Author Topic: Burning is Still Alive and Well  (Read 10013 times)

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Offline zhangweis

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If we have to go in pool way, at least we should adjust the fixed supply to 3.0 billion which is the estimated final supply under current delegate pay rate.
If the fixed supply is not set to 3.0 billion, I suggest to set up a burning worker account and a 0.7 billion project for it. We can achieve this by using public key from a blockchain random number + 1000(fixed number to avoid delegate cheating). The random number can be taken from a future block so that we can be confident that it will be somewhat truly random.
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Offline Thom


Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.

I am with svk and many others. Recycling for reuse is not burning. And it is not just semantics.

Your post lead me to a different thought though.
BTS share are made of primarily carbon.
When they are recycled they are turned to.....Graphene of course. :)

OK so I re-read the post on project funding and I see what I was missing:

https://bitshares.github.io/technology/stakeholder-approved-project-funding/

While it still doesn't qualify as what I consider burning, as long as the amount "burnt" or going into the reserve fund exceeds the amount being paid to witnesses and workers, the amount of freely available BTS will decrease. This will have the same effect as burning, as the shares will not be in circulation but held by the blockchain, however the funds may need to be released later on if the amount being "burnt" starts to decrease and falls below the sum of witness and worker pay.

In the end I think it's quite clever, it lets the blockchain build up a rainy-day fund of sorts that can be used to maintain witness and project funding in the case transaction volume falters for example.

I say shame on you BM for twisting the definition of "burning" :o You're smart enough to know the difference so why inject this confusion? Is it sophistry to manipulate people to believe a "burn fund" is a good idea or just an off the cuff remark / sloppy language? (I don't want to believe that, but it is a valid question, albeit rather bluntly stated) For the reasons well described above burning fees in BitShares 2.0 is not the same thing, that's just the cold hard facts.

But lest you walk away thinking I'm down on the idea, think again. I agree it is a rather clever way to produce a "rainy day" pool of funds which the shareholders can vote to do with as they may. Whether that is a good thing or not is debatable. It is a form of money supply control either way you look at it.

It is important to note that although BitShares 2.0 provides this new facility to divert a portion of fees into a special "recycle / rainy day" account, I don't believe it prohibits true fund burning by transferring funds to a non existent or "null" account address. BM, can you confirm that? If such a true burn address does not explicitly exist, anyone is free to create a new account and throw away the private keys, then advertise the public key :) With that in mind burning is indeed possible, whether it's alive and well is another matter.

Like it or not the BitShares ecosystem is not a true (i.e. pure, self regulating) free market economy, no matter what version you're talking about. Any type of regulation of the money supply by any "control group" (such as developers, delegates, the FED or governments) other than the market forces of supply and demand is an attempt to alter the free nature of the ecosystem. Any such control group plays god with the economy.

Theoretically, a true free market is one where the amount of money in existence is always balanced with the value of goods and services available for trade. That relationship is extremely dynamic and involves many variables. New people entering and leaving the workforce, the impact of new inventions and methods, natural disasters that destroy people and property are some of the big factors.

Until there is a way to take humans out of the control loop (god role) and replace them with some "perfect" system of automatic control to dynamically adjust the money supply based on accurate measurement of all those factors in real time, we will have to settle for human decisions that attempt to manually adjust the controls to achieve a balance that although not perfect, will be good enough to stimulate the growth of creativity and prosperity without the need for violence and aggression.

I think humanity is still far too primitive to do a good job at playing god with the economy. That doesn't mean we shouldn't strive for improvement. I believe BitShares 2.0 is a major improvement over anything prior to it in the evolution of blochchain technolgy.

Lets each take an active role and work to make it the best it can be!
« Last Edit: June 10, 2015, 04:15:13 am by Thom »
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Offline starspirit

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It seems to me more like a capital reserve (controlled by vote) than burning (requiring a hard fork to reverse). I expect how the market values that depends on how wisely they expect that capital reserve to be managed in the future.

Offline zhangweis

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Burn means different things to different people I suppose. In the case of BTS Graphene a burnt share is one that is held by the blockchain for possible release later. In BTS 1.0, and I believe most other instances, it means transferring of value to an address for which the private key is not known.

It's just semantics.

In the case of BTS Graphene the pool is drawn on to cover the costs of running the network. In BTS 1.0 where a burn is the traditional understanding the share holders would have to decide to hard fork to increase supply if the number of BTS got too low. Both scenarios result in the same thing - enough BTS to allow the protocol to exist. The difference is BTS Graphine doesn't require the hard fork.

Since the pool cannot be spent by anyone but only metered out to workers I feel it is basically burnt. It cannot be used in commerce.

There might be something I'm not getting here but it doesn't seem to be the same thing at all to me, semantics or not. In BTS 1.0 or any other coin, burning means removing shares/coins from the total supply, never to be seen again. In BTS 2.0 it seems to me "burnt" funds will be recycled back to workers who are then free to release them back into circulation by selling them. What I am missing?

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Offline Method-X

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Correct, you now effectively have a "paid by the job" paradigm instead of your old "paid by the hour" one

Contractor vs. employee...

Offline Ander

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Which is why workers shouldn't be doing marketing.   I do not support using worker pay to fund marketing campaigns.   Let the marketers speculate on their cost/reward ratio.

Definitely.  The new system allows marketers to get paid based on their referral numbers, so we won't need marketing delegates anymore.  That should let us cut down a bit on inflation.
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Offline theoretical

there is a third scenario : 1000 new users come in after the hard work was done by the worker marketer who spent 30000USD per month , but each of those users only generates 20USD fees per person in this year . 

The problem is the marketer's pay needs to be based on his performance.  In particular, $20,000 needs to be an upper bound on what this particular marketer gets paid.  Letting this marketer be a worker means their pay is less tightly coupled to their performance, which is why bytemaster says:

workers shouldn't be doing marketing.   I do not support using worker pay to fund marketing campaigns.   Let the marketers speculate on their cost/reward ratio.

If some marketer brings in 1000 users with $20 in transaction volume per year, then they will get paid less than $20,000 per year from the referral program.  (How much less depends on what the referral split is.)

If that marketer's costs are $30,000 per month, those costs are coming out of the marketer's own pocket.  An imbalance can still occur, but the pain will be limited to the marketer's own funds.  The referral program allows each individual marketer to reap the rewards of their success without socializing the risk of their failure.
« Last Edit: June 09, 2015, 07:43:17 pm by theoretical »
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Offline clayop

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I'm with BM. The issue is not an inflationary model but how we can increase the income by expanding bts ecosystem. We are at the early stage that reqiures lumpsum of investment (inflation). If we are doing properly, we will have returns (increasing reserved fund).
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Offline bytemaster

How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.

The total amount of BTS in circulation will be far less under this model.  If BTS survives for the next 3 years and gains any traction what so ever then transaction fees will far exceed the daily spending limit and should continue to do so forever.

So the pool can keep growing so long as fees can cover network costs? In an extreme example where BTS is worth $1000/share (hey, it happened to BTC :P ) there may be 1 billion BTS in circulation and 2.7 billion BTS in the pool?

The pool is like a pond with a maximum drain rate of 5 bts per second.  The stakeholders can plug the drain at just enough to cover witness pay (no workers).   Any time fees are above 5 bts/sec the pool is growing but the rate at which it can drain is shrinking. 

The only time where dilution will be a problem is if the protocol has no traction and yet BTS holders still vote to pay workers.   If the network has no traction and doesn't pay workers it is dead.   If the network has traction and is gaining users then it will be deflationary. 

So fear of dilution is completely misplaced because it will either by deflationary in the long-run or it will die.

there is a third scenario : 1000 new users come in after the hard work was done by the worker who spent 30000USD per month , but each of those users only generates 20USD fees per person in this year . 

Gaining traction != the sheet is balanced . It all depends on if the income > the cost . Some business has tons of users and still losing money .

Which is why workers shouldn't be doing marketing.   I do not support using worker pay to fund marketing campaigns.   Let the marketers speculate on their cost/reward ratio.

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Offline btswildpig

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How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.

The total amount of BTS in circulation will be far less under this model.  If BTS survives for the next 3 years and gains any traction what so ever then transaction fees will far exceed the daily spending limit and should continue to do so forever.

So the pool can keep growing so long as fees can cover network costs? In an extreme example where BTS is worth $1000/share (hey, it happened to BTC :P ) there may be 1 billion BTS in circulation and 2.7 billion BTS in the pool?

The pool is like a pond with a maximum drain rate of 5 bts per second.  The stakeholders can plug the drain at just enough to cover witness pay (no workers).   Any time fees are above 5 bts/sec the pool is growing but the rate at which it can drain is shrinking. 

The only time where dilution will be a problem is if the protocol has no traction and yet BTS holders still vote to pay workers.   If the network has no traction and doesn't pay workers it is dead.   If the network has traction and is gaining users then it will be deflationary. 

So fear of dilution is completely misplaced because it will either by deflationary in the long-run or it will die.

there is a third scenario : 1000 new users come in after the hard work was done by the worker who spent 30000USD per month , but each of those users only generates 20USD fees per person in this year . 

Gaining traction != the sheet is balanced . It all depends on if the income > the cost . Some business has tons of users and still losing money .

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Offline bytemaster

How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.

The total amount of BTS in circulation will be far less under this model.  If BTS survives for the next 3 years and gains any traction what so ever then transaction fees will far exceed the daily spending limit and should continue to do so forever.

So the pool can keep growing so long as fees can cover network costs? In an extreme example where BTS is worth $1000/share (hey, it happened to BTC :P ) there may be 1 billion BTS in circulation and 2.7 billion BTS in the pool?

The pool is like a pond with a maximum drain rate of 5 bts per second.  The stakeholders can plug the drain at just enough to cover witness pay (no workers).   Any time fees are above 5 bts/sec the pool is growing but the rate at which it can drain is shrinking. 

The only time where dilution will be a problem is if the protocol has no traction and yet BTS holders still vote to pay workers.   If the network has no traction and doesn't pay workers it is dead.   If the network has traction and is gaining users then it will be deflationary. 

So fear of dilution is completely misplaced because it will either by deflationary in the long-run or it will die. 
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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 Riverhead

How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.

The total amount of BTS in circulation will be far less under this model.  If BTS survives for the next 3 years and gains any traction what so ever then transaction fees will far exceed the daily spending limit and should continue to do so forever.

So the pool can keep growing so long as fees can cover network costs? In an extreme example where BTS is worth $1000/share (hey, it happened to BTC :P ) there may be 1 billion BTS in circulation and 2.7 billion BTS in the pool?

Offline Pheonike

I can understand having the reserve pool for those times when fees wont cover worker pay. Could the reserve size be dynamic but have max size say 5% of total supply? Or maybe the reserve constantly adjust to have no more than 1 years worth of worker pay max at any given time.

Offline bytemaster

How do we communicate that there are 3.7B coins. No inflation, no burning. Fixed supply but controlled circulation.

I think the problem is that this is not what a lot of us want.  We want there to be less than 3B coins and decreasing.  The value proposition of BTS is that when it becomes successful, it can burn more coins than are added, being deflationary, thus paying a dividend to holders.

The perception of future inflation is a huge factor in the value of BTS.  At 2.5B BTS and decreasing, each BTS is going to be a lot more valuable than at 3.7B and not decreasing.  And the more valuable the BTS are, the more the workers can get paid out of the BTS that are created.

The total amount of BTS in circulation will be far less under this model.  If BTS survives for the next 3 years and gains any traction what so ever then transaction fees will far exceed the daily spending limit and should continue to do so forever. 

The total BTS outside the reserve fund will likely never hit 3B let alone 3.7 and if I were a betting man will hit a long-term decline taking it well below 2.5B.
« Last Edit: June 09, 2015, 06:25:02 pm by bytemaster »
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Offline Riverhead


Quote

In a Stan moment it reminds me of how airships control altitude. Helium is only lighter than air at near atmospheric pressure. Compress it into tanks and it is not lighter than air. By controlling the portion of helium in the gas bags vs what's in the tanks the buoyancy of the ship can be tightly controlled.

Continuing the Stan style... keep in mind that we in the early stages of flying [blockchains in this case] and we are still using hydrogen...highly flammable!

Touche :) . The Hindenburg was an inside job!