That subject is deserving of a tweet storm in and of itself. I suggest you look up the writing of @hugohanoi on this topic, he's great.
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As more debt are taken on, people will become less & less incentivized to hold on to their stake. Reservation demand then will come purely from how good the PoS coin is as a Store-of-Value (not likely to be good), not from the requirement for staking.
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I'm not sure your debt focus is warranted. A small gain in the portion of non-debt capital would be extremely significant. Perhaps this is next part is where I'm wrong: the economic incentive of staking rewards is roughly an analog to an interest rate. (1/3)
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Without going through the effects of changes in relative interest rates in traditional currencies, the case here is actually more complex than that classic. Two competitors to a well functioning POS coin would be POW coins (currencies with no interest rate) or (2/3)
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...fiat currencies that have an interest rate, but also are managed by central banks with a mandate to maintain stable inflation over time to incentivize investment. I'm no exactly sure how a currency with an interest rate and no incentive to inflate itself will look (3/3)
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Which is to say, I'm not sure what the through-time interactions of those three kinds of systems looks like or to which system value accretes, but writing it off as a one-time bump seems to ignore the complexity of the on-going interaction.
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I guess another way of putting it is this: as soon as there exist staking rewards there also exists a discounted future appreciation/depreciation of that coin vs every currency in the world (and discounted depreciation vs every POW coin). I can't figure out how that settles.
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All investments have a rate of return, which is *not* to be confused with an interest rate. One can invest in productive assets (stocks) or non-productive assets (gold, currencies). Fiat is an asset with negative rate of return over the long term, due to its inflationary nature.
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Bitcoin (and fixed supply currencies) has non-zero rate of return because 1/ people buy into the vision of uncensorable sound money 2/ the larger economic pie (GDP) keeps rising thanks to productive assets
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This thread gives a good summary of what I’ve written on the topic. From the engineering perspective, PoS is unlikely to work / offer any real benefit over PoW.
Let me try to unpack this.
Money is not equity, period.
When you park capital in a non-productive asset, it is OUT of the system completely. Decommissioned.
The non-productive asset value can only rise if it piggybacks on the success of productive assets.