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Offline Ander

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Proposal for a more fair allocation than Bytemaster's proposal
« on: October 22, 2014, 05:17:46 PM »

Now that we have had some more time to analyze, I would like to make a counterproposal to Bytemaster's proposal which I believe is more fair.

First off, my stake is currently 100% in BTSX.  My proposal is not made to help my stake, but rather to help out those who I feel have been hurt in this allocation. 

We do not want a wounded community going forward, in which a majority of people made out just fine, but a significant minority of people are grievously hurt by the merger.


I hope that everyone can try to look at this proposal in a fair and rational way, and analyze its merits.


First, lets look at what each party gained and lost in the original proposal:

80% to BTSX:  Gains the benefit of becoming the superDAC, loses due to some dilution.  Price initially dropped and then recovered to about where it was before the proposal. 

3% to VOTE: Vote is basically just another allocation to AGS and PTS holders, but it is to only those who held AGS/PTS prior to its august snapshot.   This is *almost* the same group of people who hold AGS, PTS, and DNS, but not exactly. 

7% to AGS:  Gains the benefit of having liquidity eventually, where it previously would never have had liquidity!  Is down maybe 10% or so compared to the price that AGS 'should' have been valued at, if we assume that AGS is worth the same value as PTS was.

7% to PTS: Loses the benefit of liquidity, is instead subject to a lockout period.  Is down maybe 10% or so since the announcement.

3% to DNS: Loses the benefit of liquidity, is instead subject to a lockout period. 
During the release of DNS, prior to the announcement, DNS shares had traded in a range from about 180 to 400 satoshis.  This is a huge range, obviously.  At the time of the announcement, it was in the low 200s.   At the very least, one should value DNS at around 180 satoshis per share, which was the lowest point that it traded at.

It is true that there was "not much" liquidity in DNS, as it is small.   However, there was a reasonable amount for a patient trader who didn't simply limit buy or sell millions of shares at once.

DNS is down around 40-50% or so since the announcement.  It is roughly 30% lower than its lowest price before the announcement.

Toast has stated in this forum that the allocation to DNS was unfair.  Bytemaster has admitted in this forum that he thought he was giving DNS an allocation roughly equal or better than what he and toast had agreed to, but that he had made a mistake!


Summary:

BTSX: does fine.

VOTE: really just more shares to almost exactly the same people who currently have PTS/AGS.

AGS: loses slightly BUT gains liquidity, that it was supposed to never have. 

PTS: loses slightly AND loses liquidity.

DNS: loses greatly AND loses liquidity.



My solution to these issues:

1) We need to give DNS a slightly greater stake.  At a 4% stake instead of 3%, DNS rises in value to at least close to the low point it traded at prior to the announcement.   

2) We should not arbitrarily limit liquidity of DNS and PTS, which were already liquid.  We should also enforce a small cost onto AGS for the benefit of having its liquidity restrictions removed.

3) I believe that the total stake for AGS+PTS+VOTE+DNS needs to be 20%  (This is the "10% to AGS/10% to PTS" rule).  These are all *mostly* the same holders, with a small difference based on people who traded DNS or PTS on exchanges. 


Therefore I would make the following proposal:

80% to BTSX, no lockout.  Just as it is now.  This is necessary for community buy-in, most of us are BTSX holders.

2.5% to VOTE.  2 year restriction on liquidity.  The additional percentage I am allocating to DNS has got to come from somewhere.  DNS and VOTE were the exact same snapshot, so in changing the allocation from one to the other, I am not effecting anyone who has not messed with their shares.  It is ONLY effecting those who sold or bought DNS on an exchange!   My new allocation will ease the pain of those who traded DNS.

6.5% to AGS.  2 year restriction on liquidity.   AGS gets a tiny amount less, because it needs to pay something for the liquidity gain we are giving it. 

7% to PTS.  NO liquidity restriction.  PTS already got a 10% haircut, reducing its liquidity is unfair.

4% to DNS.  NO liquidity restriction.  This Makes DNS mostly whole again, and means that it only gets a maybe 10% drop from its prices before the announcement, not 40%+.  Also, there is no reason to hurt DNS holders further with the lockout period.



Summary of how this effects people:

To people who held AGS/PTS and did nothing with their shares:  They are not effected!  Since they hold all of the different shares already, the fact that one is slightly hurt and another helped doesn't end up changing their final result.

Note that someone who had AGS only and not PTS loses a *tiny* amount.  But this is a fair price to pay in exchange for now having liquidity of their AGS!


To people who bought PTS in order to have liquidity:  They do not get their liquidity unfairly removed from them.


To people who bought DNS on an exchange:  They do not get a massive loss.  They get only a small loss, and are not going to have hurt feelings forever over this.  They also do not have their liquidity unfairly removed from them.



Who does my proposal help:
 
DNS buyers who were severely hurt by the original proposal.  Slight help to PTS holders who were hurt by the original proposal.
Who does proposal hurt: 
Slight loss to AGS holders.  However, I feel this is fairly compensated by the fact that now they will become liquid over a 2 year period, whereas initially this was NOT supposed to happen! 
VOTE allocation is slightly reduced.  However, VOTE is in exactly the same snapshot as DNS, so everyone in that snapshot who got VOTE is also helped by the fact that DNS is getting more.  So this really doesn't effect anyone.


Conclusion:

I hope that Bytemaster and everyone else will read this with an open mind and use reason to analyze if it is more fair than the original allocation proposal.

I am in favor of the merger no matter what, and I am not affected by this proposal.  I merely wish to see the DNS buyers (which seems to be a lot of our chinese community!) made whole and not be driven away from Bitshares as a result of this. 

I want to see everyone be able to accept the merger without hurt feelings, and without taking more than a 10% or so loss on any given type of shares.

Accepting this proposal would give Bytemaster an opportunity to mend fences with the wounded DNS holders.

Thank you!
« Last Edit: October 22, 2014, 05:24:34 PM by Ander »
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Offline Rune

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Re: Proposal for a more fair allocation than Bytemaster's proposal
« Reply #1 on: October 22, 2014, 05:22:03 PM »
While this might be a more fair allocation, the markets have already adjusted to BMs proposal. If the proposal was changed you cannot be sure that the compensation would even go to those who initally lost.

Offline alphaBar

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Re: Proposal for a more fair allocation than Bytemaster's proposal
« Reply #2 on: October 22, 2014, 05:22:43 PM »
Thank you for at least acknowledging some of the blatant unfairness of the prior proposal.

Offline alphaBar

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Re: Proposal for a more fair allocation than Bytemaster's proposal
« Reply #3 on: October 22, 2014, 05:23:26 PM »
While this might be a more fair allocation, the markets have already adjusted to BMs proposal. If the proposal was changed you cannot be sure that the compensation would even go to those who initally lost.

By this argument we can never change anything after it has initially been proposed.

Offline Ander

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Re: Proposal for a more fair allocation than Bytemaster's proposal
« Reply #4 on: October 22, 2014, 05:26:30 PM »
While this might be a more fair allocation, the markets have already adjusted to BMs proposal. If the proposal was changed you cannot be sure that the compensation would even go to those who initally lost.

It would still go to almost exactly the same people.  A few people who traded since then would be hurt, but this is unavoidable.  Better to hurt a few than to hurt everyone in DNS.

Also, DNS has STILL not fully fallen to the level it should at a 3% allocation.

It should be below 120 satoshis to account for the stake of only 3%, it is around 140 right now.  With this proposal it should go to around 160.
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Offline roadscape

Re: Proposal for a more fair allocation than Bytemaster's proposal
« Reply #5 on: October 22, 2014, 05:32:58 PM »
While this might be a more fair allocation, the markets have already adjusted to BMs proposal. If the proposal was changed you cannot be sure that the compensation would even go to those who initally lost.

Right, so we have to weigh potential gains in fairness vs. additional market turmoil. We're at the break-even point IMO.
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Offline luckybit

Re: Proposal for a more fair allocation than Bytemaster's proposal
« Reply #6 on: October 22, 2014, 05:36:01 PM »
If I say I'm against mergers then I'm a hypocrite. I wanted to see Blackcoin merged with Bitshares X into "Blackshares".  https://bitsharestalk.org/index.php?topic=4230.0

I think it's a matter of perfecting the process. I think this merger process seemed rushed and sloppy. There wasn't the traditional debate period, there wasn't the vote period, and it seemed to come about at a time when no one was expecting it.

I think Proof of Stake chains should actually merge a lot more and that this should be a process which must be perfected. The way I proposed doing it was to split chains 50/50. TheFuzz can elaborate on it if he remembers some of our discussions.

The idea is that there are different classes of investors separated by year. Year 2013, year 2013, year 2015, and so on. The idea was to reward loyal investors while also promoting diversification.

With AGS/PTS suppose it starts at 50% of the DAC? Over time that would be 40%, then 30%, then 20%, while sharedrops could be used to reward new classes of investors. To put it simply, if you're a long term investor then you're expecting to make enough of a profit from these DACs that at some point you'll have diversified out.

So it would only punish investors who don't diversify, who don't reinvest into other stuff, and who just hold. It's no different from an inactivity fee except the inactivity would be used to support the next generation.

So if the average merger starts 50/50 with 50% for AGS/PTS and 50% for the other community, then the other community would find it attractive if they found out that out of the AGS/PTS 50% there will be a new sharedrop each year. Or if not a sharedrop it could be set up so there is a crowd sale each year and new investors can buy into the open slots.

I think we should study this process, refine it, and see if improvements can be made over how Bytemaster did it. The discussion needs to switch from complaining about the decisions to thinking about how mergers could be done much better in the future. Assume that you can renegotiate the social consensus or invent a new one, and that the goal is to unite stakeholders around a central idea/technology rather than around the developers or Invictus.
« Last Edit: October 22, 2014, 05:38:30 PM by luckybit »
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Offline bobmaloney

Re: Proposal for a more fair allocation than Bytemaster's proposal
« Reply #7 on: October 22, 2014, 06:05:34 PM »
No.

You do not adjust to make up for a bad proposal by making it worse (taking from VOTE and AGS to feed DNS)

PTS/AGS/DNS/VOTE are all getting the short end of the stick...by a lot.

For some reason, this entire proposal has been configured to overwhelmingly satisfy the current BTSX holders who were freaking out about possibly being overtaken by VOTE.

The reason for the merger is that recent BTSX investors were more leveraged in BTSX and either had less held as hedge in PTS/AGS, or none at all.

PTS/AGS holders were not "all in" with BTSX and many of them would not mind which DAC gained network effect first.

BASING THE CURRENT PROPOSAL NEAR MARKET CAP OR DISTRIBUTION IS INHERENTLY UNFAIR.

- The value of the VOTE DAC was significant and had not been valued and shares properly priced due to 2 main reasons:

1. VOTE had not yet been issued and therefore, was not tradable on an exchange.

2. Bytemaster has not yet gone public with whatever epiphany has led to him being so excited about VOTE <---This is a big point that everybody seems to be ignoring about the value of the non-BTSX entities.


If "fairness" or "value" is being attempted here - it is nowhere close. Many PTS/AGS were not only safely hedging, but looking forward to a bitshares ecosystem consisting of many competing experiments.

BTSX holders are gaining a windfall here - by gigantic proportions: They are basically stealing the VOTE DAC's likely future network effect for themselves at below market cost (thanks to doing this before allowing VOTE to price itself).

I have no suggestion of a more just proposal since I lack the information needed, but the current one is obviously done with too much bias toward BTSX.

*That being said: The most important decision needed here, IMO - is what will benefit I3, bitshares development, and the entire bitshares ecosystem most - so despite the obvious misallocation and bias in the current proposal - I'd like to get I3 what they need to continue down the road, but hopefully with less alienation of the original supporters.

DISCLAIMER (weight as you will): I currently hold PTS, post-Feb.28 snapshot AGS, BTSX (the majority of my holdings were purchased after release) and DAC.
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Online Shentist

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Re: Proposal for a more fair allocation than Bytemaster's proposal
« Reply #8 on: October 22, 2014, 06:20:40 PM »
No.

You do not adjust to make up for a bad proposal by making it worse (taking from VOTE and AGS to feed DNS)

PTS/AGS/DNS/VOTE are all getting the short end of the stick...by a lot.

For some reason, this entire proposal has been configured to overwhelmingly satisfy the current BTSX holders who were freaking out about possibly being overtaken by VOTE.

The reason for the merger is that recent BTSX investors were more leveraged in BTSX and either had less held as hedge in PTS/AGS, or none at all.

PTS/AGS holders were not "all in" with BTSX and many of them would not mind which DAC gained network effect first.

BASING THE CURRENT PROPOSAL NEAR MARKET CAP OR DISTRIBUTION IS INHERENTLY UNFAIR.

- The value of the VOTE DAC was significant and had not been valued and shares properly priced due to 2 main reasons:

1. VOTE had not yet been issued and therefore, was not tradable on an exchange.

2. Bytemaster has not yet gone public with whatever epiphany has led to him being so excited about VOTE <---This is a big point that everybody seems to be ignoring about the value of the non-BTSX entities.


If "fairness" or "value" is being attempted here - it is nowhere close. Many PTS/AGS were not only safely hedging, but looking forward to a bitshares ecosystem consisting of many competing experiments.

BTSX holders are gaining a windfall here - by gigantic proportions: They are basically stealing the VOTE DAC's likely future network effect for themselves at below market cost (thanks to doing this before allowing VOTE to price itself).

I have no suggestion of a more just proposal since I lack the information needed, but the current one is obviously done with too much bias toward BTSX.

*That being said: The most important decision needed here, IMO - is what will benefit I3, bitshares development, and the entire bitshares ecosystem most - so despite the obvious misallocation and bias in the current proposal - I'd like to get I3 what they need to continue down the road, but hopefully with less alienation of the original supporters.

DISCLAIMER (weight as you will): I currently hold PTS, post-Feb.28 snapshot AGS, BTSX (the majority of my holdings were purchased after release) and DAC.

 +5%

merger biased to AGS/PTS holders before Februar 28, but the other side will not be rewarded, because the "proposal" set anything in stone. would love to know which people or big fishs are just taking out their champagne.

nothing more to say.

Offline Ander

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Re: Proposal for a more fair allocation than Bytemaster's proposal
« Reply #9 on: October 22, 2014, 06:43:21 PM »
Bytemaster did another solution which was to give some of the dev team's DNS shares to those who ahd recently purchased DNS at higher prices.

Thats a good solution as well, and hopefully it will help.


Given that, this post is probably no longer relevant.  I am glad DNS buyers are getting something more.  (I have no idea how it will work, but its something).
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