Should PoW coins make miners hold the coin they mine?

[ToprakGarin]

In most PoW coins miners are permanent sellers: they pay for electricity or rented hashrate in fiat and sell their rewards. That puts constant sell pressure on the coin and gives miners no reason to care about it beyond the next payout.

I am testing the opposite on a small live Ethash chain:

• Your reward address must hold a minimum balance before the node hands out work. The threshold is 0.25% of the mined supply, so it grows with the network.
• Larger balances unlock higher reward tiers: 1x the threshold pays 50% of the block reward, 4x pays 60%, 8x pays 75%, 20x pays 100%.

The upsides I see:

• Miners become buyers first, and miners who want a better tier keep buying, so the coin creates some of its own demand.
• Hit-and-run hashrate becomes less attractive, because rented hashrate still needs a funded address.

The downsides I see:

• A higher entry barrier for small miners.
• Richer miners earn more per hash, which could push towards centralisation.
• It does not stop a large miner who already holds enough coins.

Is this a sound design, or a centralisation trap with extra steps? I would like to hear what experienced miners think, especially about the threshold size and the tier spread.

The live implementation is Pinch (rule "PINCH-STAKE-1"). The spec is at https://pinch.network/docs.html and the current threshold and tiers are on https://pinch.network/stats.html

[Stalker22]

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Is this a sound design, or a centralisation trap with extra steps?

In my opinion, this is a centralization trap.  What prevents all "small" miners from combining all their hashrates into pools that will keep a large balance on a single address to "unlock" the max payout?  Pools can then distribute rewards internally, proportionally to the hashrate of each individual miner, minus their fee.  Such a system would initially be completely centralized between only a few of the strongest pools (at best) because there would be no incentive for solo mining or switching to a weaker pool.

[TastyChillySauce00]

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Is this a sound design, or a centralisation trap with extra steps?

In my opinion, this is a centralization trap.  What prevents all "small" miners from combining all their hashrates into pools that will keep a large balance on a single address to "unlock" the max payout?  Pools can then distribute rewards internally, proportionally to the hashrate of each individual miner, minus their fee.  Such a system would initially be completely centralized between only a few of the strongest pools (at best) because there would be no incentive for solo mining or switching to a weaker pool.

Yep, the design is flawed and could cause 51% attack since the blockchain is also new and vulnerable to centralization of hashrate as stated above. PoW miners selling their hard earned coin is completely normal and if that become a problem, that means the blockchain itself have no usage that miner who run the blockchain selling their own coin becoming such a big deal or in other word the blockchain don't need to exist.

[pooya87]

We have an expression in Farsi that goes "she wanted to fix the eyebrow, but blinded the person".

First of all the focus of no cryptocurrency should ever be on the price, if it is then that is one of the main signs of that cryptocurrency being a shitcoin. If miners sell and get out quickly, that is another sign of them not having any faith in the future of that coin and they want to get out as quickly as possible before the dump so obviously the problem is elsewhere and it won't be fixed by preventing miners from selling their coins. The solution is to create a coin that people actually want to use an don't feel they need to dump and escape.
To put simply a good cryptocurrency should have enough demand that would absorb whatever the miners sell. Just like bitcoin.

The model you are suggesting is also going to create a very unfair system where you have to be filthy rich to be able to earn more money to become even richer! That is not a good model. The system has to be fair and only reward participants based on their "work" not based on how much money they have.
It will also severely centralize the mining of that coin because a centralized mining pool or a massive mining far that earns massive amounts of reward is going to have higher "balances" and be rewarded by this proposed system for being rich!
That will kill solo mining and even small pools.