I'm afraid I cannot give a valid comment as I don't know how important the other pallet incentives are and how high they need to be to work correctly.
From a collator perspective I don't like it too much because my expanses alone are around $150.
On the other hand, to be at least a little constructive, one solution comes to my mind and that is temporary lowering the requirements for HW specs and location so we could run on cheaper machines. It would be also more appropriate for the current network load! Once the market conditions get better, we could go back to high performance standard.
It doesn't sound sustainable with the current spec requirements.
Just with a little market hiccup, the formula right now yields monthly 184.27$ with the current inflation and with the adjusted inflation to 2% (not 1.66%) to 73.71$
It's not like collators are making so much bank that needs to be trimmed, basically you just pay the server bills and taxes and that's it. This is what our collator has made this year.
Basically, we'd like to second Curu on lowering the spec requirements DRAMATICALLY so that collators can operate without too much loses. Preferably without lowering the inflation to 2% because in this case each percentage point makes a difference.
A related alternative could be, lowering the ratio progressively as follows:
from 1% Court - 4% Collators in 6 months time
from 2% Court - 3% Collators in 12 months time
from 3% Court - 2% Collators in 18 months time
this should give collators some room to breathe.
Alternatively, a delayed implementation of this plan for a year while the court pallet gets a subsidy funded by the Zeitgeist foundation instead, equivalent to the 3% that's meant to have. Or an immediate implementation with a collator subsidy equivalent for the 3% lost for a year. Why a year? Because the cryptocurrency market is still tied to "Bitcoin Halvings" and that's the best next opportunity for the ZTG token price to gain traction and to be economically viable on all fronts.
PD. there is a typo in the latex formula on "Current collator rewards" on the hackmd doc. It has to be 0.08861 and not 0.8861
The cryptocurrency market is unfortunately tied to global macro and specifically to SPX. I am in favour of opening a trading channel in discord where we can further discuss and deal with the market hiccups, even liquidity provision to DEXes will help balance the inflation model since it can create new income for the protocol and create incentives for token holders as liquidity providers. I believe protocol inflation at 5% is not unreasonable, and the demand/supply balance will further shift towards increased supply if collators decide it is unprofitable to collate (thus deciding to sell at a loss to avoid further losses). Probably a 4% inflation could be better, no formula comes in mind. As for making the hardware demands less, i have no opinion at all if it is a viable solution or not. More discussions for increasing protocol demand is better imo. Inflation could be reduced as price rises instead.
Btw, staking rewards are also a bit high, i don't understand 100% the mechanics on the competitiveness of the collator game, but this part of the inflation could be easily reduced to 10% (noma). If protocol inflation is at 5% and staking rewards are at 20% on average, doesn't this make it still profitable (or bearable) for the ZTG holders in the short term?
one solution comes to my mind and that is temporary lowering the requirements for HW specs and location so we could run on cheaper machines
we'd like to second Curu on lowering the spec requirements DRAMATICALLY
While I am very much in favor of this solution, from my knowledge lowering the hardware spec requirements is not possible as collators have to run a relaychain (Polkadot) full node to receive, verify and build upon relaychain blocks. Consequently the minimum hardware requirements that we can establish must be equal to or greater to those on Polkadot. This is already the case.
A related alternative could be, lowering the ratio progressively
I think this is a valid approach, as due to the low number of participants during the initialization of the new features a relatively huge amount of inflation (even 1%) is shared amongst a relatively small set of agents (jurors and delegators). This will attract participant up to certain degree, until the risk outweights the potential reward in comparison to the risk-free participation in the collation system. I like the progressive approach, I think this is part of a sensible solution.
I am in favour of opening a trading channel in discord where we can further discuss and deal with the market hiccups
I will carry that request to the broader team.
liquidity provision to DEXes will help balance the inflation model
Do you have any specific approach in mind that could be implemented? I would highly welcome if you could kick start a discussion about these kind of things in this forum. It is technically possible to automatically adjust the total ZTG liqudity in other protocols that are advanced enough to support remote dispatchable calls via XCM, i.e. remove liquidity and redirect it somewhere else, like the treasury on Zeitgeist, or move it from the treasury to DEXes at given situations. I think this is an interesting topic and we should continue in a fresh discussion.
If protocol inflation is at 5% and staking rewards are at 20% on average, doesn't this make it still profitable (or bearable) for the ZTG holders in the short term?
We have to move inflation from one part of the system (collation) to other parts of the system. Thus we have to find a balanced way to remove inflation from both the collators and delegators at the same time. When we reduce the inflation, both the APR for collators and delegators is reduced. Besides lowering the total inflation, we can also rebalance how much (percentage) of the inflation goes to the collators and the delegators. So we could reduce inflation and increase the collator rewards, effectively keeping all the collators in the profitable zone but reducing the delegator rewards in the collation system to unattractive values. At this point delegators probably want to move one, but one question I am not able to answer right now is where do they move? They could delegate in other delegation systems with zero risk like on Zeitgeist but higher rewards or they could delegate in our new Court system with relatively low but existant risks but higher rewards.
The constant increase in the number of tokens is a very negative situation. Instead of increasing the number of supply, the burning should be as it should be. I think the number of supply of Ztg coin must remain constant. It makes the token more valuable