Understanding Maximum Fair Price (MFP) on the CLORE Blockchain: The Shift to USD
The landscape of the CLORE Blockchain is continuously evolving, and with it comes some crucial updates that our community needs to be aware of. Front and center of these updates is the shift of the Maximum Fair Price (MFP) from being based on Bitcoin to now being pegged to the US Dollar (USD). This change is significant, aiming to bring more stability and clarity to the MFP system, particularly in the context of the volatile nature of cryptocurrencies.
What is the Maximum Fair Price (MFP)?
For those who need a refresher, Maximum Fair Price serves as a protective measure against hosting providers self-renting their rigs under alternate accounts at inflated prices to garner a larger slice of the CLORE Blockchain hosting rewards.
Before the introduction of MFP, hosting providers earned 40% of the block reward proportional to the rate they rented their machines. The MFP changed this dynamic to ensure fairness.
The CLORE.AI team assigns a Maximum Fair Price to every hosting provider. If a hosting provider sets a rental price for their machine that exceeds this MFP, it will not increase their earnings from a particular reward pool associated with the MFP.
The inception of MFP led to a shift in the reward distribution model:
- Solely Based on Rental Price (30% of the hosting reward pool): The traditional model still persists but now takes up only 30% of the total hosting rewards. This means that the rewards based solely on rental prices have been reduced, limiting the impact of inflated self-rental strategies.
- Maximum Fair Price (70% of the hosting reward pool): This is where the lion’s share of the hosting rewards lies. And the functioning is clear: stick to or below the MFP, and you earn from this pool. Go beyond it, and you don’t get any additional rewards.
What MFP is NOT
An important distinction to make is that the Maximum Fair Price is not a recommended price. Instead, it is the utmost ceiling that the CLORE.AI team considers feasible for the machine. Ideally, hosting providers should set a price that’s somewhat lower than the MFP to ensure they offer competitive rates while still remaining within the realm of fairness and viability.
The Interplay with Proof of Holding (PoH)
Proof of Holding (PoH) is a pivotal element in the CLORE ecosystem, allowing holders to earn rewards by merely holding onto their Clore coins in their wallets. This mechanism is directly affected by the MFP updates as it influences the distribution of rewards.
Participants in the PoH system receive varying rewards based on the quantity of coins they hold and their holding period. This dynamic ensures that committed and long-term holders are incentivized.
With the transition of MFP to USD, hosting providers and PoH participants can anticipate more predictable and consistent rewards. The backend overhaul, ensuring real-time recalculations and a universal base currency, further streamlines the entire process, making it more transparent and user-centric.
Weighted Importance in the CLORE Ecosystem:
Every aspect of the CLORE Blockchain reward system carries a certain weight, impacting the eventual rewards users can expect:
- Price: 15% weight
- MFP: 25% weight
- Price in PoH: 15% weight
- MFP in PoH: 45% weight
Why the Shift to USD?
Given the ever-fluctuating nature of cryptocurrencies, pegging the MFP to Bitcoin could lead to inconsistencies and unpredictabilities in determining a ‘fair price’. By anchoring the MFP to the more stable US Dollar, we hope to offer a more consistent, transparent, and reliable framework for our hosting providers and users.
The shift to USD also helps in simplifying calculations, making it more straightforward for hosting providers to set competitive and fair rates for their services.
Behind the Transition to USD
The shift from Bitcoin to USD for MFP is not just a simple re-coding exercise. The developer team has taken a holistic approach to ensure scalability, flexibility, and stability. Here’s a closer look:
- Scalable Implementation: Rather than hardcoding specifics for BTC or CLORE, the system is designed to be flexible. By simply adding a price source to the configuration, the system can adapt to any currency, making it future-proof.
- Universal Codebase: Aiming for simplicity and universality, the transition involves modifying a significant portion of the platform’s existing logic. With roughly 2000 lines of code dedicated to the CLORE rewards logic alone, the task is intricate, ensuring every part seamlessly integrates with the new MFP system.
- Real-time Recalculation: The platform now real-time recalculates the prices of different coins (currently BTC, CLORE) in terms of USD, ensuring accuracy in rewards distribution.
- Universal Base Currency: Beyond just adjusting MFP, the entire system now perceives USD as the universal base currency for both CLORE and BTC orders. This overarching change solidifies the platform’s commitment to treating USD as the central pivot.
In Conclusion
The introduction of the Maximum Fair Price and its subsequent pegging to the USD showcases CLORE’s commitment to fairness, transparency, and continuous improvement. It’s a step towards ensuring that all participants in the ecosystem — from hosting providers to users — get a fair deal, fostering trust and growth in the CLORE community.
