The law of supply and demand

Canxium
3 min readDec 2, 2023

Are we trying to create a better chain?

No, we are trying to apply the law of supply and demand, a fundamental concept of economics and a theory popularized by Adam Smith in 1776, into Blockchain and therefore creating a stable and sustainable blockchain ecosystem.

Consumer Demand
Consumer demand for a good commonly decreases as its price rises to high, at the end of a growth cycle, people tend to buy less. The figure below depicts the relationship between the price of a good and its demand from the consumer’s standpoint. The demand curve is portrayed from the view of the consumer, whereas supply graphs are drawn from the producer’s perspective.

Image by Julie Bang © Investopedia 2020

Explaining Supply

The supply curve considers the relationship between the price and available supply of an item from the producer’s perspective rather than the consumer’s.

When prices of a product increase, producers are willing to manufacture more of the product to realize greater profits. Falling prices depress production as producers may not recover input costs.

Image by Julie Bang © Investopedia 2020

This is exactly what we are trying to do, $CAU is the commodity, miners are the producers.

Finding Equilibrium

Consumers typically look for the lowest cost, and producers want their products at the highest price. When prices become unreasonable, consumers change their preferences and move away from the product.

A proper balance must be achieved where both parties engage in ongoing business transactions to benefit consumers and producers. In supply and demand theory, the optimal price that results in producers and consumers achieving the maximum combined utility occurs where the supply and demand lines intersect.

Image by Julie Bang © Investopedia 2020

In a market economy, manufacturers must follow this rule and change their output and plans to ensure supply is supplied to the market in a sustainable way, both bringing profits and keeping win over customers, ultimately achieving balance between demand and supply, and stabilizing prices.

Today, these rules are almost impossible to apply to any blockchain economy, because the supply of each reward coin is determined in advance, at the time of its creation, and is a constant. This factor has contributed to creating a crisis of shortage and surplus whenever user needs change. Canxium is the first project to apply and test this rule. We will make changes and adjustments in the future to achieve a state of balance, to bring a sustainable ecosystem, a reliable and stable commodity, and to achieve a distant goal: Medium of Exchange.

References: https://www.investopedia.com/articles/economics/11/intro-supply-demand.asp

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Canxium

A Pow Blockchain - A completely decentralized supply control mechanism and offline mining.