He reads this thread so I'm sure he'll drop a quick synopsis.

I will start by examining the Cryptonote Penalty Function for oversize blocks. This is critical to understand any form of spam attack against a Cryptonote coin. From the Cryptonote whitepaper I cited above the penalty function is:

Penalty = BaseReward (BlkSize M_N - 1)²

The new reward is:

NewReward = BaseReward - Penalty

Where M_N is the median of the blocksize over the last N blocks
BlkSize is the size of the current block
BaseReward is the reward as per the emission curve or where applicable the tail emission
NewReward is the actual reward paid to the miner
The Maximum allowed blocksize, BlkSize, is 2M_N
The penalty is only applied when BlkSize > (1 + B_min) M_N Where 0 < B_min < 1 In the Cryptonote whitepaper B_min = 0.1.
 
The error in the Cryptonote Whitepaper was to set NewReward = Penalty

For simplicity I will define:
BlkSize = (1+B) M_N
BaseReward = R_base
Penalty (for a given B) = P_B
NewReward (for a given B) = R_B

The penalty for a given B becomes:
P_B = R_baseB²
While the new reward for a given B becomes:
R_B = R_base(1 - B²)
The first derivative of P_B with respect to B is
dP_B dB = 2R_baseB

In order to attack the coin by bloating the blocksize the attacker needs to cause at least over 50% of the miners to mine oversize blocks and for an expedient attack close to 100% or the miners to mine oversize blocks. This attack must be a maintained over a sustained period of time and more importantly must be maintained in order to keep the oversized blocks, since once the attack stops the blocks will fall back to their normal size.  There are essentially two options here:

1) A 51% attack. I am not going to pursue this for obvious reasons.

2) Induce the existing miners to mine oversize blocks. This is actually the more interesting case; however after cost analysis it becomes effectively a rental version of 1 above. Since the rate of change (first derivative) of P_B is proportional to B the most effective option for the attacker is to run the attack with B = 1. The cost of the attack has as a lower bound R_base but would be higher, and proportional to, R_base  because miners will demand a substantial premium over the base reward to mine the spam blocks due to the increased risk of orphan blocks as the blocksize increases and competition from legitimate users whose cost per KB for transaction fees needed to compete with the attacker will fall as the blocksize increases. The impact on the coin is to stop new coins from being created while the attack is going on. These coins are replaced by the attacker having to buy coins on the open market in order to continue the attack. The impact of this is to further increase the costs to the attacker.

It at this point where we see the critical importance of a tail emission since if R_base = 0 this attack has zero cost and the tragedy of the commons actually occurs. This is the critical difference between those Cryptonote coins that have a tail emission, and have solved the problem, such as Monero and those that do not, and will in a matter of time become vulnerable, such as Bytecoin.

Unless the neckline is descending, H & S is indistinguishable from consolidation before an up-leg.

...

Thanks for this, I missed it in the main thread. I will take some time later and fully digest it as a few questions come to mind, specifically things like when an owner of a botnet sets it to only mine the spammed blocks (and has a large enough stash that they do not need to purchase coins) and blockspamming of small blocks when the variable cost kicks in (not sure when this is happening at all). Anyway when I'm up to it I'll try to fully digest this. I'm going to have to change the simplicity's sake to readabilities sake first. I hate my lack of short term memory, it makes it tough to work with assigned variables.

You are convinced the fork is inevitable?   I think even the possibility is destabilising - but with BTC at this price, it seems to not be priced in, indicating IMO that it is not thought to be definite by the market.

I am not saying you're wrong, but I wonder how you feel it's a done deal it will happen.

It is actually a cap on the rate of growth of the blocksize, once the penalty equals the block reward.

Yes