Today we are talking about absolutely new approaches to money issuance that will use in TkeyNet. Let’s start!
When creating a financial technology, you should turn to experience and ask a single question: “How does it work with cash in real life?” Because how it works in life is honed by the entire history of money.
Since the issue is an inflationary way of covering the budget deficit, the main problem here is determining the optimal amount of new money.
Economy Of TkeyNet
The issue is proportional to the contribution to the economy
The essence of the emission of TkeyNet is its dependence on business activity. The greater the movement of money, the more new ones are required, and Vice versa, respectively. This approach creates a scalable financial system.
Our concept is radically different from the existing algorithms that are currently on the market. Current approaches used in blockchain systems can affect the asset’s economy at various stages of project development. For example, the money supply on PoW algorithms can be easily increased at an early stage, when the network complexity is still at a minimum, and the power of miners prevails. They produce much more than there is the demand for the asset itself in the market. The same applies to PoS systems when due to a big deposit, users can extract a significant number of coins, also increasing the money supply.
Example # 1
The blockchain launch. Miners on processors are connected. The asset place on the exchange and trading begins. Then the following happens: miners with large capacities join, producing coins that do not correspond to the supply and demand on the exchange. Consequently, the price of the coin falls significantly because the market as a whole does not need such a large amount.
Example # 2
The situation when the project has been trading on the exchange for several years, miners are actively mining coins. In this case, miners can manipulate the network by refusing to process payments that they believe have a low Commission. It turns out that using algorithms created in 2010–2012, there is a direct dependence on other participants in the system. These are investors, traders, companies, people who use TkeyNet only for payments, and so on. An unbalanced situation a create when the performance of the entire system depends on meeting the needs of miners.
However, using the principle of “contribution to the economy” an independent economic system implemented. In TkeyNet, it is not possible to create money, simply because someone wanted to, or because someone has more power or money to produce an even exorbitant amount of money supply: “No, it doesn’t work that way anymore.”
- The initial issue in TkeyNet will be proportional to the Genesis block “Core 1.0” and the number of mined a TKEY until the “Core 1.0” stop.
- The current money supply circulates until there is no need for scaling, and the amount of money meets the needs of absolutely all TkeyNet participants.
To date, a sufficient number of TKEY assets have been an issue, and even more than the market currently requires.
“This new system is built-in on a fundamental economic principle: the value of an asset is a function of its utility and scarcity.” — emphasize the developers of TkeyNet.
Interested parties can buy TKEY on the exchange or get it in the exchanges from partners. This approach will allow us to develop the system without the risks of hyperinflation and create a balanced economy.
Traders work to maintain speculative demand for the coin itself, earning on currency quotes, companies buy TKEY to use the asset in their tasks for example, cross-border payments, exchange transactions, etc.
The issue in TkeyNet is controlled by consensus algorithms and by voting. These are nodes of users, banks, commercial organizations, developers, and so on. Therefore, to avoid hyperinflation introduced additional parameters: activity cash flows, the number of assets in circulation, the number of frozen funds, inflation, the function of the inflow-outflow of money, the total annual percentage of emissions, etc. The algorithm will automatically perform the processes of checking the issue of the destruction of the unnecessary money supply.
When the prerequisites for a monetary deficit begin, the necessary amount of TKEY is issued to meet market needs. However, it is worth noting that the release accepts a place at the level of the consensus algorithm and entailed by a vote of network participants, which helps to avoid the creation of “illiquid assets.”
In simple terms, as long as the amount of TKEY is sufficient to conduct transactions in the network, the issue remains unchanged. Therefore, supply and demand in a closed economy of any scale are always balanced.
“Funds” will be created in TkeyNet, which we mentioned in previous publications and the first edition of the White Paper in 2018.
The stock policy is economically useful for the project and makes it completely independent. The collected funds are reinvested in new developments and maintenance of the entire TkeyNet platform. Users have the right to request a certain amount of funds for new developments, also by holding a General vote.
Fees for transactions carried out on the network are accumulated in the “Commission Fund”. Later, you can use this amount for the development of TkeyNet or reinvest funds to eliminate the shortage of money supply. Also, these assets can be sent to the “Developer Fund” for grants.
The essence of “Funds” is to store the money supply to support the economy. For example, there is a “Developer Fund” where companies, startups, or developers working only for themselves can get funding to create a product based on TkeyNet.
Granting of subsidies
A team of programmers applies for the nth amount to create an application, and network members evaluate its suitability and vote: For or against. In this type of voting, the following parameters play an important role: “Utility for the network and its users.” Also, regardless of the classical voting procedure, TkeyNet confirms or refuses to issue assets through “verification nodes.” The main parameters accepted into account — the amount of money supply: frozen money circulating on the date of voting, etc.
Company X or developer Y decided to create an application for quick asset exchange based on TkeyNet. We have estimated the product implementation and further promotion, marketing, and other expenses required amount: 500,000 TKEY. Developers share information with network participants — users vote for or against the idea’s approval. If the concept is accepted, then the second stage of “granting subsidies” begins at the level of algorithms and “validators” per the main economic parameters.
The economy in TkeyNet is balanced, which means that the liquidity of TKEY assets can be at an optimal level. Additionally, there are opportunities to work with loans, deposits, and investment products. Each member of TkeyNet is interested in the development of the system.
We should not forget that the TkeyNet system base on the blockchain. The chain of information transactions in the network is stored on the computers of its participants, making the information unified. Adding data to a distributed database is performed using cryptographic methods that allow you to check information for any change. Even if the information on one of the computers is changed most slightly, the system will reject this data.
The TkeyNet algorithms perform data verification every 25–90 seconds through the checking nodes. If the information in the block is “valid”, it is added to the entire history in the distributed database, linking each element of information to each other.
If an attacker wanted to cheat the system by trying to create money out of thin air, they would have to change the entire history completely on all computers that store a copy of the blockchain history. It is worth noting that the “validators nodes” in TkeyNet are independent of each other and can locate on different continents. These can be nodes of commercial organizations, users, developers, and others, which also differentiates interests and, most importantly, eliminates the possibility of information forgery.
A balanced economy eliminates conflicts of interest between investors and participants that might have affected it if a different consensus algorithm had been used. TkeyNet connects people: developers, investors, entrepreneurs, and financial institutions, forming a single infrastructure for managing money.
New economic incentives are emerging. A balanced level of supply and demand is created, which affects the price of the TKEY asset.
The system scales. An internal economic market is creating flexible conditions for everyone, which allows the system to expand on a global level.
There is no usual mining. You can’t create an excessive amount of money supply.
After the release of TkeyNet, we will publish information about the system’s features on the site: tkey.org, as well as in the “just about complicated” format in the blog and social networks.