Not actually capped at 100 billion? · Issue #23 · dogecoin/dogecoin · GitHub

There was a comment on this thread earlier (that seems to have been deleted) that got me thinking about this problem again.

I think we can all agree that the current rate at which the block reward is decreasing is not in the best interest of the coin, but how to go about addressing this without damaging the coin's stability, utility. security, etc? I spent a lot of time playing around with a spreadsheet this morning and eventually reached the conclusion that we'll likely need to both adjust the block time and the rate at which the block value is reduced. Also, while I had initially thought that the 100,000,000,000 coin limit was a good thing I've come around to thinking that it's probably okay to build in a tiny bit of inflation, as the dogecoin foundation states: "The point of any currency is to exchange it for goods and services so making a pile and hiding it in a secret lair is no good to anyone". Built-in inflation helps promote these exchanges. So, I offer the following proposal which would proceed in 3 stages:

Stage 1 (blocks 0 - 149,999): well that's actually where we're at right now
State 2 (blocks 150,000 - 199,999): block time increased to 90 seconds
Stage 3 (blocks 200,000+): New block value calculation

I mentioned the idea for stage 2 in an earlier post so I won't get into that. For the last stage, before block 200,000 rolled around the following GetBlockValue would be in place:

https://gist.github.com/somegeekintn/8456847

Basically what would happen is that the block reward would actually decrease by 59.6% at block 200,000. In exchange for this more substantial reduction, the number of blocks between reward decreases would be doubled. After that each reduction would be slightly less than the last with the random portion of the reward having less and less significance with each reduction until (at block 9,200,000) the random portion will have completely right shifted itself out of existence.

You'll notice there are two variants to the GetBlockValue. One would always add 1000 doge to the value and the other would insure that the block reward was at least 1000 doge. That is, if the random portion and the fees totaled less than 1000 then the value would be set to 1000.

In exchange for these two disruptions, dogecoin's block value would settle into a gentle decline once every 208.3 days as opposed to the current rate of once every 69.4 days. It would end up working out like this:

through / reward / totalcoins
02/14/14 / 500,000 / 50,000,000,000
05/11/14 / 250,000 / 75,000,000,000
12/05/14 / 101,000 / 95,200,000,000
07/01/15 / 51,000 / 105,400,000,000
01/26/16 / 26,000 / 110,600,000,000
08/21/16 / 13,500 / 113,300,000,000
03/17/17 / 7,250 / 114,750,000,000
10/12/17 / 4,125 / 115,575,000,000
05/08/17 / 2,562.5 / 116,087,500,000
10/12/17 / 1781.25 / 116,443,750,000

and so on until the random portion of the block reward is completely eliminated in sometime in 2040. At that point there will have been ~124,000,000,000 coins mined and the reward will be fixed at 1000. At 1000 coins per block the total supply will grow by 350,400,000 coins/year or about 0.66% of the total at that point in time.

Lastly, for better or worse, dogecoin is most often exchanged for BTC and its value is expressed in those units. About 47 satoshis at the moment. I deliberately tried to keep the inflation somewhat in check because I think we may run into trouble if the value falls below 20 satoshis. At 20 satoshis increase / decrease of 1 unit translates to a valuation change of 5%! Also you have to wonder at what point value that exchanges would consider removing DOGE/BTC pairs and maybe force trading in LTC, etc.

This transition period is not going to be fun, but I think in the end we'll have a solid foundation on which to build.