DevLog 10 - HarveyCoin - Decentralized Disaster Relief

***Read Past the intro to hear about a set of Etherum contracts that let you donate your existing ETH today to people that need help and get it all back in the future as the disaster is mitigated.***

Catchup:

Another month has gone by since the last Catallax DevLog update and it has been a busy month.  Work on project MCD continues and I’m still hoping to hit October 1st unless I get derailed by the project I’ll be discussing today.  The most interesting news is that we participated in the dAppathon put on by BCG DV and Dvolution in LA. We launched a prototype for a service called Lannister (http://lannister.tech) that lets you collateralize any existing or future ownable ethereum service.  I’ll publish a dev log on this in the future but we have more important things to talk about today. 

Now for today’s news and request for help: 

I’m from Houston and I haven’t been home for 2 ½  weeks.  I’ve seen pictures and I’ve heard stories. We’re headed back home now to a dry house with our shoulders filled with survivor’s guilt.  I’m a computer programmer.  I’m not a jump in a boat and pull people out of houses kind of guy.  I know people like that and I’m amazed at their service. What can I do?  How can I help?

I’ve started something and I need your help.  One of Catallax’s core concepts is the idea that decaying money can be used to rapidly rebuild a crumbled economy.  This was tried in Austria in the 1930s and was so successful that it threatened the central bank’s authority to issue currency and was shut down. See the Worgl experiment.  Ethereum lets us try it again very easily.

We have very big plan on how to implement this in a global way that fundamentally realigns incentives in the economy.  We are working on it, but we need help now.  Houston is hurting and Irma is hurling toward Florida and about to create another disaster area.

So here is what I have so far.  I call it HarveyCoin.  Open to better names.

HarveyCoin

HarveyCoin allows you to donate ETH to people who need it today and get it back over the course of the future in a guaranteed way. It is a glorified HODL strategy that helps people get their homes back while you maintain your position in ETH that you plan on cashing in far in the future.

There are four use cases: 

1. Donate.  Donate your ETH today by creating a HarveyWallet and minting new HarveyCoin.  There is a 1:1 relationship between HarveyCoin and ETH.  Your ETH will be given out to people in need over the next 5 years and will decay back to you over that time.  So if you donate 5 ETH today you’ll be able to reclaim 1 ETH in a year, 1 ETH the year after that, etc.

2. Become a Service Provider.  Create a HarveyWallet and begin accepting HarveyCoin for your services today.  The ETH you make by selling your services will decay at a stiff ~20% rate, but per day this is fairly low if you work with your fellow vendors and employees to get them onto the system as well and can turn over your HarveyCoin quickly.

3. Get help.  Apply to the custodian to get disaster relief funds in the form of HarveyCoin in your HarveyWallet.  You’ll be free to spend the HarveyCoin with any approved vendors or other citizen that has a HarveyWallet.

4. Exchange ETH for HarveyCoin.  Exchange cash or ETH to get more HarveyCoin.  This lets people who are dead ends in the ecosystem get value out the system for their HarveyCoin.  If the system is successful this should maintain as close of a 1:1 relationship between HarveyCoin and ETH as possible.  This gives us a good barometer of the system's success.

If you have ETH today that you plan on holding for a long time your only downside is liquidity. HarveyCoin helps you resist fear, uncertainty, and doubt while building the utility case for Ethereum. 

There is no profit built in for the custodian in the initial contracts.  The custodian can issue itself some HarveyCoin for administrative purposes, but I’m hoping this can be kept to a bare minimum and will keep the custodian true to making sure that HarveyCoin is as valuable as possible as it is the only funds that the custodian will be able to get access to.

You can find the command center for this project on r/Catallax here.  Please hop over and find a way to help.

Things we need:

1. The initial contracts need to be vetted and can be found here.  I’m hoping to build some truffle tests in the near future as real life allows.  I wrote these quickly and they need some serious TLC before going live.
2. Wallets for iOS and Android that make it dead simple to trade HarveyCoin.  I know react-native has some issues with implementing web3, but maybe there is a cordova/phonegap solution that can be put together quickly.
3. Suggestions for the governance structure.  Right now the custodian just has an owner, but we can easily set that to a multisig wallet or some other governance structure.  All suggestions welcome here. I don't have the talent, training, or bandwidth to run a significant disaster recovery effort all by myself.
4. A web app that directs the 4 use cases to relevant web apps that can capture info needed to approve wallets.
5. Someone to write the exchange contracts.

I’ll quickly go through the basics of the contract:

HarveyCustodian

Members:

uint drain - holds decayed funds available to be claimed by minters

address treasury - the treasury wallet that minted funds go into for dispersal.  Also a HarveyWallet and subject to decay.

uint totalMinted - the total donated

uint totalDrained - the total reclaimed

address owner - owner of the custodian

mapping(address => bool) validWallets - allows the custodian to authorize HarveyWallets to participate in the system.

address[] wallets - a list of wallets that have participated with the system for iteration.

Functions:

setOwner - sets the owner of the custodian

setTreasury - sets the treasury wallet

mint - forwards funds to the treasury

unMint - allows minters to claim funds out of the drain

sendDecay - deposits decay with the custodian

setValidWallet - sets the validity of the wallet

calcVested - calcs the % vested over a 5 year period of a donation

availableToRedeem - calcs the amount available to be withdrawn given a minted amount, redeemed amount, and startTime

HarveyWallet

Members:

mapping(address => bool) owner - holds the owner status of the wallet.  Allows for multiple owners

address custodian - the custodian overseeing the wallet

uint lastCatchup - records the last time the wallet paid the decay fee

uint mintStart - records the time the wallet minted(you can only mint once)

uint minted - amount minted

uint redeemed - amount redeemed already

Functions:

setOwner - sets the address and validity of an owner

pay - pays an amount to another valid HarveyWallet.

calcCatchup - calculates how much this wallet owes in decay fees.

catchup - pays the decay fee to the custodian.

mint - donates ETH to the treasury that can be claimed back as time moves forward.

unMint - claims back ETH from the drain

Please hop over to r/Catallax to discuss more. 

If this is interesting to you and you'd like to see where we are going with Catallax, please pick up my book Immortality (Purchase of a physical or kindle copy helps support this project).

Donations always accepted at:

BTC: 1AAfkhg1NEQwGmwW36dwDZjSAvNLtKECas

ETH and Tokens: 0x148311c647ec8a584d896c04f6492b5d9cb3a9b0

If you would like more code articles like this please consider becoming a patron on patreon.

You can discuss this article and more at our reddit page r/Catallax.

Happy Birthday, Catallax!

“Note: The Dev Log will return next week and we’ll be looking at testing time in truffle + testrpc. I’m on vacation this week. Enjoy this brief history post in its stead.”

This week is the three year anniversary of the concept behind Catallax.  Every year my family and I take a retreat into the east Texas woods to relax and rejuvenate. This place is great and there is a ton of child care so that parents can reconnect and have some time to step away from the children.
 
Three years ago I had a really great confluence of influencers. We had just found out that our third child was on the way and I was deep in the weeds with Piketty, Fukuyama, and wrestling them through the lenses of Alexander.
 
I had been thinking for a long time about how money fell short of all that I thought it could be. I distinctly remember drawing a dollar with arrows over it going both directions in the early 2000s. I was introduced to Kevin Phillips’ History of the American Rich and I banged my head against the problem a good bit, but never came up with much.
 
In 2009 I discovered Gesell and his natural money concept. That discovery really clicked a few things into place and there was something about the 0% interest assumptions that I knew was going to be important. I wrote a piece of fan fiction about one of the big cell phone makers launching a natural money to fix the economic crisis. It never really went anywhere.
 
It wasn't until June of 2014 that Bitcoin and the Blockchain came into the picture and clicked all the pieces into place.
 
Lessig's mayday PAC was flailing and the prospect of never being able to fix money in politics led to a deeper question of how can we fix money.  Piketty showing the data of capital concentration magnified many of the principles that I'd been ruminating on since I'd read Phillips a decade and a half earlier. On a morning walk, a number of ideas were elevated into RAM out of the cold storage of my brain. Bitcoin's idea of a public ledger of all transactions was a key piece in the puzzle. Before seeing and understanding that this was a tech that could actually live in the world Catallax would not have been possible.
 
It wasn't until later that year that I got into the meat of the Bitcoin tech and realized that all the pieces I needed were already there, but the summer of 2014 caused me to start writing the pattern language found in my book Immortality. 
 
I tried to soft launch in 2015 with a talk at the Texas Bitcoin Conference and flying to NYC to demo at the Singularity Institute's Exponential Finance.  The feedback was ok, but not what I wanted. In that same season, a colleague brought a business opportunity to me that was too good to pass up. We bought a company in an unrelated field and we've been fighting the good fight trying to apply new technologies to the world of organ donation for the last two years.  It has been a fun ride and we are starting to see enough light at the end of the tunnel that I can start to hand some of my responsibilities over to new employees. 
 
I haven't been completely idle. As I've been crisscrossing the country installing software at organ centers I've been piecing together the book Immortality that lays out why I think we need this new kind of money. "Why?" Was the biggest question I received when I had tried to launch previously.  Somewhere around early 2016 Robert Pirsig helped me answer that question in his amazing book Lila.  I hope that if you have the “Why?” question and that the intersection of moral philosophy and economics piques your interest that will check out Immortality and that it will answers that question.
 
During the last two years, ethereum has really matured and now seems to be the platform that I needed all along. Now we are here in the summer of 2017 and people are paying me to write solidity contracts. The pieces of the puzzle for how Catallax can be a real thing now are starting to fall in place and the last few hurdles of regulatory compliance are being arranged.  Please follow us on twitter, medium, rss, Facebook, or Reddit and come along for the ride.
 
Let's fix money.
 

Happy Birthday, Catallax!

If this is interesting to you and you'd like to see where we are going with Catallax, please pick up my book Immortality.

Donations always accepted at:

BTC: 1AAfkhg1NEQwGmwW36dwDZjSAvNLtKECas

ETH and Tokens: 0x148311c647ec8a584d896c04f6492b5d9cb3a9b0

If you would like more code articles like this please consider becoming a patron on patreon.

Get to know Catallax: Demurrage, Catch Up, and Pref Dividends

This is the first part in a five-part series of posts that lay out the basics of what we are trying to build with Catallax.  The series will follow the following schedule and I’ll update the list with links as the articles go live: 

1. Demurrage, Catch Up, and Pref Dividends (today)

2. Passthroughs, Legacy, and Folding the Blockchain

3. Privacy, Accounts, and Transparency

4. Selective Citizenship and Citizen Override

5. Loans and a new kind of Capitalist

Demurrage, Catch Up, and Pref Dividends

The hook of this system is built on Silvio Gesell’s concept of Natural Money as described in his book ‘The natural economic Order.'

Natural money is ‘natural’ because it decays like all kinds of real capital. Historically, this kind of money was implemented using stamped money.  With stamped money you would have to buy a stamp(say for 1 cents) and affix it to your physical $1 bill once a month(thus having a 12% decay rate).  At the end of each year, all bills would be turned in for new bills. Stamps are a bit impractical in the real world and we are able to do away with them because of the blockchain.  Instead of charging for a stamp, we just track the decay rate and make sure that each account that uses the system pays the correct fee before they are able to transfer money.  We call this the Catch-Up.  I’ve laid out a simple way to do this in solidity in a dev log post.

This is a decent system for accelerating the flow of cash through an economy.  If you cash is going to decay you want to quickly find a place to spend/invest it so that someone else takes on the burden of paying the decay fee.  You will typically find people willing to pay the fee in exchange for reducing risk elsewhere.  As a result, your cash ends up being more efficient as a liquidity tool. 

Implementing a decaying currency is all well and good, but what to do with the decay?  Other blockchains have tried allocating this a miner reward friecoin.  In other stamped money systems the decay fee was used to provide government services and treated like a tax.  We are going to do something different with our decay fees.  We are going to treat the blockchain as a time machine and pass the decay backward through the blockchain to the people that paid into an account.  We call these Pref Dividends.  By doing this we not only incentivise the application of cash so one does not have to pay the decay fee, but we incentivise the application of cash to destinations that the cash holder anticipates will be good at attracting more cash in the future.

Let's take a look at a couple of examples of how this system would work.

Scenario 1 - The Wine Heiress:

A wine merchant produces a bottle of stunning wine.  I think this bottle of wine is worth $20 and the merchant agrees.  This is her first catallaxian transaction so when I give her $20 for the wine, I get 20 pref shares in her account.  I own 100% of the pref shares at this point.  The next day she finds out that a Catallaxian great uncle has passed away and she has inherited a cool $1 million.  She idles the day away dreaming of what she is going to spend this money on.  When she goes to start spending it the next day she has to ‘Catch Up’.  She held $1,000,020 for 1 day at a 12% per year decay rate.  Her first transaction will have a $328 decay fee tacked onto it.  That $328 will go straight into my account because I’m the only one who has ever put cash into her account. Not a bad return on spending $20...and I get to keep the wine.

This is a far-fetched scenario, but it shows the power of betting right.

Scenario 2:  The Established Merchant.

Like the last scenario, I’m going to buy a bottle of wine for $20. But this time I’m buying it from a wine merchant who has been growing their operation for a while and is established in the business.  I get the same 20 pref points in the account, but in this scenario, the merchant has already had revenues of $3,000,000 over the course of her operation.  As a result, my $20 only makes up 0.00000666666 of the total 3,000,020 prefs.  If this merchant likes to keep $100,000 in their account to mitigate risk, my one day's worth of pref payments(at a 12% decay rate) would only be $0.0002.  What a tiny sum!  Over a year that is only $.073 cents.

From this scenario, we learn that one shouldn’t expect grand riches from this setup, but if one were to buy a bottle of wine a week for 20 years you’d end up with a stipend of $75 / year for your participation in the Wine Economy. (This is a rough calculation and doesn’t take into account reduction in percentage of the wine merchant's account).  This is not a great ROI, but don’t forget, you still have all that wine.

The moral of these two stories is that over a lifetime of spending money with accounts that range in return between these two scenarios one can build up a nice recurring pref payment that can act as a form of earned basic income.

In addition, we have some new levers on the economy that we can pull to try to accelerate the velocity of money, combat inflation, and increase redistribution of wealth while maintaining the market incentives of capitalism.

Statutory Theft

One principle must be put in place for this all to work properly and that is the principle of the inalienable right to pref ownership.  This means that you cannot sell your prefs anymore than you can sell yourself into slavery.  I propose the concept of statutory theft as a legal guiding principle of how handle scams and inappropriate attempts to confiscate the value of future pref payments.  This is a difficult thing to implement in code and will be an important reason that we will need to look at rule of law in relation to deploying the Catallax system.

You can read more and explore the economic model I’ve built showing how this system can lead to increases in GDP and reduction in poverty in one of my other articles:  http://catallax.info/news/2015/4/19/a-published-model-of-hypercapitalism

If this is interesting to you and you'd like to see where we are going with Catallax, please pick up my book Immortality.

Donations always accepted at:

BTC: 1AAfkhg1NEQwGmwW36dwDZjSAvNLtKECas

ETH and Tokens: 0x148311c647ec8a584d896c04f6492b5d9cb3a9b0

To Part 2:  Pass Through, Legacy, and Folding the Blockchain