This is a more-game-theoretic-issue than bug-in-the-code. I’m also not totally positive about it but would love to hear your thoughts.
Assuming: At some point in the future, the total supply of Ether will be relatively constant (reduced issuance, the possible burn of tx fees, loss from lost keys/death, etc).
Early adopters w/in curation market make a "profit". This means that some of the late adopters (say, at least, the very last adopter), will necessarily lose money.
Thus, if you knew you were the last adopter, you would choose to not invest - as you would be guaranteed to lose money.
Furthermore, as there is a limited supply of Ether, if all other Ether was invested in the market, the last un-invested Ether holder could be sure they would lose money, and would thus choose to not invest.
As the last user would never choose to invest, thus the person before them would never choose to invest (as they can be sure, by this argument, there will be no later adopters to invest and give them a profit).
The argument can be applied recursively — which seems to point out that it is not a stable equilibrium to invest in the first place.
Essentially, the argument is that a user who is thinking about putting money into the market can say “If the rest of all free Ether was invested in this contract, would I end up making a profit, given the amount of Ether invested as of now?” — and come to the conclusion that it does not make sense to invest.
I simplified the argument by saying “the last adopter,” but from some (possibly wrong) calculations, its seems mores like the last >75% of adopters would not make their money back. But as long is there is one (which there must be if early adopters get rewarded), I think the argument holds.
I might be totally off-base here, but let me know what you think.
This is a more-game-theoretic-issue than bug-in-the-code. I’m also not totally positive about it but would love to hear your thoughts.
Assuming: At some point in the future, the total supply of Ether will be relatively constant (reduced issuance, the possible burn of tx fees, loss from lost keys/death, etc).
Early adopters w/in curation market make a "profit". This means that some of the late adopters (say, at least, the very last adopter), will necessarily lose money.
Thus, if you knew you were the last adopter, you would choose to not invest - as you would be guaranteed to lose money.
Furthermore, as there is a limited supply of Ether, if all other Ether was invested in the market, the last un-invested Ether holder could be sure they would lose money, and would thus choose to not invest.
As the last user would never choose to invest, thus the person before them would never choose to invest (as they can be sure, by this argument, there will be no later adopters to invest and give them a profit).
The argument can be applied recursively — which seems to point out that it is not a stable equilibrium to invest in the first place.
Essentially, the argument is that a user who is thinking about putting money into the market can say “If the rest of all free Ether was invested in this contract, would I end up making a profit, given the amount of Ether invested as of now?” — and come to the conclusion that it does not make sense to invest.
I simplified the argument by saying “the last adopter,” but from some (possibly wrong) calculations, its seems mores like the last >75% of adopters would not make their money back. But as long is there is one (which there must be if early adopters get rewarded), I think the argument holds.
I might be totally off-base here, but let me know what you think.