posted on 10 Oct 2020

A mote is a quantity of gold, used as a unit of value. The amount of gold that one mote represents varies over time: it decays by 2% each year, compounded on a per-second basis. The “initial” value was 1.0 grams of gold on the first second of the year 2000.

More precisely:

1 mote = (0.98 ^ ((t - t0) / y)) grams of gold
    t0 = 946684800  (UTC timestamp of y2k)
    y  = 31557600 (seconds in one year)
    t  = current UTC timestamp

It can also be projected backwards before this date, e.g., 1.02 grams in 1999.

At the time of writing this post, one mote is approximately 0.6572 grams of gold.

What is the purpose of the mote?

A mote is a unit of value which has (price) inflation built in. The idea that “inflation is good for the economy” is usually supported by one of two arguments:

  1. If the value of money is decreasing, you are incentivized to spend it on productive endevours, and
  2. If debt is denominated in a unit of account that loses value over time, a deflationary debt crisis is less likely to occur

Motes provide a middle ground between hard-money advocates who distrust a central issuer tasked with causing a target inflation rate, and fiat money advocates whose primary argument is that “inflation is good for the economy”.

Strictly speaking, a mote is not a thing you can hold or transfer. You can hold mote-valued ‘tokens’ of some kind, or just hold gold. There are two kinds of mote-valued tokens.

  1. A custodial mote is a claim on gold backed by some entity. The built-in inflation can be thought of as a storage fee. The gold custodian can sell an additional 2% outstanding motes each year off of a fixed quantity of gold.
  2. A synthetic mote is any derivative designed to be worth one mote. Other mote-denominated derivatives could also be useful, like an interest-bearing mote, a leveraged mote, or even a free-floating fiat-like currency which simply uses the mote as a reference asset to denominate a target price.

Both custodial and synthetic motes carry different forms of risk. If you want a “risk-free” mote, there is something even better: gold. Gold, by definition, grows in value by 2% each year (when measured in motes). Gold is effectively seignorage shares for motes.

It is critical to emphasize that a pure mote is not a thing you can own or transfer, except by holding physical gold. It is a unit of measure.

The most important part of the definition of the mote is that no entity can ever claim to issue “real” motes – only custodial motes or synthetic motes. If a mote issuer becomes insolvent, it can’t lobby to change the definition of a mote and spread the damage to preserve itself.