Hi
I want to point out what I judge to be the key ideas I presented on my last post, because I think it deserves more debate over the final architecture.
Yes, I think it doesn’t matter now, at this point of discussion (even though I think that an account model would be easier to save a checkpoint at mainchain). When I spoke about account, you could read “UTXO” as you like (I was indeed thinking on an UTXO model).
I really think we cannot runaway from burning the entire UTXO. I’ll explain:
I pointed out to inflation and small miner friendliness, but there is another aspect: how much time the miner has contributed to the pool. If we don’t burn, the old miners would have a gigantic amount of shares, at a point that new miners couldn’t even compete. The conclusion would be a pool for little, where new miners couldn’t enter, and even the old miners would eventually leave because of the total pool size plateau.
Also, that system wouldn’t be fair, because miners would be double paid. When a miner is selected to receive the revenue, he’s getting paid by its work, but if he doesn’t lose shares, the amount of work spent one time would be valued multiple times.
I think I didn’t express myself very well. In an UTXO model, I think the selected UTXO would be the one that is burnt entirely, in an account based, the account would be burnt. That way, we don’t need to insert shares-to-BTC exchange rates, it’s all or nothing.
BUT, the main point, and waht I think is the final solution to all incentives problems: the above linear probability function.
Imagine an exponential probability function based on amount of shares. In that way, doubling the amount of shares would more than double the probability of being selected. That is, [p(s1+s2) > p(s1) + p(s2)]
In an an above linear probability system, that would be severely penalized, that’s because it is far more desirable to have a single big UTXO instead of many small UTXOs. Big miners would severely undervaluate their energy spents by pulverizing shares.
That’s another incentive gain from the above linear solution: shares have different values in the hands of different actors. The shares of the small miners are much more valuable on the hands of bigger miners, because at their point on the probability curve, the marginal increment of shares have more impact. That’s the solution for small miners, big miners and entities are incentivized to buy shares.
We could think that this would lead to centralization, and we need for sure run some simulations on that. But, looking by another angle, knowing that the selected share (either in an UTXO or an account) would be burnt, even the big miners go down to position 0. In theory, some long running small miner could eventually have an enormous amount of shares and be selected. That’s because the concurrent miners would eventually go back to 0.
I just pointed out the cordination because that could be another mean of getting paid. Miners could cordinate inside the pool on order to “join their shares” and distribute it onchain by a cordinated payout tree. The sidechain would be a cordination point by itself, as a data availability medium, and dealing with miners, they would certanly be more frequently online.