Chapter 13: Economic Model and Minting Logic
13.1 MeriToken Is Not a Currency
To reiterate MeriToken's economic positioning:
- Non-tradable, non-transferable, non-cashable (no secondary market)
- No speculative value
- Not a medium of exchange
- Purely a measure of contribution and a carrier of voting power
The sole inbound monetary touchpoint is the optional, one-way, capped cold-start bootstrap defined in §13.5. It is strictly one-way (no reputation→fiat exit) and, like all Merit, decays to the floor value — so it never confers persistent voice. This refines, not reverses, the positioning above.
Therefore, the constraints of traditional monetary economics (inflation control, monetary policy) do not apply to MeriToken.
13.2 Minting Approach Selection
Three approaches were evaluated during discussion:
| Approach | Description | Advantages | Disadvantages |
|---|---|---|---|
| Fixed supply | Preset cap | Simple | Increasing difficulty for latecomers, unfair |
| Periodic quota | Fixed minting amount per period | Controls total supply | Contributions become a zero-sum game |
| Uncapped + decay self-balancing | Mint on demand, decay automatically burns | Fair, no latecomer disadvantage | Requires precise decay model |
Choice: Uncapped Minting + Decay Self-Balancing
Rationale:
- Merit is not a currency; it does not need scarcity to maintain value
- It represents "current active contribution level"; decay guarantees this
- Avoids unfair disadvantages for latecomers
- Voting power is based on share; changes in total supply do not affect governance fairness
13.3 Why Over-Issuance Will Not Occur
Key question raised during discussion: Merit is created from nothing—won't it be over-issued?
Answer:
- Decay is a natural burn mechanism: old MeriToken continuously decays
- Dynamic equilibrium: when minting rate = decay rate, total supply tends toward stability
- Share determines voting power: even if total supply increases, individual voting power depends on share rather than absolute value
- Analogy: academic citation counts have no cap, but the influence of older papers naturally decays—the system self-balances
13.4 Dynamic Equilibrium
Steady State
When user count is stable: total network MeriToken ≈ constant
Growth Phase
New users increase → total supply grows → but per-capita tends toward stability → voting power shares are naturally diluted
Decline Phase
Active users decrease → minting decreases while decay continues → total supply drops → remaining active users' shares increase
13.5 Initial Allocation
- Registration grants MeriToken = e ≈ 2.718
- Initial minMerit = e
- Ensures every new user has basic participation capability
- e is small enough not to significantly dilute existing users, yet large enough to guarantee basic participation rights
Optional Cold-Start Bootstrap (one-way, capped, decaying)
To address present-moment voice and the cold-start problem, a participant MAY optionally make a one-way fiat payment to receive an above-baseline initial reputation grant, up to a hard cap. This is the system's only inbound monetary touchpoint, and it is strictly one-way:
- No exit: there is no reputation→fiat path — no resale, no cash-out, no secondary market, no transfer.
- Decays like all Merit: purchased initial reputation is subject to the same decay and collapses toward the floor value (
minMerit). It MAY be configured to decay faster and/or be non-renewable, to prevent "keep paying = permanent power." - Net effect: a purchase buys only a temporary head start. Without subsequent genuine contribution, the purchased reputation necessarily decays to the floor value — money cannot buy persistent voice. At steady state, voice is determined by sustained contribution.
⚠️ Parameters to be specified (this is qualitative alignment only): the purchase cap; whether purchased reputation decays faster or is non-renewable; the exact coupling to the decay/floor model. See iFay ADR
decisions/0001(Decaying Bootstrap) for the cross-system ruling. This refines, not reverses, MeriToken's "measure of contribution, not financial asset" positioning.
13.6 Incentive Analysis
MeriToken is non-tradable, but the incentives it provides are:
| Incentive | Description |
|---|---|
| Voting power | Influence in community decision-making |
| Social recognition | High MeriToken = high credibility |
| Priority access | Preferential allocation of certain resources or opportunities |
| Legacy value | Can be partially passed on to descendants |
In the post-currency era, social recognition and voting power are themselves the strongest incentives.
13.7 Discussion Notes
Core insights of the economic model:
- MeriToken is not a currency and does not need the constraints of monetary economics
- Decay is the most elegant "burn" mechanism—no human intervention needed, naturally self-balancing
- Voting power based on share means changes in total supply do not affect governance fairness
- The core advantage of this model: simplicity, self-balancing, fairness
- No complex "monetary policy" is needed to maintain stability