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Offline tonyk

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Half-baked Elements of Bitshares 2.0 [first read]
« on: June 09, 2015, 01:23:46 AM »

I will leave most of the exiting new features to be praised by other fan-boys. Below are some the concerns I have after reading the proposal.



1. There is no more BTS burning. No more dividends

The BTS from fees are kind of recycled (put back in a ‘future spending fund’). The question is not anymore if Bitshares will ultimately has 2.5+1.5 bill BTS in existence, the question is only ‘when’. What we have given up is the dividend for the shareholders. I will not theoreticise  here if such dividends is essential for the shares to have value and what is the impact of having/not having dividends.
Anyway this matter is easily fixable – by setting 3 way split instead of the proposed 2 way (80%/20% for referral program/ future spending’s fund), by just adding % to be burnt



2. The bond market is clearly not well thought and developed. It will take far more features to actually work and work well.

Why? – Put yourself in the lenders shoes. You will require collateral equal to the loan amount + interest+ some amount to guarantee for negative price movement of the collateral. So if you are lending bitUSD and accepting say BTS as collateral you will ask for 100% + interest + some% to insure yourself if BTS goes down during the term of the loan. So say 125% of the loan amount in BTS at the current BTS/bitUSD price.

Now to the shoes of the borrower. If you have to provide $125 in BTS to borrow $100 in bitUSD, and keeping in mind that nature of the asset that one can own on a blockchain, the circumstances in which such loan sounds like a real loan is very very small. It is not like owning a house and taking a loan to start a business. Most of the blockchain assets are of such a nature that simple selling them at current price is the best way to go. The cases that are left are not true loans but more akin to speculation that the collateral will go up in value during the loan term.

Some form of reputation system (credit score of kind) and or insurance/guaranty third party is clearly needed for true active bond market.



3. The referral system is killing the product [while probably being very good tool to sell it], or very actively working on it.

In order to provide decent referral bonuses ($80 per account seems to be the target) the transaction fees are $0.20 for free account (and $100 + $0.04 per transaction for lift time one). Do you really thing the customers will come flying to the system at those levels. [Leaving aside how astronomically high that is for each placed/canceled order on the DEX…not filled just placed]. Do you think customers will jump on the system with $0.20 per transaction when the competition is 10x less? I know a lot of marketer will try to sell it to them to get their $80 bucks, but how many will really use it 10x higher transaction cost (or be happy to pay $100 for the privilege to try it and enjoy normal fees)


Recurring & Scheduled Payments as well as the enormous amount of transactions (TPS) that the system is promised to be able to handle are more than AWESOME but let’s address the problem areas and not pretend such do not exist.

Go BTS!
« Last Edit: June 09, 2015, 01:33:21 AM by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline eagleeye

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #1 on: June 09, 2015, 03:36:25 AM »
Legitimate concerns.

Taking off the fee to place orders just a fee to execute should be standard.

(I just read your post not the post bytemaster made.)

clout

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #2 on: June 09, 2015, 03:39:20 AM »
1. We haven't had BTS burnging since BitsharesX. We've already agreed to the dilution model. Burning really doesn't constitute a dividend. You're not going to see an appreciation in value from the process of burning BTS. While dilution might add a marginal amount of short term sell pressure it ultimately adds long term value creation which is what is most important.

2. The bond market works like the margin accounts on various other crypto exchanges. You don't need to a reputation system for collateralized lending. The bond market is primarily a means for traders to short BitAssets relative to other BitAssets or BTS relative to BitAssets.

3. I think the pricing makes sense. If you make more than 200 trades in a year it is more economical for you to purchase a yearly subscription. Any trade greater than 100 dollars you are paying less in fees than btc38.com which charges a 0.1% (probably the lowest fee of any crypto exchange that charges fees). If you make more than 625 trades in a "life time" then it is in your best interest to purchase a lifetime membership. Any trade greater than 40 dollar you are paying less than the 0.1% fee of btc38.com. I think that these are pretty reasonable price points and the fees are negligible enough that no one except market makers with automated trading bots would care about having to pay a fee to place an order.

With that being say I think that there should definitely be an incentive program for market makers, particularly in order to bootstrap the BitAsset to BitAsset markets. It would be great if the devs could either implement some variation on maker taker fee model or provide a rebate to those market makers that provide a certain amount of depth within a given spread.

Offline tonyk

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #3 on: June 09, 2015, 04:17:23 AM »
1. We haven't had BTS burnging since BitsharesX. We've already agreed to the dilution model. Burning really doesn't constitute a dividend. You're not going to see an appreciation in value from the process of burning BTS. While dilution might add a marginal amount of short term sell pressure it ultimately adds long term value creation which is what is most important.
We have burning even as we speak. Burning from all delegates that are <100% pay rate. A 3% delegate current burns 97% of  the transaction fees [97% of 1/101 of all  fees collected in the last 2 weeks or there about]. So currently we have both the process of  creation and destruction of BTS . Creation far outpaces destruction, for a net creation indeed, but this is not the point I am making.

On the long term value creation claim - it creates value if it does... I am not saying it is one or the other currently or in the future.

2. The bond market works like the margin accounts on various other crypto exchanges. You don't need to a reputation system for collateralized lending. The bond market is primarily a means for traders to short BitAssets relative to other BitAssets or BTS relative to BitAssets.
Those are the few use case that do remain, hopefully. It is not true peer-to-peer lending - it is one party getting interest the other not so much taking a loan but mainly speculating on a price movement.
 In my view  limited use case remaining. That is wat I said or at least tried to say in the OP in 2.
Also if you look at the numbers you will  see that in reality it does not make sense to borrow say bitUSD @ interest and 125% collateral on the bond market if you can instead simply short the same borrowed asset (bitUSD at 100% collateral and no interest owed) ...

3. I think the pricing makes sense. If you make more than 200 trades in a year it is more economical for you to purchase a yearly subscription. Any trade greater than 100 dollars you are paying less in fees than btc38.com which charges a 0.1% (probably the lowest fee of any crypto exchange that charges fees). If you make more than 625 trades in a "life time" then it is in your best interest to purchase a lifetime membership. Any trade greater than 40 dollar you are paying less than the 0.1% fee of btc38.com. I think that these are pretty reasonable price points and the fees are negligible enough that no one except market makers with automated trading bots would care about having to pay a fee to place an order.
I am not talking about me as a use case...for me this kind of works due to a high # of transactions I make anyway and I am not a new user that need to be hooked to BTS. A new user (just signed)  has generally 2 not too attractive choice - almost 10x higher fees than say BTC ($0.20 as opposed $0.023) or pay $100 to try the system and have comparable fees.
« Last Edit: June 09, 2015, 04:21:39 AM by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Ander

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #4 on: June 09, 2015, 04:34:08 AM »
Burning BTS is very important. I didnt read anything that suggested no burning would take place, I assumed that part of the fees were going to be burned, and part go to referrals.  If there is actually no burning, then there is no reason to hold BTS, because it could not be profitable.  Burning is essential.
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Tuck Fheman

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #5 on: June 09, 2015, 05:07:12 AM »
bump

I need some more sub 3k bts

Offline onceuponatime

Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #6 on: June 09, 2015, 05:13:15 AM »
Burning BTS is very important. I didnt read anything that suggested no burning would take place, I assumed that part of the fees were going to be burned, and part go to referrals.  If there is actually no burning, then there is no reason to hold BTS, because it could not be profitable.  Burning is essential.

https://bitsharestalk.org/index.php/topic,16747.msg214794.html#msg214794

Offline Shentist

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #7 on: June 09, 2015, 05:14:24 AM »
i assume the BTS you pay for creating UIAs of MPAs are still burned?

so at the moment the only source, but the papers didn't show how much will a name costs in the future etc. so maybe we will have a lot of sources left for burning BTS.


Offline CryptoPrometheus

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #8 on: June 09, 2015, 05:22:55 AM »
Workers can run on a platform of burning their wage - shareholders just have to vote them to the top if they want BTS burned. Right? Am I misunderstanding the worker branch of DPOS 2.0?
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Offline Ander

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #9 on: June 09, 2015, 06:10:33 AM »
I need some more sub 3k bts

NEVER AGAIN.


Also, given the cup and handle formation that looks to be forming, you'd better buy the sub 4000 sat BTS as fast as possible.
« Last Edit: June 09, 2015, 06:16:43 AM by Ander »
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Offline xeroc

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #10 on: June 09, 2015, 06:37:19 AM »
Workers can run on a platform of burning their wage - shareholders just have to vote them to the top if they want BTS burned. Right? Am I misunderstanding the worker branch of DPOS 2.0?
Yes .. you understanding is correct ... There will be dummy delegates that just burn their pay!!

Hence, tony is only half right: There is no implicit burning in bts any longer.
However:

you can see that the "burned" funds from the "left over delegates" are fed back to the reserve.
Also note that the workers are the only once allowed to take fund out of the reserve.
Max amount the workers can take out is 5 BTS per second or 50 BTS per 10 seconds (like atm)

In the end it doesn't really change much ... however, we might right a higher supply eventually .. but are also much more flexible as shareholders ..


// edit: seems I have some facts wrong... delegates can vote on the max dilution (i.e. 5 BTS/sec) ...
also I though witnesses are paid by transaction fees ..
« Last Edit: June 09, 2015, 06:41:24 AM by xeroc »
Give BitShares a try! Use the http://testnet.bitshares.eu provided by http://bitshares.eu

Offline Ander

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #11 on: June 09, 2015, 06:49:10 AM »
Imo, we should vote to keep total pay below about 40% of the max possible - similar to current levels. 
We have a good rally going, lets keep it going by not overdiluting.

As the price increases, this pay will go further. 



This is a good system, it allows voters to control whether the DAC is focused on being profitable, or on spending to fuel growth.  Early on we can vote for more funding, but later as the system matures we can show profits and burn BTS by voting down the pay level and letting more BTS be burned.
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Offline arhag

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #12 on: June 09, 2015, 06:59:30 AM »
Well first all these numbers including the total supply can be changed with hard forks if there is enough shareholder approval. But let's consider what is possible without hard forks. Also, let's assume another change to increase total supply above 3.7 billion BTS is so undesirable that we would "never" hard fork to do it. If the rate at which BTS is pulled from the reserve pool follows the same hard-coded rules of the current BitShares system (5 BTS/sec and halving every 4 years), then there is effectively no difference from a dilution standpoint. However, if a majority of the delegates are able to change this number, then that is a different system than what we currently have. Dynamically adjusting the number makes it much easier for a large enough quorum of stakeholders to effectively retroactively reclaim funds that we earlier "burned" (but still never exceeding the 3.7 billion BTS hard limit, assuming no hard fork). But I don't think that is necessarily a bad thing. I would like clarification on whether the rate that is pulled from the reserve pool is set by delegates or hard coded (or maybe it is set by delegates but with a hard-coded upper limit?).

Regarding the bond market, I have some other concerns actually, but I rather just wait until more information is provided. Personally, I consider it a work-in-progress that will likely be greatly improved over time. I'm just glad that it is being considered a priority though.

Regarding the high transaction fees, I believe different operations can have different fees set by the delegates (is that correct?). If so, my concerns about the fees is greatly reduced. I think that certain operations like updating an account's votes and placing and cancelling limit orders should have very low fees (in fact, I think we could just get away with making cancelling orders free without worrying about spam issues). We shouldn't penalize people who update their votes because they help keep the system secure and running properly. And high fees on placing and cancelling limit orders hurts bots which will hurt market makers and thus liquidity. I would rather have very low fixed fees on placing market orders and have percentage fees on the matched volume instead (but still at a lower rate than our centralized exchange competitors). But I am fine with all other operations (including transferring assets from one account to another) having the higher fixed fees for the sake of the referral system.
« Last Edit: June 09, 2015, 07:03:57 AM by arhag »

Offline blockhead

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #13 on: June 09, 2015, 07:46:04 AM »
I'm concerned about the fees aswell. Price stable BitAssets with a good yield could be a huge advantage in the unbanked markets but they need to be able to afford to trade them. 0.4$ seems too high in my oppinion.

Offline tonyk

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Re: Half-baked Elements of Bitshares 2.0 [first read]
« Reply #14 on: June 09, 2015, 07:54:19 AM »
Well first all these numbers including the total supply can be changed with hard forks if there is enough shareholder approval. But let's consider what is possible without hard forks. Also, let's assume another change to increase total supply above 3.7 billion BTS is so undesirable that we would "never" hard fork to do it. If the rate at which BTS is pulled from the reserve pool follows the same hard-coded rules of the current BitShares system (5 BTS/sec and halving every 4 years), then there is effectively no difference from a dilution standpoint. However, if a majority of the delegates are able to change this number, then that is a different system than what we currently have. Dynamically adjusting the number makes it much easier for a large enough quorum of stakeholders to effectively retroactively reclaim funds that we earlier "burned" (but still never exceeding the 3.7 billion BTS hard limit, assuming no hard fork). But I don't think that is necessarily a bad thing. I would like clarification on whether the rate that is pulled from the reserve pool is set by delegates or hard coded (or maybe it is set by delegates but with a hard-coded upper limit?).

Regarding the bond market, I have some other concerns actually, but I rather just wait until more information is provided. Personally, I consider it a work-in-progress that will likely be greatly improved over time. I'm just glad that it is being considered a priority though.

Wow. I do admire how  elegantly and yet precisely you put all (or most all)  issues and possibilities. I hope that the designers of the system see that your statement is actually loaded with  questions that need to be answered, though.


Regarding the high transaction fees, I believe different operations can have different fees set by the delegates (is that correct?). If so, my concerns about the fees is greatly reduced. I think that certain operations like updating an account's votes and placing and cancelling limit orders should have very low fees (in fact, I think we could just get away with making cancelling orders free without worrying about spam issues). We shouldn't penalize people who update their votes because they help keep the system secure and running properly. And high fees on placing and cancelling limit orders hurts bots which will hurt market makers and thus liquidity. I would rather have very low fixed fees on placing market orders and have percentage fees on the matched volume instead (but still at a lower rate than our centralized exchange competitors). But I am fine with all other operations (including transferring assets from one account to another) having the higher fixed fees for the sake of the referral system.

Now this is pure optimism... I wish you are right, but I have not read anything confirming that different [deeply thought out and reasoned] fees for different transactions are coming to BTS. Are they?
?
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

 

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