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Offline Empirical1.1

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A BitShares Constitution?
« on: October 31, 2014, 08:31:13 PM »

We have a new, united BitShares beginning on Nov 5th.

We have an opportunity to define a new beginning about who we are and where we're going.
Whether that's a constitution, mission statement or just some basic values, I don't know.
(I think MethodX has previously expressed interest in helping draw up a draft for something like this.)

For me a big question is this...

Should BitShares define it's maximum annual dilution for eternity?

Personally, I think yes.

A BTS that is limited & defined like Bitcoin but puts the dilution towards positive, productive uses rather than wasteful centralised mining is something I think will be more successful.

Bytemaster, is open to that angle.

Its 2021:

https://en.bitcoin.it/wiki/Controlled_supply

Great... an enshrined constitution that stipulates an dilution rate strictly less than BTC's inflation rate would "tie our hands" and should be carefully considered, but from a marketing perspective there is a strong case.

https://bitsharestalk.org/index.php?topic=10816.msg142543#msg142543

Do you think we should cap our dilution rate in a constitution forever? Other thoughts?


« Last Edit: October 31, 2014, 08:39:52 PM by Empirical1.1 »

Offline Ander

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Re: A BitShares Constitution?
« Reply #1 on: October 31, 2014, 08:36:09 PM »
This would be great, especially if the capped amounts were less than bitcoin's inflation over time. 

This could be achieved by having the max block reward for a paid delegate decrease over time, from 50 this year, to less in the future, similar to how bitcoin's block reward halves each 4 years.  (Ours doesnt have to have exactly the same schedule of decline).

I think this would help to calm down the investors who have been dumping because they dont like dilution, mostly because they dont understand how large it will be, and it seems to them that it could be any amount.
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Offline Method-X

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Re: A BitShares Constitution?
« Reply #2 on: October 31, 2014, 08:39:33 PM »
Interesting idea. I can see both sides of this discussion.

a) Fixed dilution limits future unknowns.
b) Fixed dilution gives investors peace of mind.

I can't decide.

Offline Ander

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Re: A BitShares Constitution?
« Reply #3 on: October 31, 2014, 08:42:53 PM »
 
Interesting idea. I can see both sides of this discussion.

a) Fixed dilution limits future unknowns.
b) Fixed dilution gives investors peace of mind.

I can't decide.

 +5% :P
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Offline fuzzy

Re: A BitShares Constitution?
« Reply #4 on: October 31, 2014, 08:43:02 PM »
always loved this idea. 

We should put it on real parchment paper and each contributor signs it.  How about that for an incentive to contribute to it?!   

Couldn't we slightly modify the most well-thought-out Consitution to date for the digital age?  "Authorities" would certainly fear taking any of its signers into custody....that is for damned sure. 
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Re: A BitShares Constitution?
« Reply #5 on: October 31, 2014, 08:48:34 PM »
We should probably write our declaration of independence as well.

Offline Ander

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Re: A BitShares Constitution?
« Reply #6 on: October 31, 2014, 08:51:45 PM »
We should probably write our declaration of independence as well.

This seems a bit silly to me, and could attract attention from government/regulators that we dont want.


What we need is a document outlining a schedule for fixed dilution, that we all agreed to and is hard to change.  Plus a mission/vision statement for what bitshares is about and what our goal is.
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Offline bytemaster

Re: A BitShares Constitution?
« Reply #7 on: October 31, 2014, 08:53:50 PM »
Interesting idea. I can see both sides of this discussion.

a) Fixed dilution limits future unknowns.
b) Fixed dilution gives investors peace of mind.

I can't decide.

 +5% :P

+5%  for me too...   hard to decide, limits potential major moves which is good and bad.

Enshrining a maximum dilution rate into the code is really doing nothing more than placing a spending limit on government.   This spending limit is fundamentally tied to the markets ability to absorb the new shares. 

All "Democracies" suffer from the potential of shareholder abuse of power and desire to have unlimited spending ability.   Do we trust the shareholders to make good judgements?  Do we know enough know to bind them for ever?  By what process can we change the rule?

On the other hand who will trust a constitution after our recent moves?  We have already proven the ability to turn on a dime and issue new BTS as necessary.   In the free market there are no rules except survival of the fittest and most flexible.

Having the ability to change the dilution rate with some established process that is deemed "hard but not impossible" is what is needed.
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Offline Stan

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Re: A BitShares Constitution?
« Reply #8 on: October 31, 2014, 08:54:45 PM »
Interesting idea. I can see both sides of this discussion.

a) Fixed dilution limits future unknowns.
b) Fixed dilution gives investors peace of mind.

I can't decide.

 +5% :P

Easy peasy: 

Nothing can happen very fast. 
If you don't like how the future is unfolding,
sell at that time.

Never try to over constrain the future.
If it were even possible
You are just as likely to prevent yourself from doing something right.

 :)
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Offline Ander

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Re: A BitShares Constitution?
« Reply #9 on: October 31, 2014, 08:57:16 PM »

Having the ability to change the dilution rate with some established process that is deemed "hard but not impossible" is what is needed.

I agree.

I think that modifying a constituiton is "hard but not impossible". 

It should be hard enough that people have confidence that it should probably not happen, except in an extreme emergency where everyone agrees it must happen.
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Offline bytemaster

Re: A BitShares Constitution?
« Reply #10 on: October 31, 2014, 09:03:29 PM »

Having the ability to change the dilution rate with some established process that is deemed "hard but not impossible" is what is needed.

I agree.

I think that modifying a constituiton is "hard but not impossible". 

It should be hard enough that people have confidence that it should probably not happen, except in an extreme emergency where everyone agrees it must happen.

Extreme emergency or extreme opportunity.... I think we can put this kind of thing up to a vote that requires 75% stakeholder approval and allows stakeholder to buy/sell their approval would do the trick.
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Offline Ander

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Re: A BitShares Constitution?
« Reply #11 on: October 31, 2014, 09:11:25 PM »
Extreme emergency or extreme opportunity.... I think we can put this kind of thing up to a vote that requires 75% stakeholder approval and allows stakeholder to buy/sell their approval would do the trick.

Requiring 75% approval to change sounds great to me. 

Investors would have confidence that greater dilution could only happen with mass approval.
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Offline CoinHoarder

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Re: A BitShares Constitution?
« Reply #12 on: October 31, 2014, 09:12:57 PM »

Having the ability to change the dilution rate with some established process that is deemed "hard but not impossible" is what is needed.

I agree.

I think that modifying a constituiton is "hard but not impossible". 

It should be hard enough that people have confidence that it should probably not happen, except in an extreme emergency where everyone agrees it must happen.

Extreme emergency or extreme opportunity.... I think we can put this kind of thing up to a vote that requires 75% stakeholder approval and allows stakeholder to buy/sell their approval would do the trick.

This sounds wonderful.

+5% to making a Bitshares' constitution, but I think it should be extended beyond simply dilution. This is actually similar to what I proposed at the end of my last post, except again I believe it should be extended to cover more than dilution.

It should also cover the philosophy or "game plan" of the Bitshares project, including long term goals and incentive structure of Bitshares AGS/PTS ectera. Changing incentive structures and the main "game plan" of Bitshares on the fly provides uncertainty to investors and thus is reflected in the market.

TL;DR: Too much change too fast.. dilution and playing with the incentives of those that have previously invested in AGS and PTS is not cool.

Changing things on the fly does not work with cryptocurrencies, as people like to know what they are investing in, the long term goals of the project, and that those goals won't constantly change on a whim. By changing so many things so drastically and quickly, I am sure we have lost some big stake holders that are now uncertain of Bitshares' future and the success of some of the recent changes. For instance, dilution is a word that carries a very negative connotation in the cryptocurrency community. Also, you guys are playing with the incentives of AGS/PTS/BTS on the fly and that is not cool.. it provides uncertainty to investors and scares people away and the market is reflecting that. I am sure there will be some big PTS holders that show up over the next few weeks that don't follow Bitshares day-to-day. They will be irate when they realize that a final snapshot was taken and that their PTS holdings are now worthless. People "in the know" will come out OK as they can still sell their PTS for Bitcoins at a reasonable exchange rate, but the people that are not will not come out as good as the others.

I think combining DACs was a good move, but when you start playing with the incentives of AGS/PTS/BTS and the incentive structure of DACs themselves (dilution) on the fly, that is not cool. So, although I agree with the main philosophy of the merger, I believe the way it has been carried out was sub optimal. I suggest the Bitshares community take a long hard look in the mirror at this point in time. Write Bitshares' goals and the vision of the project, and then etch that vision in stone. Only change economic incentives of a cryptocurrency when absolutely necessary (preferably never) to the success of the project.
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Offline starspirit

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Re: A BitShares Constitution?
« Reply #13 on: October 31, 2014, 09:20:55 PM »

Having the ability to change the dilution rate with some established process that is deemed "hard but not impossible" is what is needed.

I agree.

I think that modifying a constituiton is "hard but not impossible". 

It should be hard enough that people have confidence that it should probably not happen, except in an extreme emergency where everyone agrees it must happen.

Extreme emergency or extreme opportunity.... I think we can put this kind of thing up to a vote that requires 75% stakeholder approval and allows stakeholder to buy/sell their approval would do the trick.
The essential problem with dilution is that it is a coercive tax, and the antithesis of voluntary action, especially for smaller stakeholders. I would prefer a constitution built around freedom.

Offline Method-X

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Re: A BitShares Constitution?
« Reply #14 on: October 31, 2014, 09:26:45 PM »
A constitution is meant to be social glue. It's in writing and is "official". Eventually people start to almost worship it like a holy book; so I see merit in having our own. As mentioned previously, the first rule should be that changing the constitution requires a 75% supermajority, otherwise inflation is fixed. You get the best of both worlds this way: investor confidence and the ability to tackle both known unknowns and unknown unknowns.

 

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