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Offline benzona

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How does the bitshares/DAC token economy work?
« on: March 06, 2015, 05:33:21 PM »

Hey everyone,

Been having a poke around trying to learn about this seemingly amazing technology, but I've got a number of holes in my understanding of how things work.

Can anyone explain to me how exactly new tokens are created, and how they arrive at their value?  Is it crowd funded?  Are the tokens pegged somehow to bitshares?  If so, how does the conversion to the new token work exactly?

I understand also that new DACs are encouraged to honor holders of PTS/AGS (BitsharesXT now?) with 10% of the company.  If so, how does that tie in to the above?  And how does/would the community differentiate between those DACs that honor this social agreement, and those that don't?

I'm also confused as to how the bitshares money supply works.  The entire amount was premined I reckon - what percentage went to Protoshare holders?  Who holds the unallocated bitshares?  How are these meant to be released into the bitshares ecology?

I would appreciate any help with the above!

Cheers all, glad to be here

Offline Xeldal

Re: How does the bitshares/DAC token economy work?
« Reply #1 on: March 06, 2015, 06:10:54 PM »
Hey everyone,

Been having a poke around trying to learn about this seemingly amazing technology, but I've got a number of holes in my understanding of how things work.

Can anyone explain to me how exactly new tokens are created, and how they arrive at their value?  Is it crowd funded?  Are the tokens pegged somehow to bitshares?  If so, how does the conversion to the new token work exactly?
There are User Issued Assets(UIA's) 
which anyone can create to represent anything they want. 
They rely on trusting the issuer to make good on whatever promise. 
Similar to how you trust an exchange to honor your balance at the exchange.

There are Market Pegged Assets(MPA's)
there are a limited number of these that are hard coded, and represent things like the price of USD, Gold, Silver, Oil etc.
They do not require trust in anyone.   
Read more about MPA's here http://bytemaster.bitshares.org/article/2014/12/18/What-are-BitShares-Market-Pegged-Assets/

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I understand also that new DACs are encouraged to honor holders of PTS/AGS (BitsharesXT now?) with 10% of the company.  If so, how does that tie in to the above?  And how does/would the community differentiate between those DACs that honor this social agreement, and those that don't?

Stan wrote an excellent piece on share drop theory here: https://bitsharestalk.org/index.php?topic=2876.msg35841#msg35841

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I'm also confused as to how the bitshares money supply works.  The entire amount was premined I reckon - what percentage went to Protoshare holders?  Who holds the unallocated bitshares?  How are these meant to be released into the bitshares ecology?

No pre-mine.  Initially there was only Protoshares and it was minable just like bitcoin.   Stan wrote another excellent piece on the Origins of Bitshares here : https://bitsharestalk.org/index.php?topic=14019.msg182299#msg182299


There may be better examples to more directly answer your questions but those are great starting points to refine your initial understanding.
Hope it helps.
« Last Edit: March 06, 2015, 06:25:32 PM by Xeldal »

Offline Pheonike

Re: How does the bitshares/DAC token economy work?
« Reply #2 on: March 06, 2015, 06:13:39 PM »

There is a full breakdown of history in newbie section

https://bitsharestalk.org/index.php?topic=14019.0


Offline benzona

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Re: How does the bitshares/DAC token economy work?
« Reply #3 on: March 06, 2015, 07:47:08 PM »
Thanks guys - will check out reading list

Offline Ander

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Re: How does the bitshares/DAC token economy work?
« Reply #4 on: March 06, 2015, 10:43:56 PM »

Can anyone explain to me how exactly new tokens are created, and how they arrive at their value?  Is it crowd funded?  Are the tokens pegged somehow to bitshares?

Welcome Benzona!

Regarding assets, there are two types of assets:

Market assets, and User assets.


User assets are just like assets in NXT or other coins.  Some user created them, and they have no backing.  They only have any value if you trust the person who created them.



Market assets like bitUSD, bitGOLD, etc are a whole different animal.
They are market pegged assets which are backed by Bitshares.  That is, Bitshares (BTS) is used as collateral for them.  In order to create them, someone must put aside enough BTS to back 300% of the value of the market pegged asset they want to create.  If they ever fall below having 200% collateral, a margin call is automatically issued.

This is all handled BY THE BLOCKCHAIN.  Not by any centralized, trusted authority!  Therefore, market assets are backed by BTS itself, and this is enforced by the blockchain itself.

So how does the blockchain know what price these assets "should be" so that it can enforce margin calls and ensure that holders of the assets get their value?  The delegates who create the blocks of the Bitshares blockchain provide price feeds, which tell the system how much the assets are worth.  Thus, as long as you do not corrupt most of the delegates, the system works.   Delegates are the Bitshares equivalent of Bitocin miners.

The delegates are elected by holders of BTS, who want to elect trustworthy delegates to produce blocks.



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If so, how does the conversion to the new token work exactly?

People buy and sell them on the bitshares decentralized exchange.  This is a free market, so you can buy or sell at whatever price others agree to pay.  So you are not guaranteed to get the 'fair' price for your asset if you need to sell instantly (but it should be fairly close).  If you are willing to wait a little bit however, you are pretty much guaranteed an opportunity to sell your asset at the fair price.  The more users and liquidity that bitshares gets, the better this will be.
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline benzona

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Re: How does the bitshares/DAC token economy work?
« Reply #5 on: March 07, 2015, 12:08:19 PM »
Thanks Ander!

Apologies if I am rehashing old questions.

So then, DACs would generate user assets, of which some percentage would be distributed to the old PTS/AGS holders (or are those now bitshares holders?)  And transaction fees of these DAC user assets would still be expressed in bitshares, which is used in turn to compensate "investors", or holders of bitshares?

Still not entirely clear on BTS coin supply strategy.  bitsharesblocks shows 2.5 billion BTS - with 500m unclaimed.  Where are the 2 billion, and how will the 500 m be claimed?

Sorry if I am being daft! 

 

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