On-chain conversion rate
- Hi everyoneReaching out to discuss an action DA recently took on our SVs across all environments (Dev, Test, and Main nets).DA bumped up the on-chain conversion rate for our SVs to $0.0517.As a quick reminder, this conversion rate will (if we all agree at the time) move to a liquid market price once that exists. In the interim, there is a simple algorithm to take the median of all the SV reported conversion rates.There are a number of reasons we felt it was appropriate to raise our conversion rate:
- The $0.005 price was recommended at launch as it felt like a 'fair' projection of the extrinsic value of the Network given the range of participants acting as SVs and the delivery of tech to production
- Since then, we have had material early adoption - over 60 Validators are live on the Network, the SV pool has grown in important ways, use has grown to ~ 0.5 TPS, Copper and Dfns have gone live, Circle made their announcement, governance has really improved at the GSF, etc
- There are a few OTC transactions that have been quoted around the 5-6c range. Nothing has traded yet
We felt that the strong first ~6 months of the network warranted a rise in the conversion rate. This means the same amount of activity in the Network would burn less CC per $1 of burn.Feel free to do as you like. DA updating its price alone is not enough to move the conversion rate. If you're not operating an SV then there is nothing for you to do - only the SV operators have an input to the median calculation.Yet another one of those topics that we get to discuss for the first time!Thank youEric - toggle quoted message Show quoted textA few people have reached out to me bilaterally and I realized there is an important point I didn't explain well in my first note...The reason that we felt it was important to do this now is because activity is likely too expensive (in CC terms) for using the chain given the events of the last few months and the current on-chain use. Raising the conversion rate means that for every $1 of fees, those fees will burn less CC. If you are an early adopter and heavy user of Canton today, the burn is significant and, given the strong start, likely too high at this time.On Wed, Feb 5, 2025 at 1:33 PM Eric Saraniecki via lists.sync.global <eric=digitalasset.com@...> wrote:Hi everyoneReaching out to discuss an action DA recently took on our SVs across all environments (Dev, Test, and Main nets).DA bumped up the on-chain conversion rate for our SVs to $0.0517.As a quick reminder, this conversion rate will (if we all agree at the time) move to a liquid market price once that exists. In the interim, there is a simple algorithm to take the median of all the SV reported conversion rates.There are a number of reasons we felt it was appropriate to raise our conversion rate:
- The $0.005 price was recommended at launch as it felt like a 'fair' projection of the extrinsic value of the Network given the range of participants acting as SVs and the delivery of tech to production
- Since then, we have had material early adoption - over 60 Validators are live on the Network, the SV pool has grown in important ways, use has grown to ~ 0.5 TPS, Copper and Dfns have gone live, Circle made their announcement, governance has really improved at the GSF, etc
- There are a few OTC transactions that have been quoted around the 5-6c range. Nothing has traded yet
We felt that the strong first ~6 months of the network warranted a rise in the conversion rate. This means the same amount of activity in the Network would burn less CC per $1 of burn.Feel free to do as you like. DA updating its price alone is not enough to move the conversion rate. If you're not operating an SV then there is nothing for you to do - only the SV operators have an input to the median calculation.Yet another one of those topics that we get to discuss for the first time!Thank youEric--
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Thanks for raising this.
We are in alignment on this. I assume we would need recommend a conversion rate to the GSF as next steps
Best
Prakash
From: cip-vote@... <cip-vote@...> on behalf of Eric Saraniecki via lists.sync.global <eric=digitalasset.com@...>
Date: Wednesday, February 5, 2025 at 1:33 PM
To: cip-vote@... <cip-vote@...>
Subject: [cip-votes] On-chain conversion rateHi everyone Reaching out to discuss an action DA recently took on our SVs across all environments (Dev, Test, and Main nets). DA bumped up the on-chain conversion rate for our SVs to $0. 0517. As a quick reminder, this conversion rate will (if
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Hi everyone
Reaching out to discuss an action DA recently took on our SVs across all environments (Dev, Test, and Main nets).
DA bumped up the on-chain conversion rate for our SVs to $0.0517.
As a quick reminder, this conversion rate will (if we all agree at the time) move to a liquid market price once that exists. In the interim, there is a simple algorithm to take the median of all the SV reported conversion rates.
There are a number of reasons we felt it was appropriate to raise our conversion rate:
1. The $0.005 price was recommended at launch as it felt like a 'fair' projection of the extrinsic value of the Network given the range of participants acting as SVs and the delivery of tech to production
2. Since then, we have had material early adoption - over 60 Validators are live on the Network, the SV pool has grown in important ways, use has grown to ~ 0.5 TPS, Copper and Dfns have gone live, Circle made their announcement, governance has really improved at the GSF, etc
3. There are a few OTC transactions that have been quoted around the 5-6c range. Nothing has traded yet
We felt that the strong first ~6 months of the network warranted a rise in the conversion rate. This means the same amount of activity in the Network would burn less CC per $1 of burn.
Feel free to do as you like. DA updating its price alone is not enough to move the conversion rate. If you're not operating an SV then there is nothing for you to do - only the SV operators have an input to the median calculation.
Yet another one of those topics that we get to discuss for the first time!
Thank you
Eric
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