I would like to reiterate the importance of PRE utilities. The current draw on PRE treasury reserves for rewards is approximately 380k-400k PRE / day [80-100k search rewards and ~300k node rewards] or around 12million PRE / month. With 305 million PRE locked in stakes that is only a max of 195 million available for continued rewards. Assuming all 195 million are owned by Presearch treasury that is less than 16 months of available rewards assuming thing’s don’t change much.
It is good to see a roadmap and potential near-term actions to begin to move the project forward and address this sustainability issue.
The following announcements/mentions I assume are in part to address this challenge:
(1) changes in the search rewards which may reduce the total rewards paid out for searches. This would hopefully reduce the 80k-100k daily draw to a lower daily rewarded amount extending the treasury PRE runway. Yet to be seen on the details and implementation of this though.
(2) Increasing node minimum stake is anticipated based on Tim’s recent comments and when implemented should slow the growth of nodes and therefore a slow in the delta outflow of PRE for node rewards. Although less new nodes will be created, most will maintain their nodes and PRE earned will likely be re-staked on nodes. The total outflows every month for node rewards are likely to remain the same and increase, just increase at a slower rate.
(3) The announced 1% + PRE buy backs will buy PRE back currently at a lower price than is being rewarded out .035 vs .07 so this should have a positive impact on extending the rewards runway but if too many people continue to hold it may backfire instead.
We can see these efforts and the stated Priorities (Income; Token flow; and Searches) are clearly ordered at attempting to address the rewards sustainability concern. IMHO these are partial improvements; the only thing that will fundamentally change the outflow dynamics are PRE utility.
I lay all this out to reiterate the importance of adding PRE utilities. Why? Without additional enticing PRE uses the token flow doesn’t change much, it continues on a net outflow from the PRE treasury albeit at a slower outflow rate. All current holders (self custody, node runners, and searchers) are likely to continue to hold and accumulate at these sub .10 prices. Therefore, anticipated purchases via buybacks once the cheap PRE .035-.07 is bought off the open market the buybacks will begin to yield less PRE to the treasury. I do like staking utilities from a supply and demand perspective but staking alone does not put PRE back into the treasury it encourages PRE to be accumulated and not used or sold. Staking utilities must be balanced with a healthy amount of enticing consumptive uses for PRE. The consumptive uses and/or high PRE token prices are the only positive things that will get people to relinquish PRE tokens. If we rely only on buybacks to get PRE flowing back into Treasury, what happens if prices don’t get high enough to entice holders to sell or the 1-20% of income generated for buy backs is not enough to offset the reward outlays? What if it takes years to get greater adoption and quality searches high enough to entice substantial advertising money? I am quite aware that a price increases above .07 will reduce the PRE outflows for rewards but there will also be pressure to maintain a .07 PRE to maximize reward payouts. The logical conclusion of this is to entice searchers, node runners, and other holders to USE their PRE CONSUMPTIVELY. Advertising eventually will be the most likely mechanism to sustain or even increase rewards but we need 10x or more in quality searches to start to get that ad investment. Therefore, the best thing to do in the near-term IRT token flow is to create other enticing CONSUPTIVE USES for PRE. If you increase PRE utility for consumptive uses search rewardees, node runners, other holders, and even new users may likely view those utilities as more valuable than holding PRE and use their PRE or actually purchase PRE for those utilities putting less pressure on buybacks. Every user, search earner, and node runner you can get to use PRE consumptively reduces net outflows.