Monetary Policy Discussion: Generation 1019 (July 8- July 22 2023)

This topic has been created for the Eco Trustees to discuss the monetary policy that will be enacted on Saturday, July 8th. As always, the policy will be in effect for two weeks — this is for Generation 1019, which runs from July 8-22.

Trustees are encouraged to post via replies under this topic to:

  • Discuss what policy they have proposed and/or are voting for, and why
  • Engage in public dialogue/debate with other Trustees

Community discussion will occur in the #trustee-community channel on Discord.

This post will be updated with the end result once the winning proposal has been enacted on July 8th.

Update: The proposal enacted on July 8th for Generation 1019 was a -1% linear rebase and a 7% APR lockup (120 days).

This cycle, my voting rationale is as follows:

  • I ranked the policies in order of APR for the interest rate lockup, from highest to lowest

  • This is consistent with my philosophy for the majority of previous votes: favouring experimentation in these early days

We’ve experimented with the linear rebase lever these past two cycles — and I am now eager to experiment with a higher APR proposal to see if it moves the needle on lockups. I don’t necessarily anticipate that it will, but would prefer to experiment and learn from such testing in these early days while the currency is still nascent.

I’m on vacation so I’m cutting and pasting previously described motivations for Pure Macro’s proposals as we agree with Annika and Dave that it’s important to document how we are thinking about monetary policy. We’ll try to write something more thoughtful next cycle.

Pure Macro proposed our usual high interest rate/short-term lockup. Three reasons. First, support ECO relative to other digital and fiat currencies. Second, provide a lockup that is profitable to a broader segment of the ECO holders than previous lockups (and, perhaps, even encourage new users to join ECO). Third, attempt to obtain a sense of how the ECO economy reacts to interest rate changes.

Would you say the rebase experiment is complete? Did it have an effect? If stability was the goal, could we argue that the rebase actually helped maintain it?

I voted the same way as last cycle:

  • My first choice is the rebase policy to continue the experiment we are currently having.
  • My second choice was the 24% APR policy, I would love to see it implemented, but unfortunately there is really strong opposition and no chance of it winning (at least for now). This is the main reason why I did not rank it first.
  • I have ranked the other policies by APR from highest to lowest.

I have voted this way for several cycles and will continue to support innovative monetary policies over conservative ones.

A 24% APR is my top-choice proposal. As an early experiment, it would be interesting to see how it plays out, given gas fees dynamics.

No, I certainly wouldn’t say the experiment is complete — but we have at least surpassed the milestone of enacting a rebase onchain and it worked & nothing major seems to have broken, all of which I do view as a small win in the evolution of this grand experiment overall.

I don’t think there is anything we can confidently infer from a causation standpoint on the rebase’s effect.

That’s fair. I am reluctant to try a different experiment, until we have learned what we can from this one. For that reason, I ranked that 24% the lowest.

If the group considers the rebase experiment complete, than I am happy to try something new.

Mike, we just got off an audio call together, and in discussing what our next experiment should be, we both agreed that Random Inflation should be the next tool we test. But you indicated that it has inherent problems, and so what we need is Christian, or another developer, to give us a break down in our next group video call, of how it works.

Annika, Bob, could you get behind this experimentation?


For this cycle we are upvoting our rebasing proposal. There’s a cumulative effect to rebasing that seems worth exploring. In terms of price, has it really moved the needle? Hard to say with the data we have now–again, greater user adoption will bear theories out–but there does seem to be consensus around it.

After that, ranking APR from 7% down, with the exception of the 24% proposal, which I view as excessive.

Interestingly, the adjusted APR is higher for 7%/120 (0.023) than for 24%/30 (0.0197).

It’s certainly an interesting experiment but, aside from testing whether the mechanism can be implemented correctly, to what end would we use random inflation? I’m not being cheeky here, it’s a real question for me. Also, if I recall correctly, there was also an earlier discussion that random inflation, given the probability of “winning” $ECO increases with one’s holdings, would result in a “rich get richer” phenomena which some trustees were not keen on.

That issue with the ‘lottery’ component of the Random Inflation, is exactly why I’ve asked for one of the devs to give us an explanation of functionality, so we fully understand how it works.

But to your points about why we should do it, I can think of two good reasons. First, because it’s a tool available to us, and I feel we are obligated to test functionality, and two, which is by FAR more important, it would be the first time we acted as a group, where we talked about a proposal, and then acted on it with collaborative intent.


My question was obviously not clear. I apologize. Let me try again. In what sort of circumstance do you envision using random inflation as a policy tool?

Not at all unclear.

But you are asking the wrong person. I did not create the tool, the devs did, and they must have had some idea in mind.

Which is why I’ve asked for one of them to provide an explanation in our next video chat.


@Subspace I love the discussion around random inflation experimentation — and, in particular, the idea of spending time talking about the lever itself as a group since we haven’t spent time on it previously.

I agree. It’s important for us as monetary policy trustees to develop some sense of the implications of different policy tools. Evan and I had an earlier (brief) exchange on random inflation but, unfortunately, the discussion was fruitless. Our exchange centered on finding a real-world analog to the random inflation policy lever. I also explored the microeconomic literature on lotteries but that was a dead end as well. The search continues!

Yes, we definitely need to discuss:

  1. The exact mechanics of distributing $ECO created by random inflation (claim, drop, something else?)
  2. The issue of massive wallets that are not blacklisted
  3. The ability to upgrade the random inflation lever to make it more efficient and customizable.
  4. The design philosophy behind random inflation lever and advantages/disadvantages over rebase inflation and APR inflation.
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I also explored the microeconomic literature on lotteries but that was a dead end as well.

Have you seen this?
Federal Reserve Bank of Philadelphia: “…Our main finding is that the dollar magnitude of the lottery prize increases the number of subsequent bankruptcy filings in that neighborhood…In terms of the behavior of the bankrupt neighbors of large lottery winners, we provide evidence consistent with conspicuous consumption and increased financial risk-taking by bankrupt neighbors as an explanation for our main results. We also find that borrowing in the entire neighborhood increases with lottery amounts. These findings are consistent with additional risk-taking and debt accumulation to finance conspicuous consumption leading to financial difficulties and bankruptcy for nonwinning peers.”

I have not. Thank you. I’ll take a look to see if there is anything relevant for us.