Reusing inactive assets

Dormant and inactive assets could be reused by an ecosystem to generate income for the treasury

After a long period of inactivity the assets in a wallet could be taxed and reused as a form of income for the ecosystems treasury. This income could pay for network operation costs and other ecosystem initiatives. This income approach could be effective at preventing the accumulation of deadweight assets that make a network deflationary over time due to people losing access to their wallets due to lost passwords or when people pass away and don’t set up any process for their family to claim their assets. Reusing inactive assets could help with ensuring that the total supply of coins available in an ecosystem is always eventually active by preventing these assets from becoming lost over the long term. An ecosystem could adopt any length of time before this taxation starts to occur and could also make it happen gradually or suddenly. There are a number of approaches that could be used by a network that wants to reuse its inactive assets. As some examples, one ecosystem might decide to remove all of the assets from an inactive wallet after 10 years of inactivity whereas another ecosystem might decide to tax 5% of the assets in a dormant wallet each year after 5 years of inactivity.

Very low short term income potential (Score - 1)

Reusing inactive assets requires the assets to be dormant for a moderate to long period of time. This means this approach would not be very useful for generating short term treasury income.

High long term income potential (Score - 4)

As the ecosystem grows there could be an increasing number of users that lose access to their wallets due to forgetting their password or due to someone passing away that hasn’t given any relatives or friends the ability to access their assets. As the number of these types of events grow over time there is an increased probability that a stream of income could be generated for the ecosystem treasury. The amount of income generated from this approach could be limited as an increasing number of solutions would likely emerge to ensure someones assets never get lost due to the use of back up solutions and multi-signature approaches that could give family and friends better access to any soon to be dormant assets. Even if these solutions do emerge this approach could still be an effective supplementary approach to generate income for the ecosystems treasury that also can help with preventing assets from becoming lost and unusable over time.

Low incentive complexities (Score - 4)

There is low incentive complexity regarding how the income is generated when reusing inactive assets. The wallet is provably dormant and the assets have not been used for a long period of time. Once any assets are reclaimed they could be used by a community to support any ecosystem initiative that help with improving and maintaining the ecosystem. The only main incentive complexities that exist would be around whether the founding entities still have control over the treasury and how those funds would be disbursed.

Very low game theory risks (Score - 5)

The wallets that are inactive and end up having their assets reclaimed by the network would have no increased influence over how assets get disbursed. Similarly this income approach wouldn’t increase the amount of influence that any other community members has over the collection or allocation of that income. No immediately obvious game theory risks exist for this income approach. The community would need to govern the changes made to any of the parameters involved in how often and how much is claimed from dormant and inactive wallets.

Total score = 14 / 20

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