Dynamic Emission Model

CYCLONE EMISSION MODEL

Traditional coin issuance models have shown their limitations. Inspired by the adaptability of central banks, Cyclone Blockchain introduces a machine-learned emission model that dynamically adjusts coin emission based on the economic climate of the blockchain. This ensures that the Cyclone ecosystem remains responsive to demand and supply fluctuations, stabilizing the economy, incentivizing participation, and preventing the concentration of wealth.

The underlying AI model, named CYCLONE EMISSION MODEL (CEM), is based on a sophisticated correlation engine combined with a bayesian neural network. Bayesian inference provides an optimal methodology to quantify uncertainties in statistical predictions, especially for multi-step-ahead state forecasting of economic systems. By using Markov Chain Monte Carlo (MCMC) sampling methods based on previously learned economic data from a variety of blockchains as well as economies, CEM is able to determine the optimal circulating supply depending on the current economic and technological state of the cyclone chain. Put simply, CEM analyzes the economic state of the blockchain based on the real-time blockchain data, historical data and trend indicators, as well as a fundamental knowledge of blockchain economies using internal parameters such as transaction volume and coin velocity, etc.. The model adjusts the periodic issuance accordingly and can even transition to a fully deflationary issuance, where coins are continuously burned until a negative price trend weakens. This makes Cyclone Blockchain the world's first model with truly balanced dynamic emission.

Cyclone Emission Model (CEM) - Approach to a decentralized economic stability

In the realm of blockchain technology, one of the significant challenges has always been striking a balance between coin supply and market demand, to ensure the stability of the native coin's price. Understanding this challenge and the limitations of static emission models, the Cyclone Blockchain introduces the Cyclone Emission Model (CEM).

What is CEM?

CEM is an innovative approach to coin emission. At its heart, it's a bayesian neural network, purposed to calibrate the periodic token emission of the Cyclone Blockchain. But CEM is not just a copy-pasted machine learning model from an Online-Tutorial. It is a comprehensive real-time monitoring and correlation engine that enables a variety of blockchain-internal parameters and key indicators to be provided to the neural network so that it is able to determine the optimal CYCL coin emission to validators based on the "health of the cyclone economy".

Objective of CEM:

The primary objective of CEM is to minimize the price level volatility of the CYCL Coin. In a market often swayed by unpredictability, Cyclone seeks to be an oasis of stability. Through mathematical optimization, CEM adjusts the CYCL coin emission in such a way that the economic climate is optimized in the medium term. An optimal economic climate for cyclone chain is defined in the Economic objectives of Cyclone Chain.

The result? Medium-term price stability that protects both the network and its participants from the often detrimental effects of strong price fluctuations.

Decentralization at DEM's Core

While the objective of CEM is groundbreaking, its commitment to the principles of blockchain is unwavering. True decentralization is at the core of CEM's design. Instead of relying on external data sources, which can introduce centralized points of failure or manipulation, CEM draws insights solely from the internal state of the blockchain. This eliminates dependencies on information providers such as oracles, ensuring CEM's operations remain transparent, trustless, and tamper-proof.

Responsive and Adaptive Emission:

But CEM's brilliance doesn't end with stability. Its machine learning foundation empowers it with an unparalleled adaptability. Should the internal parameters indicate a strong downtrend in the Cyclone Coin price, CEM is designed to take corrective action, even possessing the capability to make the emission deflationary. Such a responsive approach ensures that the Cyclone ecosystem remains robust, no matter the economic climate.

Why did we create "CEM"?

The Problem of Pre-defined and Static Coin Emission in Blockchains

1. Coin emission, in the context of blockchain, refers to the creation and distribution of new coins or tokens in the ecosystem. All blockchains adopted a pre-defined and static coin emission model, dictating how many coins would be created and at what intervals. While such models offer predictability, they come with their own set of challenges:

2. Economic Inflexibility: Economies, both digital and traditional, are dynamic in nature, constantly evolving based on various factors like demand, supply, technological advancements, and geopolitical events. A static coin emission model doesn't allow a blockchain to adapt to these changing economic conditions. It's akin to having a one-size-fits-all monetary policy, regardless of the actual needs of the economy.

3. Hoarding and Centralization Risks: Knowing the exact emission schedule can lead to strategies where large stakeholders or miners hoard coins, expecting future scarcity. Over time, this can lead to centralization of wealth and power within the ecosystem, which is antithetical to the decentralized principles of blockchain.

4. Reduced Security: Block rewards (part of the emission model) motivate miners or validators to secure the network. A predictable decline (like Bitcoin's halving) might disincentivize miners once rewards decrease significantly, especially if transaction fees don't compensate adequately. This can compromise the security and decentralization of the network.

5. Market Manipulation: Predictable emission schedules can be factored into trading strategies, allowing savvy traders or large stakeholders to manipulate markets to their advantage, especially during known emission events.