Pecus: The World's First Deterministic Value Currency

The Need for a Better Currency

The global monetary system, which has worked fairly well for over half a century, is clearly starting to break down. All around the world we can see:

• Most millennials and zoomers living paycheck to paycheck.

• Housing becoming less and less affordable.

• Bankrupt towns and cities.

• Education and healthcare becoming incredibly expensive.

Most politicians will lay the blame for this on other political parties and some sort of ideological scapegoat like immigrants, globalization, corporations, billionaires, foreign governments, etc.

But the truth is the economic issues can be found all over the world — regardless of local policies. This suggests a primary cause that is common across the board.

A key candidate for such a cause is the monetary system of free-floating fiat currencies that the world switched to following the failure of the Bretton Woods system in the late 1960s.

There is a clear breakdown of the link between productivity and wages after the Nixon shock of 1971 kicked off this new monetary regime:

While increased productivity helps mask it, as a side effect of how we create money today, we ended up rigging the economy so that people’s purchasing power goes down over time.

This puts the squeeze on those that primarily live off of their income, i.e. most people, to do more and more work just to earn the same as what they were earning in previous years.

And since the 1970s we’ve been milking more and more out of the labour and middle classes, with families needing two incomes, people working longer hours, students going into deeper levels of debt, etc.

So, in many countries, the average person can no longer afford to buy a house that their parents could afford with just a single income. Meanwhile, the lucky few with assets have seen their wealth explode.

The increased stress placed on families is starting to reach a breaking point. If we are to fix the broader economic issues facing society, we need to first create a better monetary system.

Failure of the Gold Standard

Before jumping into Espra’s monetary system, it might be useful to first understand what went wrong with previous systems, starting with the gold standard.

In this system, central banks in different countries issued bank notes and coins that were backed by a fixed amount of gold. This was considered to be good for a number of reasons:

• Since countries needed to have actual gold reserves to back their currency, they couldn’t manipulate their currency easily, e.g. by overissuing.

• It provided a reasonably stable mechanism, i.e. fixed exchange rates, for converting between different national currencies.

• If a country were to go through economic difficulties, you could always cash out and move your gold elsewhere.

But each of those benefits corresponds to a damning negative:

• Since countries on the gold standard didn’t have control over monetary policy, their influence on the economy was limited to just fiscal policy, i.e. government spending and taxation.

  But in times of crisis, people cashed out from the local currency into gold. This depleted reserves and reduced the country’s ability to stabilize its economy, e.g. by expanding credit.

  This tended to make already bad situtations a lot worse, e.g. the gold standard was a key factor in prolonging and deepening the Great Depression.

• When countries suddenly had large surpluses or deficits, e.g. due to technological breakthroughs or wars, it would have a massive impact on their gold reserves and ability to trade.

• Domestic money supply was highly sensitive to changes in the supply of gold, e.g. due to increased personal or industrial uses of gold, new discoveries of gold, etc.

All of this made for relatively volatile economies. And perhaps most importantly, because growth was limited to how much physical gold you had, economic growth was unnecessarily constrained.

Debt-Based Money Creation

While today’s monetary system has a lot of negatives, it was both necessary and beneficial for the world to move away from the limits imposed by the gold standard.

However, the biggest issue with today’s monetary system is the way that we create money in the first place, and the type of economic behaviours that it encourages.

Contrary to most people’s expectations, most of our money is not created by central banks or governments. Instead, it’s created when commercial banks give out loans [MRT14].

On the face of it, this seems reasonable. Money and debt have been highly interrelated throughout history — especially when the money isn’t backed by a commodity like gold.

The issue with debt-based money creation is the impact of interest. Here’s a simplified scenario to highlight the issue:

• Let’s assume that Alice and Tav are the only two people in the world, and that they start out with no money, but want some so that they can trade with each other.

• They go to ACME Bank which gives them $1,000 each on the condition that they pay 5% interest every year until they repay their principal.

• This kicks off the economy with a grand total of $2,000.

• Alice and Tav both feel confident that they can make enough from the other to pay back the interest and eventually pay off the whole loan.

• The problem is this. Even in the best case scenario where they both pay off the bank in the first year, Alice and Tav would each need $1,050 — the principal plus the first year’s interest.

• That is, together they need to repay the bank $2,100. But the total amount of money in the economy is only $2,000. The math doesn’t add up.

And this is the reason that our current economic system is such a mess. In order to keep servicing existing debt, the money supply has to keep increasing.

The M2 money supply of just the US dollar alone has gone from 300 billion in 1960 to almost 21 trillion today. That’s 70x growth in a span of 64 years:

«image-of-usd-m2-money-supply»

Most people’s wages haven’t gone up by the same factor during that time period. We’ve been able to deal with this in a number of ways:

1. Families, governments, and companies take on even more debt and eat into their savings and surpluses. We’ve been seeing this play out all over the world.

2. We brought others into the system so that they can take on debt as well. This happened through the large-scale globalization effort that followed the Cold War.

3. The world population increased from 3 billion in 1960 to over 8 billion today. This provided a large population to take on new debt. This growth is now starting to slow.

There is a limit to the amount of debt that can be managed, to the stresses that families and companies can take, to the resilience of public infrastructure to the continued lack of investment.

The constant need to service debts creates an unsustainable culture of short-termism. Pension funds need to keep up with inflation and will bail on investments if they have a few bad quarterly results.

To avoid having bad quarters, companies will prioritize short-term benefits, e.g. quick spikes in user numbers, over long-term benefits like creating consistent value for users.

Cities, and even countries, will sell off their assets and lease them back because they need to service their debts and can’t afford to invest into those assets anyway.

While, thanks to tech and increased productivity, we are richer today in absolute terms, most people are now getting poorer in relative terms, and have far less optionality with regards to their future.

As a society, we’re constantly taking from the future in order to pay for the now — leaving a liability for future generations to deal with. This is not sustainable.

At some point, we just won’t be able to keep extracting enough gains out of labour and technological advances to keep servicing the debt. This will be bad for everyone, rich and poor alike.

In the meantime, we could build an alternative monetary system where money creation is not based on debt — creating a much better future.

Interest Rates are a Limited Tool

A good monetary system needs to provide tools that can be used to nudge behaviour when conditions change, e.g. due to war, famine, demographic shifts, supply/demand shocks, etc.

To do this, instead of directly changing the money supply or velocity, central banks use interest rate targeting along with the buying and selling of certain assets to “cool down” or “warm up” the economy.

The problem is, rate-setting is increasingly broken:

• It has always been a “laggy” tool with central bank decisions taking the better part of a year to percolate through the whole economy.

  But, thanks to the financialization of everything in recent decades, rate-setting impacts different segments of the population very differently.

  For example, rate increases tend to have a delayed impact on many existing homeowners as they won’t feel the impact of new rates until they have to refinance.

  In contrast, renters and first time buyers tend to feel the impact of rate increases a lot earlier.

• Certain sectors tend to be way more sensitive to rate-setting than others. For example, rate increases tends to hit financial services, energy, and transport more than others.

  Central banks often need to set rates even higher so that the effect is felt by more of the economy. But this puts even more pressure on the sectors that are more sensitive.

The impact of central bank decisions can be worse than they need to be — delaying the time it takes for the economy to recover and often making things worse for the less well-off.

Despite being a blunt tool with limited effectiveness, rate-setting is one of the few tools that central banks have. But it’s about time that we retired this experiment.

We can do a lot better:

• Create a monetary system where both the money supply and the velocity of money can be directly influenced.

• Use smart contracts so that both the decisions and the impact are fully transparent and decentralized.

• Allow for more targeted decisions, e.g. be able to directly target “sticky” supply chains where prices change more slowly.

This will avoid the unnecessary reading of tea leaves and expectation management by central banks, and allow economies to stabilize much faster when conditions change.

Limitations of Cryptocurrencies

Despite the naming, most cryptocurrencies do not offer a viable alternative to today’s global monetary system. These digital assets tend to fall into two broad categories:

1. Stablecoins, e.g. USDT, USDC, DAI, etc.

2. Speculative tokens, e.g. BTC, ETH, SOL, etc.

While stablecoins are useful in providing digital versions of currencies like the US dollar, they don’t change the fundamentals of our existing monetary systems.

Similarly, while tokens like Bitcoin and Solana have generated great returns for some investors, they’re not exactly designed for day-to-day use by the public at large.

In order to incentivize early adoption and investment, most of these tokens are designed with either a fixed supply or a supply with highly constrained inflation rates.

Unlike say with gold, where just a few years ago more gold was discovered in Uganda than has ever been mined in all of history, investors can be fairly confident of limited supply.

To make things worse, most tokens distribute the majority of their supply in their first few years — giving massive advantage to early adopters who can afford to sit on it.

After all, would you prefer to be the guy who spent over a 100,000 Bitcoins on buying pizza, or would you prefer to be billions of dollars richer? The choice is obvious.

All of this encourages hoarding by the majority of token holders, with the remaining supply mainly used for speculative activity. Most people only care about the dollar value of these tokens.

By designing things differently, we believe that it is possible to create a cryptocurrency that can be an actual competitor to the global monetary system, and enable day-to-day use by the masses.

Alternative Monetary Systems

Outside of the mainstream, there have been various proposals for complementary currencies, e.g.

• Time Banks

  In these systems, people earn a time-based currency when they do work for others, e.g. by painting someone’s room you might earn 6 “time credits” for the 6 hours that you spent.

  While time banks work great in small communities and allow for people’s volunteer effort to be recognized and valued, it doesn’t scale beyond certain contexts.

  The biggest issue is that, outside of small communities, most skilled people are not content with an hour of their time being equal to that of an unskilled person.

  Then you’ve got secondary issues like how the system actively encourages people to take longer to do their work, i.e. be less productive.

• Mutual Credit

  In these systems, people simply create “ledger money” out of thin air whenever they need it. For example, let’s say Reia wanted to buy a chair from Zeno and this was their first trade:

  If the chair were to cost 150 “ledger money”, then Reia will now have a negative balance, and Zeno will have a matching positive balance.

  Account	Ledger Money
  Reia	-150
  Zeno	+150

  On the face of it, this is a great system:

  • There’s always enough money for trades — people can create more whenever they want.

  • The system is in perfect balance — all account balances add up to zero.

  • There’s no interest involved in money creation — thus avoiding all the negative consequences of interest.

  • It is fully decentralized — just like in the example above with Reia and Zeno, everyone can create and destroy money as they see fit.

  As the UK’s official proposal at Bretton Woods, John Maynard Keynes even proposed setting up a global banking system based on mutual credit — the bancor.

  The problem is, how do you stop people creating lots of debt and never paying them off? To do that you need to introduce some form of credit limits.

  It’s really difficult to create a credit limit system that is fair, decentralized, dynamic enough to expand for “useful” purposes, and resilient to manipulation.

  Even worse, such a credit limit system would create the basis for debt to be packaged up. And humanity has repeatedly shown itself to be terrible at assessing the risk of bundled debt.

• Commodity-basket Currencies

  In these systems, the currency is defined as a basket made up of different commodities and services — effectively extending the gold standard beyond just gold.

  One of the better proposals for these was by Bernard Lietaer, the designer of the European Currency Unit (ECU) that laid the foundations for the euro.

  In 2001, he suggested the creation of the Terra [Lie01] [Lie04], a global reference currency backed by a dozen of the most important commodities and services, e.g.

  100 terras =     1 barrel of oil
               +  10 pounds of copper
               +   3 pounds of tin
               + 0.1 ounce of gold
               ...
  

  Since inflation is defined as the change in value of a standardized basket of goods and services, the composition of the Terra can be chosen so that it is inflation resistant.

  While the design of the Terra is a lot better than that of the gold standard and it is a more robust standard of value, it is still subject to many of the same downsides.

So, if none of these existing systems are fit for purpose, what would a workable system look like? To answer that, let’s look at whether money would be needed in a post-scarcity context.

Even in a society with abundant energy, we’d need to prioritize access to resources, otherwise people would just spam the system, resulting in a typical tragedy of the commons [Har68].

Society could base this right of priority on something progressive, e.g. people’s contributions to society, or something regressive, e.g. a pre-established caste hierarchy.

Since some jobs could be rather complex, we would need to make the right of priority both delegatable and transferable in the form of some kind of money.

As to the right of priority itself, the priority will fundamentally be about access to energy — as the amount of energy available at any point in time will always be finite even in abundant societies.

Thus, by stripping away everything else, we can see the true nature of money. It gives holders the right of priority over the energy that is currently available to society.

Energy as the Basis for a Currency

Energy makes up the whole universe. We know from Einstein’s famous equation [Ein05] that energy is equivalent to mass and even light. Everything is energy.

For pretty much all of recorded history, energy use and economic activity have been highly correlated. Even today, energy use per capita and GDP per capita remains correlated:

«chart-of-energy-use-vs-gdp»

Source: https://ourworldindata.org/grapher/energy-use-per-person-vs-gdp-per-capita

This makes sense as it is often one of the main costs in the goods and services we consume, e.g. the electricity for data centers, the transport for our food, the energy for manufacturing, etc.

In countries where energy use and economic activity are becoming less correlated, it’s often due to the growth of the finance sector along with offshored production.

Given the importance of energy in our economy, it would make sense to base our currency on it too. This would have a number of benefits:

• Fair Access

  In contrast to the gold standard, which gave a massive advantage to countries that had access to gold reserves, energy can create a more level playing field.

  There are lots of options, e.g. wind, oil, gas, solar, hydrogen, nuclear, geothermal, coal, hydropower, fusion, etc. Anyone can put up a solar panel and start producing energy.

• Reasonably Stable Value

  We all know that a dollar from 5 years ago is not worth the same as a dollar today. A Bitcoin can easily vary by more than 10% within just a week.

  In contrast, energy is much more stable in value. What you can achieve with a kilowatt-hour (kWh) doesn’t change that much from one year to another.

  Of course, the price of energy might vary wildly, e.g. due to inflation, market forces, government subsidies, etc. But what you can do with it stays reasonably constant.

  Any improvements in the effectiveness of energy tends to be a result of technological progress and innovation. This gives a decent proxy for changes in economic productivity.

• Price Stability

  Since energy is a major component of the price of most goods except luxury items, goods priced in it would be reasonably stable assuming market conditions stay the same.

• Infinite Scale

  Unlike gold, silver, or even Bitcoin, the universe is abundant with sources of energy. This will let the economy grow as needed without being negatively constrained by existing supply.

• Reasonably Predictable Supply

  Global energy supply changes at a reasonably predictable level. Even if fusion power became viable tomorrow, it would take decades for it to be rolled out and overtake existing supply.

  In contrast, inflation in our current monetary system is highly unpredictable.

The Definition of Pecus

We define pecus, the currency of Espra, as being equivalent in worth to 10 kWh of energy, i.e. roughly the amount of energy that the average US household consumes in 8 hours.

1 pecu = 10 kWh of energy

On Espra, pecus will be represented by an int127, i.e. a 127-bit integer. It will be divisible up to 6 decimal places, i.e. micro-cents. This will give us a minimum representable positive value of:

0.000001

And a maximum representable value of:

85070591730234615865843651857942.052863

This is small enough for use cases like micropayments and large enough to support humanity’s growth for a while — without being excessive like some cryptocurrencies, e.g. ETH supports 18 decimals.

For the currency symbol, we will use the “scarab” which symbolizes transformation and growth:

¤

Originally encoded into computing systems as a generic currency sign in 1972, this symbol has not seen much use — despite being available on most systems. We believe it’s worthy of revival.

The symbol has been part of the Unicode standard since the very first edition, and is represented by codepoint 164, i.e. U+00A4. You can also use the entity ¤ to represent it in HTML.

The symbol will always precede the value it is representing, e.g. 10,000 pecus will be displayed as:

¤10,000

Wherever possible, pecus will be represented by the ticker PECU, e.g. on centralized crypto exchanges, DEXs, forex platforms, etc.

A Deterministic Value Currency

The pecu is the world’s first deterministic value currency. This means that, unlike say the dollar or Bitcoin, you are always able to determine the relative value of goods in pecu terms.

This is thanks to the pecu being defined as equivalent to 10kWh of energy. So, just by observing the amount of energy it takes to produce things, you can determine their relative value, e.g.

1 pecu = 10kWh of energy = 5kg of rice
                         = 9kg of carrots

Of course, this only determines the “base price” of goods in pecus. The final market price will be affected by competition, regulations, supply, demand, markup for luxury goods, etc.

This unique aspect of pecus is useful not just for determining the relative value of pecus against other currencies, but also in giving the market a guide for pricing goods and services in pecus.

Pecu Grants

The base supply of pecus in the economy will be created by minting new pecus via Pecu Grants. To be eligible to receive them, a user must be verified as an adult through our social vouching mechanism.

• If someone is already an adult when they sign up to Espra, they will be eligible immediately.

• Otherwise, they will become eligible once they are recognized as an adult on Espra, i.e. be at least 17 years of age.

Once a user becomes eligible, the Pecu Grant will be paid out to them regularly over a period of 10 years, e.g. 120 monthly payouts of ¤500 for a total of ¤60,000.

The payouts will be temporarily paused if a user is not active in the previous 30 days. This will act as an incentive for people to be active on Espra and keep them coming back regularly.

We see Pecu Grants as a way to:

• Fairly distribute the base supply of pecus.

  Most cryptocurrencies are distributed extremely unevenly. For example, over 50% of all Bitcoins had already been distributed by 2013 before most people had even heard about Bitcoin.

  Similarly, over 50% of the current ETH supply was distributed among less than 7,000 people as part of the initial crowd sale back in 2014 [But14a].

  By giving everyone an equal amount of pecus no matter when they join, Pecu Grants helps to create an economy that doesn’t unnecessarily privilege the earlier generations.

• Create “universal base wealth” for everyone.

  A person’s destiny is primarily shaped by where they were born and the people that raised them. While some are lucky, this is not the case for most people today.

  By giving everyone a large amount of pecus, Grants will help to free many from their lottery of birth and gives them an equal chance.

• Help kickstart the Espra economy.

  Pecus will be massively undervalued at the start. It will take time for demand to drive up the value of pecus till it reaches the equivalent worth of 10kWh of energy.

  During this time, most people are likely to look at pecus as play money. The “continuous airdrops” of Pecu Grants will help people become more comfortable with spending pecus.

  This will incentivize those who believe that pecus will go up in value to do things to acquire them, e.g. provide services, create content, build apps, buy pecus from others, etc.

To decide on the exact amount that is gifted as part of Pecu Grants, let’s look at the global balance sheet. This grew from $440 trillion in 2000 to over $1,540 trillion in 2020 [WMM+21].

Of this, the “real” assets, i.e. non-financial assets, totaled $520 trillion in 2020. If we divide that by the 8 billion people that are currently alive on the planet, we get $65,000 a person.

To roughly match this, we will set the initial value of Pecu Grants at ¤60,000 per person. If necessary, this can be adjusted over time through a democratic vote.

Global Appreciation Payouts

Whenever Pecu Grants are paid out, an equivalent amount will be minted and distributed to users based on their global appreciation holdings, i.e. how much appreciation they’ve received from others.

For example, if the current global appreciation holdings were:

And if there were 10 users receiving Pecu Grants of ¤500 each this month:

>>> 10 * 500
5000

Then, an amount equivalent to the total ¤5,000 minted as Pecu Grants will be minted and distributed to users based on their appreciation holdings, i.e.

These “global appreciation payouts” will have a massive impact:

• Significant Wealth Creation

  Scenario	Total Paid Out
  1M users	¤60 billion
  10M users	¤600 billion
  100M users	¤6 trillion
  …	…
  3B users (Facebook levels)	¤180 trillion

• Aligning Individual Interests with Society

  The possibility to significantly profit from global appreciation payouts would incentivize people to do the kind of things that would earn them appreciation from others.

  That is, by creating and doing things that are valued by others in society.

In addition, global appreciation payouts will help to drive the adoption of Espra:

• Since global appreciation holdings are diluted by a new tranche every cycle, e.g. every month, early adopters have a massive advantage, e.g.

  Month	Number of Appreciation Holders
  1	60
  …	…
  100	5,000,000

  As each tranche has the same weight, appreciation holders from earlier cycles will be able to get a larger portion of the global holdings as they’ll be sharing their tranche with fewer people.

• These early appreciation holders have a strong incentive to bring new users into Espra. The more users there are, the more Pecu Grants will be given out, and the greater their payouts.

All of this creates a virtuous cycle:

1. People join Espra because they hear about it from someone.

2. They create things of value in order to get appreciation from others.

3. These creations attract new users to Espra.

4. Those users appreciate the things that they find valuable.

5. As a result of appreciation payouts, the creators are rewarded with pecus to create new and improved things.

6. Creators actively tell others and get them to join Espra as it’ll result in more pecus for them.

This will massively accelerate the growth of Espra once people start to understand how this new economy works.

Decentralized Monetary Policy

Pecus will be managed through a fully decentralized, democratic, and transparent process. Monetary policy changes will be made by voting on changes to parameters in the core pecu smart contract.

During Espra’s first year, voting will be limited to our Genesis Members. After this, all verified adults who have been active on Espra for at least a year will be able to participate.

People participate by selecting their preferred monetary policy model from a list. These models are software agents that act on a person’s behalf. They:

• Keep track of market conditions, e.g. the current price for PECU/USD on a decentralized exchange on Espra, external market data via our ChainState mechanism, etc.

• Signal the desire to change the value of some parameter in the core pecu contract when market conditions change, e.g. the total supply of pecus, the time window for triggering votes, etc.

• Vote for a particular parameter value once enough agents have signalled the desire to change it, i.e. met the required vote threshold.

• Predict market conditions based on parameter changes. This will provide the means to see how accurate a model is, and thus help people to decide on a particular one.

• May be customizable, e.g. to use a person’s preferred data sources when making decisions.

By default, everyone will be subscribed to “Tav’s Monetary Policy Model”, but people will be able to switch whenever they want, or even create their own models if they like.

Changes to parameter values are done democratically through median consensus, i.e. by choosing the median value from the values voted on by the agents.

As long as a user is online, the agent will automatically vote on their behalf whenever it is necessary. Thus, we intend to keep things extremely simple for users.

The most important parameter value that agents will vote on is the “overbase” pecu supply, i.e. the amount available beyond the “base supply” created through Pecu Grants.

Since pecus are only “anchored” to 10kWh per its definition, and not hard pegged, e.g. through a currency board, we let the market determine the relative value of pecus.

Models decide on their value for overbase supply change by comparing market conditions against some “target price” of pecus in some fungible asset, e.g. US dollars, wheat, oil, etc.

If the current market price is higher than the target price, then it would suggest the need to increase the overbase supply so as to bring the price down, and vice versa.

Models can use whatever approach they want for determining the target price, e.g.

• Use the current market price of Brent Crude Oil to define a target US dollar price for pecus, e.g. by dividing it by 170 as a barrel of oil is equal to about 1,700 kWh.

• Use the current installed capacity of solar and the learning rate derived from the historic levelized cost of energy to determine a target price for pecus.

• Use the current market price of a basket of “stable” commodities and compare it with the amount of energy needed to produce them to determine a target price for pecus.

• Use the average price of electricity around the world to define a target price for pecus.

If enough agents signal that the overbase supply needs to change within a time period, e.g. 10% of voters within 12 hours, then it will trigger a vote.

Agents will vote by specifying the exact amount for the change in the overbase supply. This calculation should be done at the point before the vote was triggered so as to minimize market manipulation.

As an example, if the votes for the changes in the overbase supply were:

Then the agreed change in the overbase supply would be the median value, i.e. an increase of ¤250M.

When the agreed amount is positive, it will result in the minting of new pecus. These pecus will be distributed to people via a global appreciation payout.

When the agreed amount is negative, then the equivalent amount of pecus will need to be “burned”, i.e. destroyed. We will use the following sources for this:

1. Any available funds in the demurrage_pot that have been accrued through contextual demurrage charges.

2. If the demurrage_pot isn’t sufficient, then a burn_pot will be created. Individuals can send their pecus to this on a first-come first-serve basis — limited by a quota to make it fair.

   In exchange for burning their pecus, the individuals will be rewarded with a fixed percentage of appreciation in the next N tranches of the global appreciation holdings.

   That is, in exchange for burning pecus and helping to stabilize the value of the pecus today, they will be rewarded with more pecus in the future.

3. If enough pecus aren’t burned via the burn_pot within a predefined amount of time, then a flat percentage is shaved off pecu holdings across all accounts.

Contextual Demurrage Rates

A healthy economy should have levers to affect the velocity of money, i.e. the rate at which money flows through the economy. Espra uses contextual demurrage to achieve this.

Demurrage is basically negative interest, i.e. a tax, that is applied to money that hasn’t moved. So if Zaia has ¤2,500 sitting in her current account, after a year it might be down to ¤2,490.

Unlike inflation which acts as a hidden tax, demurrage is visible to the holder, and thus nudges them to do something with their money. This disincentivizes hoarding and encourages long-term investments.

The exact amount that is demurraged depends on the type of account where the money is being held, how long the money has being sitting still, and the democratically-set contextual rate.

We have 4 types of accounts in Espra:

• savings

  In exchange for locking up their money for a minimum period, e.g. 30 days, Espra will reward people with demurrage-free savings up to some limit, e.g. 5 million pecus.

  Unlike in today’s economy, where most people’s savings are constantly devalued by inflation, this will let people better plan for their future.

• personal

  This is the default account type. The demurrage rate for this account will probably be relatively low, i.e. higher than savings, but lower than the others.

• investment

  Since undeployed investment capital isn’t particularly useful, this account type will likely have a demurrage rate that is a few-fold higher than that of personal accounts.

• tagged

  This account type will be used for everything else like business and government accounts. It will have an additional “tag” as a qualifier, e.g. default, housing, food, transport, etc.

  The demurrage rate for a tagged account will depend on its tag. So specific sectors like housing can be nudged without affecting others like food.

The contextual demurrage rates for the different account types and tags will be set democratically, and will be a core functionality of the monetary policy models.

All money collected through demurrage will be aggregated into a demurrage_pot.

• Funds collected within a specific month will remain in the pot for a certain amount of time, e.g. 6 months, in case it’s needed to offset the “burning” of pecus.

• Any funds that aren’t used within that time, i.e. 6 months, will then be re-introduced into the economy via a global appreciation payout.

Pecu Economy Simulator

This section is a placeholder for publishing the results from the pecu economy simulator that we will build as part of our core development.

The simulator will:

• Use agent-based modeling to simulate the various actors in the economy.

• Be fully configurable through a wide range of parameters, e.g. the assumed distribution of certain social behaviours, etc.

• Auto-adapt the number of runs for each configuration set until it “converges” for selected metrics.

• Support the use of raw market data from multiple sources.

• Support the simulation of other monetary systems, e.g. the current central bank-based one, mutual credit, etc.

• Provide rich analytics of the results of the simulation.

Besides helping to validate the design of the pecu-based monetary system, we see the simulator becoming a key tool to help economists build Espra monetary policy models.