This post was supposed to be a reply to a comment made by @jelly13, but i just saw that Jelly is voting himself into a 3rd presidential term, so i deemed it prudent to explain in a post why his tax levels are both based on wrong assumptions and bad for Dcity as a whole.
Below is Jelly's comment in which he explains the reasoning behind his 110% tax strategy.
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I do not think it is cool to explain my policy in anyone else's candidate post but I thoroughly enjoyed your word selection so let me make an exception.
The investment part of this investment game is @gerber doing some smart stuff with all the money that was raised for dCity cards over the two years. Those assets back the SIM currency. You are fully entitled to expect 10 SIM a day (=3650 SIM a year) off your average card you minted for 800 SIM. It is 450% APR but you are a modest guy that has always settled for 300%. The only issue is that the actual investment is not making 450% - more like 45%. So you either Ponzify in enough dumb people or accept SIM value going down three-fold.
With the populists like you or Mary discarding all the taxes, the income tax of 80% keeps the print off an average down to 730 SIM a year for a measly 90% APR (someone must have been lazy not to keep pace with that). Not enough to turn dCity into Zimbabwe, good enough to harm the currency holders.
At the end it all comes down to SIM holders' votes. If I had a grand total of 35k SIM Power combined between my accounts (my apologies if I missed any alts of yours I do not know), I would be trying to sink the token (in order to be able to rebuy cheap) way harder than you do. I have more than that so even though I think throwing an irresponsible party every now and then is fun, I decided to step in when I felt this lunacy had lasted too long.
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So let's break down what he is saying here.
"You are fully entitled to expect 10 SIM a day (=3650 SIM a year) off your average card you minted for 800 SIM, which is 450% APR. The only issue is that the actual investment is not making 450% - more like 45%."
No it is not 45% Mr President, not by a long shot with your tax levels. Let's take a look at my city's income after taxes. My base income is 125,370 Sim and after taxes my current income is 1564 Sim. Calculate that back to your 10 Sim average card income and you get 0.12 Sim daily or 44 Sim per year. This comes down to 5.5% APR instead of your 45%.
But it's actually much worse, since almost all cards were bought at a higher Sim price or in Hive. So what does that mean for APR?
Cards bought in Hive were bought for 4 Hive or 8000 Sim at current Sim price. For these cards the APR comes down to a 10th, so 0.55% APR.
The average Sim price for all other cards bought was above 0.0015 Sim per Hive instead of the current 0.0005, so the actual APR comes down to a 3rd, or 1.83% APR on cards bought with Sim. Guessing that about 15% off all cards were bought with Hive, the average APR with your tax levels is a shocking 1.64%.
"With the populists like you or Mary discarding all the taxes, the income tax of 80% keeps the print off an average down to 730 SIM a year for a measly 90% APR (someone must have been lazy not to keep pace with that). Not enough to turn dCity into Zimbabwe, good enough to harm the currency holders."
This is correct: At 80% taxes a 10 Sim income card yields 730 Sim per year which comes down to 90% APR. Atleast for cards bought now at current Sim prices. The actual APR for most bought cards comes down to less than a 3rd as i explained above. And 30% does not resemble Zimbabwe, but is in line with the industry standard for APR on blockchain gaming.
The crucial error Jelly is making here is that he feels currency holders need to be protected with high taxes, when there is a perfect model in place for holding incentives: the holding rewards in Hive. Holding rewards derive from investments and new investments require growth of the player base. Your tax levels leave no reasonable incentive for smaller and new players and you are choking the engine, or as we say in Dutch: You are tying the horse behind the carriage Sir.
You should be thinking about how to get more Hive in the game and let the new peg (fluid peg from holding rewards do it's work. Right now your taxes make it so that 80% or more of all income go to the 10 players that hold the majority of the war shares.
Those are also the main currency holders, so they really don't need you to protect them from harm: They are in fact the ones that profit the most from a healthy game in the long run and what you are doing now opposes the whole concept of a sustainable economic model.
"At the end it all comes down to SIM holders' votes. If I had a grand total of 35k SIM Power combined between my accounts (my apologies if I missed any alts of yours I do not know), I would be trying to sink the token (in order to be able to rebuy cheap) way harder than you do. "
You did miss some alts, but my Sim power combined is less than 80k. Personally i prefer to buy income cards now, instead of holding, but atleast i am buying cards again, as i do see potential once more in Dcity. At current market prices buying cards makes more sense to me, atleast it did untill your 110% tax insanity. As far as sinking the token goes, you say it yourself, you would rebuy cheap, which proves the holding rewards driven peg does what it is supposed to do and does not need your tax assistance. Let the peg find the right balance and stop choking it's function with circle jerk income distribution. As i really don't wanna go off and waltz with you again i leave the sinking comment as it is.
"I have more than that so even though I think throwing an irresponsible party every now and then is fun, I decided to step in when I felt this lunacy had lasted too long."
I feel the same, only i find your party the irresponsible one and with you going for a 3rd term the lunacy does last too long.
So what do i think is the right path?
Just 3 things really and stuff will look much better.
- Tax should be capped at 100% , i mean how could it be more really?
- We need Hive income to support and grow holding rewards.
- Let the peg do it's job and let Sim price be determined by investment returns instead of tax tweaking.
And oh yeah, 4. a little transparancy on investment levels wouldn't hurt either.