Before I start this follow on post, I’ll re-iterate that due to the significant reduction of the scale of emissions, I am not overly concerned about their impact on the network, but still want to outline some of my thoughts as to why I don’t think they’re a great idea… also my brain is a bit frazzled, so if something here makes no sense I’ll come back to it another day 
Is the reasoning for emissions sound?
The whitepaper says that emissions are needed to:
- Support the incentive to run nodes in early years
- Support uploaders to provide competitive pricing by subsidising the upload cost
- Ensure and encourage network growth
- Counter the initial price rise in ‘fair storage’ price
I will try to argue that the planned subsidies would be low in effectiveness in achieving any of these aims, and also that the reasoning given for them being needed may be flawed.
Probable low effectiveness of any subsidy
This is a fairly simple point that the effectiveness of any subsidy paid out in the currency of the network will be reduced because it’s emission to node operators is likely to lead to an almost immediate increase in sell pressure, and therefore to some degree negate any short-term impact it is intended to have.
E.g. 10% subsidy = up to 10% more selling pressure from node operators who choose to sell. With that group likely being a significant source of market token supply, it’s likely to lead to a corresponding token price drop that reduces the effectiveness of the incentivising power of the subsidy.
It’s also worth noting that any effect of subsidising upload cost will be eroded by this same effect, as downward token price pressure means people will need more tokens to buy a given quantity of network resources than they otherwise would.
Notes on the Network Node Reserve:
This is also a potential problem for the Network Node Reserve, and in this case it could be more damaging. Because the Node Reserve is intended to be used to boost incentives specifically during times of reduced upload activity & therefore lower token demand, it’s likely to come at a time when the market for the token is already weak (unlike emissions, which are on a pre-programmed schedule). Increasing sell pressure specifically when the market is already weak seems risky and potentially counterproductive.
If the Network Node Reserve kicks in at a time when the reserve is full, not only would there be the negative price impact of increasing market supply, but the reserve would soon cease being full, leading to the 18% ‘tax’ on transactions being reinstated. This would put further pressure on node operators, negating the benefit of the pay-out to some, and perhaps a very large degree.
The reasoning for the reserve’s purpose seems backward to me; in times of low demand (lower than average uploads), surely boosting demand should be the aim, rather than taking action to try to boost supply beyond what the market requires? Could the reserve be targeted at ‘ecosystem development’ actions that boost demand instead of paying out to nodes?
I certainly don’t have a good grasp of the Network Node Reserve, but in its current form it seems to add significant risks, and be an ineffective attempt to solve a problem that I don’t think will be an issue; I don’t think node operators will be phased by short-term luls in demand, and the reserve couldn’t do anything about long-term demand reduction.
Possible flawed reasoning for emissions
If I understand correctly, one of the main threads of reasoning for the emissions is based on the ‘bump’ in the green line on the following chart:
The system must overcome this initial price resistance to benefit from the subsequent decline in price, driven by increasing data upload rates and decreasing raw resource costs. To address this initial friction, The Network will provide additional incentives to node operators during The Network’s early stages - derived from an emission allocation.
The biggest reason given for emissions is to help the network to overcome the upward sloping part of this green line.
Unfortunately, it doesn’t matter what you do with subsidies; that line is going to rise significantly because the ratio of cumulative uploaded data to newly uploaded data / ‘network data overhead’ will be rising for the first few years of the network’s growth until it stabilises.
Any successful subsidy could only shift the curve rightward a tiny amount, but the trajectory would remain the same. A subsidy can’t do anything to significantly reduce the magnitude of the impact this changing ratio will have on the cost of uploading data to the network.
I can see why it’s a bit concerning to envisage how the market will respond to this cost increase over the first few years, but I think the solution offered by the subsidies seems like a futile attempt to reduce the impact of this dynamic.
One way to look at it is the problem is the network adapting to it’s growing ‘overhead’ as it matures to the point of a stable overhead to new-data ratio. The network will find a balance between supply and demand along the way, but the ‘problem’ is that the network is too cheap in the early days to be a good indicator of what use cases will be in the long term.
Framing the problem as the network being ‘too cheap’ initially exposes a flaw in thinking that a subsidy is a sensible solution to the problem at hand.
Summary
In summary, emissions very likely can’t do anything significant to counter the initial rise in ‘fair storage’ price, and won’t be effective at incentivising nodes to do anything beyond the incentives provided by those who are paying to upload data.
Given this, while 20% of max supply is a MASSIVE amount better than the initial 70% planned for emissions, I feel it’d be a lot more impactful to direct these valuable funds towards ecosystem development.
This would likely provide a far bigger tangible benefit to the network through financing high-quality app development, core-network improvements, beneficial infrastructure etc that will spur demand via real usage, rather than the probably ineffective, and potentially market-distorting subsidies to node operators.