Author Topic: Subsidizing bitUSD, bitEUR, bitCNY yield to minimum 5%, has this been discussed?  (Read 14638 times)

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Offline Rune

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I think it is enough to post something like "last year people earned X% on BitUSD"... not changing... true... past performance is no guarantee of future performance.

Totally true, but that still leaves us nothing to market in our first year, and is exactly why we need the subsidy in the beginning.

Offline Rune

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I've always been hesitant about the idea of promoting the yield on BitAssets at all. The only reason a yield can be delivered is because the shorts cannot provide an absolute guarantee that longs will be made whole in the event of a BTS collapse. For the privilege of a leveraged exposure to BTS, without recourse to any personal assets outside of the the BTS contributed as collateral, shorts are willing to pay interest to the longs. This is akin to the incentives on each side of margin lending.

In an ideal design, if possible at all, it would be better for mainstream adoption to have an iron-clad guarantee on the security of BitUSD being made whole, and give up on the interest.

That implies that you can create an iron-clad guarantee that BTS will have value... not possible.   Not even possible in traditional banks.

Near certainty is enough. A public bail-out policy on the main bitassets would be such a gargantuan advantage. In the event of a price collapse of BTS, bitasset owners will wait a lot longer to panic and begin pulling out their own funds (that would only happen if they think that the price is literally going to 0 and the network will cease to exist). This will give a market-wide increase in confidence and will help prevent a crash from happening in the first place.

Offline bytemaster

I think it is enough to post something like "last year people earned X% on BitUSD"... not changing... true... past performance is no guarantee of future performance.
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Offline Rune

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Unlike nubits we have total control on when to end this subsidy. The very second that shareholders deem it unprofitable to continue the subsidy, they will vote to end it.

You guys are thinking in bitcoin terms, not in company terms. This would be a promotional marketing campaign, an investment meant to result in a higher payoff (through rapid influx of capital deposited in bitAssets). You are underestimating the massive advantage the promise of a real number will give people, rather than simply a promise of "it pays interest".

I think it is a bad idea to simply dismiss it outright. It is better to discuss if and how it could be done profitably.

...but if we're able to naturally provide somewhere in the realm of 5% interest, none of this would be necessary...let's focus on getting the yield naturally.

Even if we were able to naturally provide that, we could never back it up and thus never advertise it. All advertising efforts would at best be able to come up with a constantly updating sign that says current average interest rate = x%. Or interest rate on some set date was x%. I think this will make people suspicious that it could disappear at any time. At least it's a lot more difficult to set up advertising like that in price and a lot more difficult to communicate effectively between people in general. We want to be able to go viral (sorry for using buzzwords).

If we just set our subsidized interest rate below what we can predict will be the average interest rate, it should cost very little but have enormous marketing benefits. If we feel like we're being gamed, or we set the target wrong, we can just vote to remove it. I personally think 5% natural rates should be possible to achieve given our small market cap and enormous growth potential. We could perhaps subsidize at 4%, which is still a really significant number to be able to bring to a negative-interest market. The amount of people who will be drawn in by this 4% guarantee will vastly outweigh the price, if any, we have to pay for it.

Offline bytemaster

I've always been hesitant about the idea of promoting the yield on BitAssets at all. The only reason a yield can be delivered is because the shorts cannot provide an absolute guarantee that longs will be made whole in the event of a BTS collapse. For the privilege of a leveraged exposure to BTS, without recourse to any personal assets outside of the the BTS contributed as collateral, shorts are willing to pay interest to the longs. This is akin to the incentives on each side of margin lending.

In an ideal design, if possible at all, it would be better for mainstream adoption to have an iron-clad guarantee on the security of BitUSD being made whole, and give up on the interest.

That implies that you can create an iron-clad guarantee that BTS will have value... not possible.   Not even possible in traditional banks.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline starspirit

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I've always been hesitant about the idea of promoting the yield on BitAssets at all. The only reason a yield can be delivered is because the shorts cannot provide an absolute guarantee that longs will be made whole in the event of a BTS collapse. For the privilege of a leveraged exposure to BTS, without recourse to any personal assets outside of the the BTS contributed as collateral, shorts are willing to pay interest to the longs. This is akin to the incentives on each side of margin lending.

In an ideal design, if possible at all, it would be better for mainstream adoption to have an iron-clad guarantee on the security of BitUSD being made whole, and give up on the interest.


Offline nomoreheroes7

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Unlike nubits we have total control on when to end this subsidy. The very second that shareholders deem it unprofitable to continue the subsidy, they will vote to end it.

You guys are thinking in bitcoin terms, not in company terms. This would be a promotional marketing campaign, an investment meant to result in a higher payoff (through rapid influx of capital deposited in bitAssets). You are underestimating the massive advantage the promise of a real number will give people, rather than simply a promise of "it pays interest".

I think it is a bad idea to simply dismiss it outright. It is better to discuss if and how it could be done profitably.

...but if we're able to naturally provide somewhere in the realm of 5% interest, none of this would be necessary...let's focus on getting the yield naturally.

Offline Rune

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Unlike nubits we have total control on when to end this subsidy. The very second that shareholders deem it unprofitable to continue the subsidy, they will vote to end it.

You guys are thinking in bitcoin terms, not in company terms. This would be a promotional marketing campaign, an investment meant to result in a higher payoff (through rapid influx of capital deposited in bitAssets). You are underestimating the massive advantage the promise of a real number will give people, rather than simply a promise of "it pays interest".

I think it is a bad idea to simply dismiss it outright. It is better to discuss if and how it could be done profitably.

Offline CLains

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It is we the shareholders, and the people who short bitUSD, who would pay for the yield, not the users. Paying out of our own pocket to subsidize a bonus for new bitAsset users in the first few quarters of our existence seems to me common sense business practice. If we don't do it, someone else might, and I have not yet seen any good arguments for why it will not work in attracting more users, only hot emotional air.

Words playing on connotation found so far:

crazy,
ponzi,
drastic,
expensive,
go join nuBits,
controversial,
deceptive,
artificial,
US QE,
scam,
nuts...

This is all FUD, with no real argumentation. Please be civil and reasonable everyone, regardless of your strong feelings on this topic! What really matters is whether or not this works as a marketing scheme to increase market cap and assert dominance mid-term.

Offline lil_jay890

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You can't subsidize an interest rate... maybe you can try when the market cap is small but it will never work as the cap increases.

Central Banks have trouble controlling interest rates even though they have the ability to print as much money and buy/sell as many of their bonds as they would like.  Just look at the US QE programs... they want rates to rise, but it's just not happening.

Offline tonyk

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What I get from this is that yield is not going to be around 5% then. Then what will it be, 2%? Then we should put that as the subsidy floor and advertise that. Any number is better than no number (which will always be assumed to be 0.001% like all other banks).

If you want artificial and or  high numbers go join NuBits... they will have them soon enough.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Rune

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What I get from this is that yield is not going to be around 5% then. Then what will it be, 2%? Then we should put that as the subsidy floor and advertise that. Any number is better than no number (which will always be assumed to be 0.001% like all other banks).

Offline tonyk

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Just to be clear... I do not support this proposal in the slightest.

And I am pretty sure nobody expected you to be supporting it.


On that note we have been developing a marketing strategy that does not depend upon dilution to implement.   

For the most part we will aim to reserve dilution for development efforts that have visible ROI rather than marketing efforts that are controversial.   

Wow. Dare to share a bit tiny little more?
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline bytemaster

Just to be clear... I do not support this proposal in the slightest.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline xeroc

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I agree. If we start doing this I would pull out and so would a lot of others. Yield is important but it's not like dilution itself is even popular within our own community and to do it specifically to provide yield is not worth it.

Yield = nice to have return as a stakeholder in the asset .. nothing more!

I vote for no (further) dilution