Introduction
Recently, the Helium network passed HIP-138, which abrogates the multi-token model introduced by HIP-51. While the Helium DAO passed the HIP, meaning that HNT rewards will be diverted from funding the MOBILE treasury to directly rewarding MOBILE deployers, the MOBILE subDAO did not, meaning that MOBILE emissions will continue.
The Helium community is at this this time forming a plan on how to move forward because continuing MOBILE emissions without any price support supposedly makes MOBILE a DePIN memecoin just like, for example, ENTROPY, which mines a memecoin without any backing. What I would like to point out in this note is that, theoretically speaking, MOBILE was always a memecoin and continuing MOBILE emissions will have no theoretical effect on the function of either the MOBILE sub-network or its token. In essence, the rejection of HIP-138 by a subDAO has no impact on the functioning of the Helium network.
This is because it does not matter whether HNT rewards are used to fund the MOBILE treasury to support token price, or whether they are sent directly to the same deployers who would otherwise receive MOBILE; the effect to deployers is the same because the amount of reward is the same. Any value that the MOBILE token may have in addition to the treasury-supported price will exist whether that support is positive, as has been the case until now, or zero, as it might soon become.
In addition to making the point above, this note presents an analysis on where the additional premium may come from and why the Helium community should not be so quick to deprecate MOBILE, the first DePIN memecoin.1 Namely, the analysis propounds a view that MOBILE serves as a "juicing" of rewards in the early stages of network buildout; MOBILE is used to cover deployers' capital costs in the short term and prevents HNT from getting "too hot" and detached from network fundamentals.2
Notation
List of important symbols:
$V$ - value (NPV) function
\(\mu\) - token price
$w$ - token mint
$y$ - revenue burned (in fiat)
\(\rho\) - time discount rate
$K$ - capital cost
$c$ - running cost
Analysis
The value of the HNT network is given by the cash-flow relationship,
$$-\dot V = -\rho V - \mu w + y$$
Assume a simplified model where supply exists at numerous locations $i$ and costs \(K_i\) to deploy, \(c_i\) to run, and provides \(y_i\) in revenue. The value \(V_i\) of the location to a deployer is then given by,
$$-\dot V_i = -\rho_iV_i - c_i + \mu w_i$$
and the value of the location to the network is the revenue it provides.
A rational deployer will deploy in a location as long as the following relationship R0 is satisfied,
$$V_i(0) > K_i$$
and, after deploying, will continue to run the device as long as the following relationship R1 holds,
$$V_i(t) > 0$$
The conditional nature of supply implies that solutions to the above system of equations depend on the price \(\mu\). The difference between R0 and R1 further implies that solutions to \(\mu\) may be discontinuous. The network is incentivized to offer a high reward \(\mu w_i\) in the short term and reduce this in the long term. Since $w$ is fixed through the reward mechanism, the only way to increase reward to deployers is through price.
Enter MOBILE
I posit that the function that MOBILE has served is as an additional reward that helps incentivize deployment. With MOBILE, the market may "juice" deployers' earnings in order to pay for capital costs \(K_i\) and avoid discontinuous jumps in the HNT price \(\mu\).
Exit MOBILE
Ceasing MOBILE emissions would remove a degree of freedom from the market, limiting its ability to self-regulate. The only way to improve deployers' earnings in the short term would be by an increase in the price of HNT. While this may sound good to token holders, it could be problematic for the network: the reflexive nature of markets could lead investors to misinterpret price spikes as sustainable growth, causing wasteful, uneconomical deployments and eventual disillusionment among deployers. That is supposing a jump happens at all, as broader market forces may suppress the HNT price and never allow for it to spike.
Exacerbating the situation is that rational deployers would expect a spike in the absence of MOBILE emissions and would therefore be wary to deploy until the HNT price reached a sufficient height to guarantee a quick return on investment. In a sense, deployers might expect a "rug-pull" and require an accelerated return to avoid being caught out.
Conclusion
The cessation of MOBILE emissions introduces risks to both the Helium network and its deployers. The network loses a degree of freedom in being able to reward rapid deployment and deployers are forced to share any additional reward with all other Helium stakeholders.
In this note, I hope to have made it clear that MOBILE was the first DePIN memecoin and, with MOBILE, deployers eat first.
1 Chronologically, the IOT token was established around the same time as MOBILE but with an earlier HIP number. However, I would hesitate to call IOT the first DePIN memecoin as it scarcely traded above its support price and therefore never exhibited a memetic function. Besides, it is now being deprecated with the passage of HIP-138 by the IOT subDAO.
2This is why MOBILE has in the past traded well above its support price.
