Flow Control Suggestions

In recent weeks the topic of flow controls have come up in the weekly community dev calls. I want to share what’s been discussed and give folks a chance to provide specific details related to these concerns.

First, several creators and developers have reported that flow controls are being circumvented do to loop holes in the current system.

Second, flow controls are preventing some community devs from building usable tools that require transacting coin between non-creators.

Based on the conversations we’ve had on these two concerns and on flow controls in general I’ve translated these concerns into user stories

Broadly speaking there are two wants/needs that community devs and creators have expressed:

  • The need for coin holders to be able to use a portion of newly acquired coins immediately (to send to other non-creator accounts) so that developers can build tools that are usable and that provide utility to creators and coin holders.

  • The desire to prevent individual coin holders from pumping and dumping a coin in a way that is purely speculative, and at such a volume, that it has a significant negative impact on a creator’s economy and community.

Please provide any examples of how you’re impacted by the above, or suggestions you have for improvements. I’ve intentionally kept this broad, but if I’ve missed something please let folks know in the comments.

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Flow control needs to be linear and based on the total amount of Creator Coin held in the wallet, not just what is being converted in a transaction.

Flow controls currently accumulate with ANY amount of coins held, even .000001. This allows speculators and bad actors to basically have ZERO flow control by just rebuying .000001 right after a dump. Flow control should be accumulated based on the amount HELD in a wallet, not just if ANY at all is held.

Users within Creator economies should be able to be “whitelisted” and “blacklisted”, to allow free or more restricted movement within the said economy. Just like any payment/settlement system, actors should be able to be incentivized or restricted. I hear a lot about free market forces but that is nowhere near what exists here and is just being used as an argument to give speculators and people looking to have negative impacts room to fill their greed. I stated it before we are incentivizing a small group to benefit off the backs of the many and somehow by sheer coincidence or luck, it always seems to be the EXACT same people who are lucky and get in on EVERY single coin? This seems more like their economy that we just participate in, not our economies. Free market implies a level playing field to start, the EXACT same group of people always getting the best positions on coins isn’t exactly a “free market”.

Buys during 1st 24 hours should be allowed to be capped at X amount of coins per user, this fits with the fair launch and ensures that an outside actor can’t come in and control the economy on day 1 without being involved or actually participating in the said economy.

To earn Creator Coin rewards, holders should have to “stake” or “lock-up” those reward-generating tokens to earn. To “un-stake” or “un-lock” that should also be on a cool down. This would stop the rampant reward chasing you see. This cool-down needs to be LONGER than the monthly rewards calculation.

Creators need more control over their economies, currently, a random whale, speculator, or bad actor can assume control or come in damage the economy just by rushing your coin and/or skirting flow controls. Then they sit in the economy like a time bomb waiting to go off and suck MASSIVE amounts of liquidity out of an economy that they had no intention of being a part of or involved in. All they are doing is ruining the experience for the actual supporters and creators themselves, while also making sure we will never get mass adoption because no one will want to participate in a system like that. These are called “creator economies” but currently creators actually have very little power in what happens in their economy and that seems both counterproductive and against what we stand for if this is supposed to be about creators.

I currently run an auction and my members can’t even pay each other due to flow controls, but people can still pump and dump our coin, skirt flow control in several different ways, and repeatedly interfere with our economy, both during launch and during the life of the coin. If these actors were contributing in positive ways to the community and ecosystem that would be one thing. But we should be asking are there more negatives or positives in the current system for X behavior and who is actually in control of these current economies?

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I agree that the Creator Coin Fee is broken and should be linear (or if it must scale then it should scale based upon amount held rather than the amount sold; but linear is probably easier and probably better). But that should probably be a separate forum post. We don’t want to address too many issues in one thread or it gets unwieldy and gains a lot of cross-talk.

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I removed part about Creator coin fee to preserve focus on discussion.

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As I see it, there are multiple things going on here: 1) creators do not feel in control 2) all users are treated as equivalent users and 3) the flow control system itself.

Slight Edit: in the below paragraph I said RLY instead of CC when listing the examples. I have updated the paragraph to be correct.

I will start with #3. The way I understand the flow control system to work is that the moment a user purchases some amount (any amount) of a creator coin the timer starts ticking. As time passes, they “unlock” the ability to transact a larger and larger portion of coin until after 30 days they have unlocked the ability to transact 5% of the coin’s supply. On the surface this seems reasonable, except that someone figured out that they could buy 1 RLY worth of a CC, wait 30 days, and then pump it, causing other people to get excited by the rise and put in more, only to immediately cash out everything they’ve put in it. A classic pump and dump. So long as they transact less than 5% of the coin supply they are within flow control limits as defined. A simple change here is that instead of unlocking 5% of the coin supply, they move towards unlocking the maximum of their already held supply. Additional “buys” relock an equal amount of the buy on scale with what they already hold. A few examples of what I mean: 1) I buy 1 CC, wait 30 days, and then buy 30 CC. At the moment of the second buy, I can transfer/withdraw 1 CC, but I have to wait another 30 days to fully unlock the rest of the CC. 2) I buy 40 CC, wait 30 days, and then buy 30 CC. At the moment of the second buy, I can transfer/withdraw 40 CC. 3) I buy 40 CC, wait 15 days, and then buy 40 CC, wait 15 days, and then buy 40 CC. At the time of the second buy, I can transfer/withdraw 20 CC (half way through unlocking the first buy). At the time of the third buy I can transfer/withdraw 60 CC (all of the first buy; assuming I didn’t cash any out yet, and half of the second buy). Similar proportional scaling like this should help fix the volatility of a coin, which was the original intended purpose of flow controls.

#2) With any kind of flow control system, there are going to be inherent problems in transacting large amounts of coin. This was already noticed before flow controls were implemented, and so they were implemented with the built-in exemption of creators and their own coin. So there is technically already a solution to the large transaction problem: Instead of User A paying User B, User A can pay the creator and the creator can pay User B. But this is very cumbersome and will eventually overwhelm the creator. Abstracting this, essentially the creator would be acting as a disinterested party to the transaction, or, in the finance world, they are acting as a clearing house. In a programmatic sense, what has happened is that the creator is white-listed to use as much of their own coin as they would like. Instead of the way it is currently done, it should be expanded to be a formal white-list that the creator is on for their own coin. They should even be able to remove themselves from it if they so desire (for potential reasons in #1). Likewise they should be able to add people to it. There is inherent risk here: a white-listed user now has the opportunity to tank the economy if they have the means and the motive. And so the number of users on a coin’s white-list should be exceedingly low; certainly less than 10 and probably less than 5. An arbitrary cap could be used, or not; either way, it needs to be clear to creators that adding someone to that white-list is very very risky and shouldn’t be done without very good reason. Potentially a further step would be for a quorum of creators to maintain a list of “pre-approved” and “not-approved” accounts that the creator in question could check against to see if this person asking for white-listing has a legitimate reason for doing so. But the details of that could be worked out later. I just can’t see any reasonable way to do an auction-house or storefront without white-listing some accounts.

#1) if it really is supposed to be the creator’s economy, they need levers and control, and more is better. I think they should be able to control the creator-fee (on/off at least; better yet, the ability to choose the flat-tax %). I think they should be able to implement a min (buy/convert-in) and max (transfer/convert-out) account-based daily transaction amount (which would be the reason to de-whitelist their own account; if set appropriately, this would be an extra safe-guard against their account being emptied by a nefarious individual). They could even be given the lever over the new flow-control method mentioned in #3; some creators may prefer “free market” volatility and would have no flow-control. Others may prefer to minimize volatility and have it set to 60 days instead of 30. As long as all of the settings of these levers are easily visible to everyone in the web UI, it shouldn’t negatively effect the overwhelming majority of existing users (i.e. no mass-migration out of RLY). Though it might make some major shifts on release, time and market forces should find most creators in an equilibrium; happier creators because they are in control, and happier users as they can put their money behind creators who they can be sure believe in the same fiscal policy as the user (e.g. hardcore free market users are going to be much happier putting their money behind hardcore free market creators; the same is true for hardcore fiscally conservative users/creators).

#4?) Blacklists. Internet history has demonstrated pretty well that “just block them” doesn’t work very well. They just create a second account. That said, it could be useful to the Rally team to see that “30 creators have blocked the same user; perhaps someone should look into that”. Therefore I think there is some small value in having them. But I think all they should do is prevent new buys. So if a user already has some CC and they get black-listed, they can still transfer, earn rewards, donate, and convert out. They just can’t convert-in any more. That should limit the potential for any abuse of the list to manipulate the coin value.

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Awesome post man. All of these are things I can stand behind, well said. Kudos.

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my .02 $RLY

  • keep rewards at weekly. I have made working for $PLAY my full-time job, and I am sure many other creators themselves and people on their staff have done the same. Weekly rewards enables people to get “paid” through their rewards without negatively impacting the coin economy.

  • enable a flow-control white list-style mechanic for transfer of coins, managed by creators. This will allow those spending large quantities of coin on items up for sale at an auction. Current flow-controls make it difficult to conduct high-value business with creator coins.

  • create a community-based group to review and discipline reported bad-actors / bots. This will remove the responsibility from Rally to determine who is good / bad and moves closer to the goal of de-centralization. electing these members through voting is done per PERSON, not per $RLY.

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Until the volatility of rally on the open market is fixed many of these problems should not be “solved”. You may find some of them were only problems caused by lack of market size for the coin by those buying it directly and flipping it to make a quick profit. Based on the charts I see that is where the real money can be made right now…and look what a low price does to the coins, causes some to freak out and sell their CC’s tanking the coins further.

I also find it amusing that many keep calling speculation bad but I am seeing new add ons that would only help literally everyone speculate on coins more. Hey look, this is what last weeks rewards were…here are the live coin sales, etc.

KT in my example, rewards would still be paid out weekly. But the coins used to generate rewards would need to be “staked” to generate rewards.

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so, if everyone stakes their coin for rewards, how does any get spend to invigorate the economy?

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KT the same coins that you spend would disappear just like if they were staked, there is no difference, both invigorate the economy, and a person can either spend or stake to stimulate the economy. Perhaps offer ENHANCED rewards on staked coins, and a lower amount on one that can be spent. Also the “staking” lock could apply to converts to Rally, not spending, donating, etc.

This, the open-market and price discovery can’t be stopped. People will find a way to sell and buy the tokens off the books anyway, Telegram and through p2p means. If curbing speculations is the one major difficulty then controlling the amount of coins issued into the ecosystem is the only way. If you build in limits then maybe the coin shouldn’t exist yet.

If the ecosystem/community can’t find it within themselves to hold and not dump then the ecosystem is too early and weak for a coin and thus back to basic centralization would suffice until you really can go decentralized and share the token in an open-way.

I feel there is a lot of over-engineering going on here to curb supply and demand dynamics when you really just need a regular controlled market like a simple old exchange with rewards built in to those that won’t dump.

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I completely agree. The more rules you make, the more loopholes you make. Look at tax codes…

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I think it is interesting and good overall to talk about ways to control flows and coin supply management etc.

But here is a thought, if the project has actual substance people won’t dump it!

Project>coin

Introducing a coin too early, even with crazy smart flow controls will bring great drag to the project because coin management and economics is hell.

If the community or early investors dump coin too early, but the project was the real thing, guess what, prices will go up and punish those that didn’t have the foresight.

Going centralized first, then go decentralized later may greatly help projects in this regard.

And by the way, tax is the ultimate example of a convoluted system because it is hard to understand and apply fairly.

So after some prodding on discord below is my suggestion for this problem. I feel it addresses the flow control and creator fee issue simultaneously while also helping to address reward hunting.

Replace existing flow controls and creator fees with a FIFO strategy based on the creator coins purchase date. For any CCs converted to RLY a fee will be assessed on a declining schedule that I would propose be either 2 weeks or 30 days in duration. This percentage and curve can be decided/adjusted but should be very steep at under 48hrs (think 15%). This action will prevent the pump and dumps seen both on new coins and existing smaller coins mentioned above where a user can hold 0.0001 of a coin for a period.

Any fees pulled from these early sells should be fed back into the CC base value similar to the early RLY reward structure thereby “lifting” the whole community value versus just the creator alone. This means that if there is a drop in value from a large sell the community sees at least a small amount of value back.

These penalties could then not be avoided by breaking up the transaction to smaller amounts or by pre-staging a small value to allow for a large sale. This also aligns with the overall RLY goal of having people hold onto a Creator Coin or use it to support the creators campaigns.

I can’t agree on the above on potentially getting more and more (flow control) restrictions in. In my opinion the scarce resources of the team / community members could better be used to create value-adding tools between creators <> fans or on attracting non-crypto people in.

I have the feeling that more and more limitations will limit the growth of the Rally ecosystem as a whole and feels as a contradiction to Rally’s ambitions to become fully decentralizes.

Instead of short-term thinking of “solving” side effects, I think the community as a whole could better invest invest time and money to fix the source of the potential “issues” raised:

  1. Have creators attract the right amount of fans in combination with valuable perks of holding or transacting with a CC. This way, potential pump&dump stuff will have less & less impact. So agree with @exchange-kit-kid on that one.

  2. Each and everyone of us should continuously think in “amount of CC” in combination with the perks, transaction to be made etc. Potential pump/dump then will have zero effect at all as you’ll simply still hold your amount of a CC.

My 2 RLY cents

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They do impact those of us using it as currency due to the wild swings in price.

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Fair enough @Meta4ickal, from that perspective / use case, yes it indeed does as long as there’s not a large enough fanbase and/or big enough “perks” to keep you holding a specific CC amount.

My personal feeling (but hey, it’s just 1 opinion), is that more and more limitations (at least, that’s how I perceive it), will more and more limit the attractiveness of the Rally network as a solution for non-creators (and thus in the end for creators less attractive as well) and can even cause an acceleration of current liquidity flowing out of the Rally.io platform.

I agree with your take. More flow controls, penalties etc. just means more problems. And what happens when you get outside trading of coins. Are you then going to tax the sent coins regardless of who they go to? It is up to the creators to draw demand. This causes people to see value in holding coins even without rewards. Look at JAYUS, WAO, JEFF and some others. They understand what works and truly care about their communities.

Break down of coin life:

:point_right:Stage 1: Tokenization

  • Convert paper/physical or digital good to a coin/token/crypto
  • Name, add symbol and have it on a blockchain (ERC20)

:point_right:Stage 2: Distribution (this is where many get stuck)

  • Get coin listed on the third-party centralized platform (Binance, Coinbase or other large platforms)
  • Broker/static price offering (let people buy token at more less static prices)
  • Get coin on own market/exchange (open orderbooks trading, HollaEx Kit)
  • Provide a token staking/lock system (lock and reward more tokens to people lock hardest and longest)
  • DEXs (Uniswap, 0x)

:point_right:Stage 3: Backing the token

  • Giving coin real value by backing it, attaching coin to real-world value (goods, cashout and communication)
    -Governance
  • Give utility, web applications and stuff that work with the coin (think redeeming systems and ways to pay for stuff with coin)
  • Allow full speculation on a token/coin to find the real value/price (pretty much open orderbook trading)

Lot of effort goes into marketing and communication (this gives a good sense of the work and costs in marketing view_cost_here.png) in stage 2 which will burn a coin creator, business or anyway out. Just look at Atari they still struggling to really communicate what is going on with their coin and they are a huge brand name.

I think people should probably not under estimate how hard stage 2 is and focus more on 3 first.

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