,500,000, any additional premine would be
more of a detriment to the coin than it would be
a benefit to our ability to trade that volume.
As for the investing group, we have a small group of day traders will take the premine amount and use it to scalp prices to return AIR back to the market at a higher price. That's the crux of the mechanism we have to raising the price. It's like a decentralized investment bank, where no trust is required. So far, according to my knowledge, this is the only coin who has figured out how to create a stable or rising exchange rate without having a destructive algorithm, which even those have a short-term dropping exchange rate.
As for the algorithm, it will move the block reward above and below the 3.72 amount depending on the size of the pool to counteract inflation. So if our buying power doubles, we will buy back AIR to raise the exchange rate 2x and block reward stays the same. But if our buying power doubles, and the exchange rate doubles ON ITS OWN, then the block reward will double, "halving" the exchange rate increase, and then our buying power will come in and double whats left. This way these two systems keep in check. So whether the reward goes up or down is based on the exchange rate disregarding our actions to raise the rate, which means if demand for buying coins is EQUAL to demand for mining coins (no inflation), block reward never moves from 3.72.
These concepts are not terribly radical, they're derived from both how large investment firms move (except we don't maintain accounts, so it remains decentralized and anonymous) and how banks regulate exchange rates between countries.
EDIT: The actual formula is like this (it's a little more complicated in actuality, but this works for 'general' trends)
1 = Change in demand (DeltaD) = [change in price (DeltaP) - Change in investment growth (DeltaI)] / Change in supply (DeltaS) = 1
If Delta D is > 1 (price increases faster than supply and growth of the investment pool) block subsidy is increased to counteract the demand, aka, DeltaS goes up. If D < 1, DeltaS is decreased (block subsidy goes down) to try and trend toward DeltaD = (DeltaP-DeltaI)/DeltaS.
