Monetary Policy
Last updated
Last updated
The tokens will have a fixed supply of 100,000,000 GORA. The aim is for the velocity of the tokens to remain low and incentivise participants within GoraNetwork to hold their tokens, or use the to transact within the ecosystem (see Property Rights for use cases) . We can use the adapted formula from monetary economics by Vitalik below to demonstrate the benefit of reducing volatility:
where p is the price of the token, M is the total money supply, T is the transaction volume and H is the average time a user holds their coin before making a transaction. M will remain constant, and we can see a proportional relationship with price and holding time. This formula assumes demand will remain stable, however a desirable aim for Gora is to increase the network effect which in terms makes Gora more valuable. This will be achieved by continuously growing the node runner and consumer base.
Monetary Policy Objectives
The objective of the Gora monetary policy will change over time. In the first 2-3 years, the goal will be to increase network effects - in other words, creating node runner and consumer demand. This is similar to real world monetary policy of a period of "Printing Money". While it leads to jobs being created, it also leads to high inflation.
Gora's first year will see limited month on month inflation through strategic use of daily vesting schedules and long lock up periods around 1-2 years. During these lockup periods, Gora will employ highly skilled and reputable market makers to ensure liquidity for node runners and community members. This period will allow Gora to grow the consumer base while rewarding node runners.
The end of lock up periods for investors may lead to price inflation due to excess amount of tokens in the circulating supply, which will require careful token engineering to minimize this impact. However, a key point to consider is that a significant portion of seed tokens is allocated to long-term investors, such as Algorand, so although monetary policy is designed for the worst case scenario (i.e. all investors sell all their as soon as they're vested), in practice it is much more likely investors will sell over a much longer period (e.g. 3-6 years). For example, Algorand, owning 33% of the seed round tokens, it is in their best interested to see the oracle grow, as it directly correlates with the mission of the organization.
The full supply schedule can be seen below: