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Offline emski

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Non-Dillutable BTSX
« on: October 19, 2014, 09:17:36 PM »

Imagine the following:
As a user I'd like to have non-dillutable share in BTSX.
For example I want to buy 1% of all BTSX shares and retain this 1% regardless of future BTSX dillution.
Of course the price for such shares could be higher and they should not be allowed to vote.
Is such mechanic useful, beneficial ?
What do you think?

Offline BldSwtTrs

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Re: Non-Dillutable BTSX
« Reply #1 on: October 19, 2014, 09:34:22 PM »
Imagine the following:
As a user I'd like to have non-dillutable share in BTSX.
For example I want to buy 1% of all BTSX shares and retain this 1% regardless of future BTSX dillution.
Of course the price for such shares could be higher and they should not be allowed to vote.
Is such mechanic useful, beneficial ?
What do you think?
Then you would be a free rider benefiting of the increase revenues cause by the dilution without any cost.

I think the best way to allow one to not be diluted is to allow old shareholders to buy the new shares before they are offered in the open market

Offline emski

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Re: Non-Dillutable BTSX
« Reply #2 on: October 19, 2014, 09:37:08 PM »
Then you would be a free rider benefiting of the increase revenues cause by the dilution without any cost.

I think the best way to allow one to not be diluted is to allow old shareholders to buy the new shares before they are offered in the open market

The cost should be higher initial price for such asset.

What you offer is interesting. I like it.

Offline bytemaster

Re: Non-Dillutable BTSX
« Reply #3 on: October 19, 2014, 10:53:38 PM »
Then you would be a free rider benefiting of the increase revenues cause by the dilution without any cost.

I think the best way to allow one to not be diluted is to allow old shareholders to buy the new shares before they are offered in the open market

The cost should be higher initial price for such asset.

What you offer is interesting. I like it.

With a DAC there is no "before they are available on the open market"....
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Offline emski

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Re: Non-Dillutable BTSX
« Reply #4 on: October 19, 2014, 10:57:37 PM »
Then you would be a free rider benefiting of the increase revenues cause by the dilution without any cost.

I think the best way to allow one to not be diluted is to allow old shareholders to buy the new shares before they are offered in the open market

The cost should be higher initial price for such asset.

What you offer is interesting. I like it.

With a DAC there is no "before they are available on the open market"....

You can have dilution by issuing new shares. What if these new shares are available for purchase by stakeholders with bitUSD at current feed price?
What if the delegate/business proposal that would normally get these shares through dillution just get the bitUSD equivalent (that was provided by shareholders buying newly issued shares) ?

Offline toast

Re: Non-Dillutable BTSX
« Reply #5 on: October 19, 2014, 11:53:54 PM »
BitBIP would let you hedge against dilution. We can have a perfect feed and have certain types of guarantees about the collateralization.
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Offline tonyk

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Re: Non-Dillutable BTSX
« Reply #6 on: October 20, 2014, 12:22:39 AM »
Then you would be a free rider benefiting of the increase revenues cause by the dilution without any cost.

I think the best way to allow one to not be diluted is to allow old shareholders to buy the new shares before they are offered in the open market

The cost should be higher initial price for such asset.

What you offer is interesting. I like it.

With a DAC there is no "before they are available on the open market"....

You can have dilution by issuing new shares. What if these new shares are available for purchase by stakeholders with bitUSD at current feed price?
What if the delegate/business proposal that would normally get these shares through dillution just get the bitUSD equivalent (that was provided by shareholders buying newly issued shares) ?

BitBIP would let you hedge against dilution. We can have a perfect feed and have certain types of guarantees about the collateralization.

Hmmm, interesting ideas... very much so!

Are the 'option contract' anywhere close to being ready?
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Rune

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Re: Non-Dillutable BTSX
« Reply #7 on: October 20, 2014, 01:30:02 AM »
Guys I realize the idea of dilution is kinda scary at first sight, but once you think it through and approach it from the right context, which is the COMPANY, then it makes perfect sense.

Imagine 2 facebooks competing for world social media domination. One of them can issue shares to acquire other startups such as Whatsapp and Oculus, and also issue shares to VC companies that help them kickstart growth. The other has a fixed amount of shares because shareholders dont want to be diluted.

Which company would you rather be a shareholder in? Would you even consider investing in a facebook that could not issue new shares in situations where it would be beneficial? Taking over world finance isn't that much different than taking over world social media, because of the massive network effect involved. Share issuance is an absolute must in the competition we are about to see ramp up, and we are the first DAC that will actually manage to implement it. We will not even have a real competitior until a different blockchains realizes that share issuance is basically a requirement to be competitive.

Offline Stan

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Re: Non-Dillutable BTSX
« Reply #8 on: October 20, 2014, 01:55:39 AM »
Guys I realize the idea of dilution is kinda scary at first sight, but once you think it through and approach it from the right context, which is the COMPANY, then it makes perfect sense.

Imagine 2 facebooks competing for world social media domination. One of them can issue shares to acquire other startups such as Whatsapp and Oculus, and also issue shares to VC companies that help them kickstart growth. The other has a fixed amount of shares because shareholders dont want to be diluted.

Which company would you rather be a shareholder in? Would you even consider investing in a facebook that could not issue new shares in situations where it would be beneficial? Taking over world finance isn't that much different than taking over world social media, because of the massive network effect involved. Share issuance is an absolute must in the competition we are about to see ramp up, and we are the first DAC that will actually manage to implement it. We will not even have a real competitior until a different blockchains realizes that share issuance is basically a requirement to be competitive.

The way I look at it, if the value of each of my shares is going up due to an infusion of new capital/talent/customers/whatever, then what do I care if there are a few more of those valuable shares?  The new shares represent the new value received plus a bunch more to share with current shareholders making their shares more valuable too.

Infusions are only done when their is more gain than pain.

Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline BitAsset

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Re: Non-Dillutable BTSX
« Reply #9 on: October 20, 2014, 02:02:09 AM »
Guys I realize the idea of dilution is kinda scary at first sight, but once you think it through and approach it from the right context, which is the COMPANY, then it makes perfect sense.

Imagine 2 facebooks competing for world social media domination. One of them can issue shares to acquire other startups such as Whatsapp and Oculus, and also issue shares to VC companies that help them kickstart growth. The other has a fixed amount of shares because shareholders dont want to be diluted.

Which company would you rather be a shareholder in? Would you even consider investing in a facebook that could not issue new shares in situations where it would be beneficial? Taking over world finance isn't that much different than taking over world social media, because of the massive network effect involved. Share issuance is an absolute must in the competition we are about to see ramp up, and we are the first DAC that will actually manage to implement it. We will not even have a real competitior until a different blockchains realizes that share issuance is basically a requirement to be competitive.

The way I look at it, if the value of each of my shares is going up due to an infusion of new capital/talent/customers/whatever, then what do I care if there are a few more of those valuable shares?  The new shares represent the new value received plus a bunch more to share with current shareholders making their shares more valuable too.

Infusions are only done when their is more gain than pain.


If shares are diluted now, maybe it'll be diluted again and again, no one trust this system, BTS dies..

I think it must be some other way to make it work.

Offline tonyk

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Re: Non-Dillutable BTSX
« Reply #10 on: October 20, 2014, 02:07:56 AM »
Guys I realize the idea of dilution is kinda scary at first sight, but once you think it through and approach it from the right context, which is the COMPANY, then it makes perfect sense.

Imagine 2 facebooks competing for world social media domination. One of them can issue shares to acquire other startups such as Whatsapp and Oculus, and also issue shares to VC companies that help them kickstart growth. The other has a fixed amount of shares because shareholders dont want to be diluted.

Which company would you rather be a shareholder in? Would you even consider investing in a facebook that could not issue new shares in situations where it would be beneficial? Taking over world finance isn't that much different than taking over world social media, because of the massive network effect involved. Share issuance is an absolute must in the competition we are about to see ramp up, and we are the first DAC that will actually manage to implement it. We will not even have a real competitior until a different blockchains realizes that share issuance is basically a requirement to be competitive.

The way I look at it, if the value of each of my shares is going up due to an infusion of new capital/talent/customers/whatever, then what do I care if there are a few more of those valuable shares?  The new shares represent the new value received plus a bunch more to share with current shareholders making their shares more valuable too.

Infusions are only done when their is more gain than pain.


If shares are diluted now, maybe it'll be diluted again and again, no one trust this system, BTS dies..

I think it must be some other way to make it work.

Do you guys understand that each capital infusion is done by a vote by all shareholders?

And a huge % of all shareholders must agree on each  capital infusion for it to become reality?

And that each current shareholder has a well in advance notice to just cash out his gains and head for the door any time he disagrees with such capital infusion?
« Last Edit: October 20, 2014, 02:11:59 AM by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline BitAsset

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Re: Non-Dillutable BTSX
« Reply #11 on: October 20, 2014, 02:16:25 AM »
Guys I realize the idea of dilution is kinda scary at first sight, but once you think it through and approach it from the right context, which is the COMPANY, then it makes perfect sense.

Imagine 2 facebooks competing for world social media domination. One of them can issue shares to acquire other startups such as Whatsapp and Oculus, and also issue shares to VC companies that help them kickstart growth. The other has a fixed amount of shares because shareholders dont want to be diluted.

Which company would you rather be a shareholder in? Would you even consider investing in a facebook that could not issue new shares in situations where it would be beneficial? Taking over world finance isn't that much different than taking over world social media, because of the massive network effect involved. Share issuance is an absolute must in the competition we are about to see ramp up, and we are the first DAC that will actually manage to implement it. We will not even have a real competitior until a different blockchains realizes that share issuance is basically a requirement to be competitive.

The way I look at it, if the value of each of my shares is going up due to an infusion of new capital/talent/customers/whatever, then what do I care if there are a few more of those valuable shares?  The new shares represent the new value received plus a bunch more to share with current shareholders making their shares more valuable too.

Infusions are only done when their is more gain than pain.


If shares are diluted now, maybe it'll be diluted again and again, no one trust this system, BTS dies..

I think it must be some other way to make it work.

Do you guys understand that each capital infusion is done by a vote by all shareholders?

And a huge % of all shareholders must agree on each  capital infusion for it to become reality?

And that each current shareholder has a well in advance notice to just cash out his gains and head for the door any time he disagrees with such capital infusion?


There is no shareholder voting now, BM can do whatever he wants..

Offline arhag

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Re: Non-Dillutable BTSX
« Reply #12 on: October 20, 2014, 04:17:23 AM »
BitBIP would let you hedge against dilution. We can have a perfect feed and have certain types of guarantees about the collateralization.

That doesn't make any sense. Either the shorts are guaranteed to lose or the longs are guaranteed to lose depending on which stage of the DAC we are in. If we are in the stage of the DAC where we are inflating, the shorts are guaranteed to lose in the 30 day period because there will be dilution during that period; thus no one will want to short. If we are in the stage of the DAC where we can afford to go back to deflating (return profits back to shareholders), the shorts would of course love to short BitBIP but no sane person would be willing to go long.

I was about to write that if BitBIP had some predefined inflation rate then it might work, but actually I am not sure about that either. I don't think the time scales match properly. One is on the time scale of 30 days, the other is a longer term plan by the shareholders on the direction of the DAC. I think the only time it makes sense is if new shorts are able to specify the current inflation rate as part of their formula. Then if shareholders decide to change the inflation rate in either direction, that is when either the long or the short would win/lose. But the problem with that is that it makes the long position nonfungible, so maybe this is more of a bond market.

The other big problem with the above is that even the long positions would still be exposed to some dilution even if their bet went in their favor, since if there is significant dilution at the time that they enter the long side of the contract then no short would be crazy enough to set up a contract at zero dilution because they would almost be certain to lose. But the hard-liners complaining about dilution don't seem to accept any dilution whatsoever. This is a philosophical problem that needs to be resolved. It is a vestige of still thinking about this like a cryptocurrency rather than a company. The way to resolve it is to either: make them see reason and understand why it is in their financial interest to allow for shareholder-controlled "capital infusion" (That's what we are calling dilution now right? I'll never get used to that.); or, let them get out of BTS (ideally into a BitAsset on the chain like BitGLD or BitUSD) and allow the rest of us to do what needs to be done.


Edit: Here is another idea which I haven't thought through too carefully, so there could be some critical flaws. I3 should figure out some growth curve for the value of BTS (in USD) if it was to try to survive without dilution. There should be some iteration between I3 and the community to come to a consensus on some curve so that the people who don't want dilution are satisfied with that growth curve and I3 believes they can achieve even faster growth than the curve if they have capital infusion available to them. Take this consensus growth curve and put it into the definition of a new BitAsset that is an investment vehicle for all the people who are really afraid of dilution. I3 can short that BitAsset and if their guess is correct they should profit from it (obviously anyone else is free to short it as well). The people who are afraid of dilution can go long on that BitAsset (and lose voting rights on matters such as capital infusion). There should be far more people willing to go long on that BitAsset than BitUSD for example, so I3 could potentially make more money going short on that BitAsset than they could by going short on BitUSD and having to pay high interest to compete with everyone else trying to short it. Also, the formula should extract the short term volatility of BTS/BitUSD and superimpose it on the growth curve, just to scare away anyone who is thinking of using this as anything other than a long-term investment asset. We don't want it to steal the demand for BitUSD.
« Last Edit: October 20, 2014, 04:45:38 AM by arhag »

Offline tonyk

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Re: Non-Dillutable BTSX
« Reply #13 on: October 20, 2014, 04:21:55 AM »
Guys I realize the idea of dilution is kinda scary at first sight, but once you think it through and approach it from the right context, which is the COMPANY, then it makes perfect sense.

Imagine 2 facebooks competing for world social media domination. One of them can issue shares to acquire other startups such as Whatsapp and Oculus, and also issue shares to VC companies that help them kickstart growth. The other has a fixed amount of shares because shareholders dont want to be diluted.

Which company would you rather be a shareholder in? Would you even consider investing in a facebook that could not issue new shares in situations where it would be beneficial? Taking over world finance isn't that much different than taking over world social media, because of the massive network effect involved. Share issuance is an absolute must in the competition we are about to see ramp up, and we are the first DAC that will actually manage to implement it. We will not even have a real competitior until a different blockchains realizes that share issuance is basically a requirement to be competitive.

The way I look at it, if the value of each of my shares is going up due to an infusion of new capital/talent/customers/whatever, then what do I care if there are a few more of those valuable shares?  The new shares represent the new value received plus a bunch more to share with current shareholders making their shares more valuable too.

Infusions are only done when their is more gain than pain.


If shares are diluted now, maybe it'll be diluted again and again, no one trust this system, BTS dies..

I think it must be some other way to make it work.

Do you guys understand that each capital infusion is done by a vote by all shareholders?

And a huge % of all shareholders must agree on each  capital infusion for it to become reality?

And that each current shareholder has a well in advance notice to just cash out his gains and head for the door any time he disagrees with such capital infusion?


There is no shareholder voting now, BM can do whatever he wants..

And may I ask - what prevent you to vote with your feet?
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Gentso1

Re: Non-Dillutable BTSX
« Reply #14 on: October 20, 2014, 04:49:10 AM »
Guys I realize the idea of dilution is kinda scary at first sight, but once you think it through and approach it from the right context, which is the COMPANY, then it makes perfect sense.

Imagine 2 facebooks competing for world social media domination. One of them can issue shares to acquire other startups such as Whatsapp and Oculus, and also issue shares to VC companies that help them kickstart growth. The other has a fixed amount of shares because shareholders dont want to be diluted.

Which company would you rather be a shareholder in? Would you even consider investing in a facebook that could not issue new shares in situations where it would be beneficial? Taking over world finance isn't that much different than taking over world social media, because of the massive network effect involved. Share issuance is an absolute must in the competition we are about to see ramp up, and we are the first DAC that will actually manage to implement it. We will not even have a real competitior until a different blockchains realizes that share issuance is basically a requirement to be competitive.

The way I look at it, if the value of each of my shares is going up due to an infusion of new capital/talent/customers/whatever, then what do I care if there are a few more of those valuable shares?  The new shares represent the new value received plus a bunch more to share with current shareholders making their shares more valuable too.

Infusions are only done when their is more gain than pain.


If shares are diluted now, maybe it'll be diluted again and again, no one trust this system, BTS dies..

I think it must be some other way to make it work.

Do you guys understand that each capital infusion is done by a vote by all shareholders?

And a huge % of all shareholders must agree on each  capital infusion for it to become reality?

And that each current shareholder has a well in advance notice to just cash out his gains and head for the door any time he disagrees with such capital infusion?


There is no shareholder voting now, BM can do whatever he wants..

And may I ask - what prevent you to vote with your feet?
or with your shares?

 

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