New CPU and REX approach proposed by Dan Larimer

As previously announced on Twitter, today Dan Larimer published his proposal for a new approach to CPU and REX to solve the resource problems that currently plague the EOS mainnet.

His proposal consists of:

1. Making sure that 100% of all CPU time should be leased from the system contract
2. The price for leasing must grow exponentially as the percentage of CPU leased increases
3. The EOS paid to lease the CPU time would be distributed to staked EOS tokens (e.g. the REX pool)

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Why would this model work? What were the previous problems?

Currently, given the huge amount of transactions that are operated in the mainnet, the price for the CPU has increased dramatically and the entire supply of EOS within the REX pool has been depleted. For this reason the price of the CPU within REX has become unsustainable and many staked EOS holders have taken their EOS from REX, causing a further imbalance between supply and demand.

Moreover, the amount of CPU time users received from leasing or simply from their own staked EOS has never been predictable, since this depended on the amount of EOS that were put in stake on the CPU. So often there was a lot of fluctuation of CPU time available within each EOS account, making the whole resource model even more complex to understand and to predict the costs for a business/dApp.

What will be the results of the new approach proposed by Dan?

1. The allocation of the CPU towards the holders of staked EOS is preserved, as they will receive an income that they can use in the rental market.
2. There will be a predictable price for the CPU, since 100% of all CPU time is leased from the system contract
3. CPU time becomes non-transferrable
4. Remove speculative component to CPU pricing
5. In future versions of EOSIO, Block Producers could be paid in rental income, to further align their interests with the utility value of the network.

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How can we move from the current model to this new approach?

The easiest way is to "virtually" increase the supply of the CPU and move the newly generated one within the contract system. In this way the CPU "real" time within the chain remains stable while the ownership of the "virtual" one is transferred to the new rental market.

Once the total virtual supply is increased 100 times, the contract system would hold 99% of the entire real CPU and we could then proceed with the new model.

After that, the contract system would distribute the total CPU within the REX pool and the revenues would be distributed among the staked EOS holders within REX. In this way we would be able to gradually shift into the new system.

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Conclusion

"The proposed CPU rental market will stabilize CPU prices, reduce rental CPU costs, and increase predictability of CPU access. The proceeds from CPU and NET rentals can still be distributed to those staked in REX. However, the biggest change would be the gradual loss of the ability “own CPU” forever via staking EOS for a share of CPU. Combined with the ability of service providers to cover CPU costs on a per-transaction basis for their users, this will make EOSIO based networks the easiest to use and most cost effective solution on the market."

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Sources:

• EOSIO Resource Allocation Reimagined
• Dan Larimer solved CPU?

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