Sub-Ether
Well-known member
I am trying to create a model for the connection between the masternode count, volatility and price movements using a variably damped multiloop feedback system based on amplifier theory, this as as far as I've got.
Am wondering what have I missed, there must be more than this to more accurately complete the simulation.
Theoretical Definition of economic stability (wikipedia)
''A financial system is stable when it dissipates financial imbalances that arise endogenously or as a result of significant adverse and unforeseeable events. When stable, the system absorbs shocks primarily via self-corrective mechanisms, preventing the adverse events from disrupting the real economy or spread over to other financial systems. Financial stability is paramount for economic growth, as most transactions in the real economy are made through the financial system.''
So, if the positive feedback is stronger than the sum of the negatives then the price will continue northwards.
The closer the positive feedback is to zero, the more the Dash price will drop (too many Dash for sale, market flooded, not enough buyers),
positive feedback should have a suggested value <= 1 for continuation of current price.
This is a typical state machine as an example,
It contains a feedback loop inside another feedback loop, perhaps smaller market dynamics(daily trading) inside the bigger picture over a longer timespan ?
Suggested Dash Model(using 6 feedback loops in parallel)
Lightly damped negative feedback
a) price goes up a small amount, masternoders/miners dump small change surplus, price goes back down to norm.
b) price goes down, market and masternodes use fiat/btc surplus to buy more nodes, price return upto norm.
Heavily damped negative feedback
c) price goes up by a large amount outside of trendlines, masternoders dump entire nodes onto the market.
Result: faster return to norm with increased undershoot which helped by (a)
d) price does down by a large amount, potential masternode owners consider entering the market and buy in large amounts.
Result: a quick return to baseline price due to the yield of ~16% still being the ROI=16% of the amount invested as a new buyer.
Positive (regenerative) feedback
e) Dash scarcity caused by hoarding, producing a price increase which is limited by whether the positive gain is higher than the combined effect of the sum of the negative feedbacks, regenerative feedback acts a price multiplier(measured by amount left on market not in nodes)
f) masternode count increasing (removing Dash from the market)
note: if the masternode count is reducing, then (f) tend towards 0,
and if masternode count is unchanged then (f) = 1
Price Stability
The price is more stable when the overall gain is less than 1.
Stability <= gain(x)
Potential chaotic states
When (e)*(f) >> (a)+(b)+(c)+(d) this will result in runaway price increases
When (e)*(f) << (a)+(b)+(c)+(d) this will result in large price drops.
Price near stable states
If the positive feedback is slightly less than the sum of the negative feedback loop inputs, the price will dip a little.
If the positive feedback is slightly more than the sum of the negative feedback loop inputs, the price will rise.
The more net negative feedback, the less 'noise' will be produced due to increased dampening, meaning increased stability and faster return to norm.
Fixed price with noise
If the positive feedback = sum of the negative feedbacks then spurious but baseline norm price movements are predicted,
where (e)+(f) = (a)+(b)+(c)+(d)
Did I miss something, there is probably more variables than this involved, looks like a bit of differential calculus will have to brought in to finish it off (yeeks!)
thoughts anyone ?
:smile:
https://en.wikipedia.org/wiki/General_equilibrium_theory
Am wondering what have I missed, there must be more than this to more accurately complete the simulation.
Theoretical Definition of economic stability (wikipedia)
''A financial system is stable when it dissipates financial imbalances that arise endogenously or as a result of significant adverse and unforeseeable events. When stable, the system absorbs shocks primarily via self-corrective mechanisms, preventing the adverse events from disrupting the real economy or spread over to other financial systems. Financial stability is paramount for economic growth, as most transactions in the real economy are made through the financial system.''
So, if the positive feedback is stronger than the sum of the negatives then the price will continue northwards.
The closer the positive feedback is to zero, the more the Dash price will drop (too many Dash for sale, market flooded, not enough buyers),
positive feedback should have a suggested value <= 1 for continuation of current price.
This is a typical state machine as an example,
It contains a feedback loop inside another feedback loop, perhaps smaller market dynamics(daily trading) inside the bigger picture over a longer timespan ?
Suggested Dash Model(using 6 feedback loops in parallel)
Lightly damped negative feedback
a) price goes up a small amount, masternoders/miners dump small change surplus, price goes back down to norm.
b) price goes down, market and masternodes use fiat/btc surplus to buy more nodes, price return upto norm.
Heavily damped negative feedback
c) price goes up by a large amount outside of trendlines, masternoders dump entire nodes onto the market.
Result: faster return to norm with increased undershoot which helped by (a)
d) price does down by a large amount, potential masternode owners consider entering the market and buy in large amounts.
Result: a quick return to baseline price due to the yield of ~16% still being the ROI=16% of the amount invested as a new buyer.
Positive (regenerative) feedback
e) Dash scarcity caused by hoarding, producing a price increase which is limited by whether the positive gain is higher than the combined effect of the sum of the negative feedbacks, regenerative feedback acts a price multiplier(measured by amount left on market not in nodes)
f) masternode count increasing (removing Dash from the market)
note: if the masternode count is reducing, then (f) tend towards 0,
and if masternode count is unchanged then (f) = 1
Price Stability
The price is more stable when the overall gain is less than 1.
Stability <= gain(x)
Potential chaotic states
When (e)*(f) >> (a)+(b)+(c)+(d) this will result in runaway price increases
When (e)*(f) << (a)+(b)+(c)+(d) this will result in large price drops.
Price near stable states
If the positive feedback is slightly less than the sum of the negative feedback loop inputs, the price will dip a little.
If the positive feedback is slightly more than the sum of the negative feedback loop inputs, the price will rise.
The more net negative feedback, the less 'noise' will be produced due to increased dampening, meaning increased stability and faster return to norm.
Fixed price with noise
If the positive feedback = sum of the negative feedbacks then spurious but baseline norm price movements are predicted,
where (e)+(f) = (a)+(b)+(c)+(d)
Did I miss something, there is probably more variables than this involved, looks like a bit of differential calculus will have to brought in to finish it off (yeeks!)
thoughts anyone ?
:smile:
https://en.wikipedia.org/wiki/General_equilibrium_theory
Last edited by a moderator:
Too much for this dummy... LOL
