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bitbro

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BitShares XX
« on: January 26, 2014, 05:23:26 PM »

Why not create a BitShares chain that  delivers 10% dividends? (Why is 5% the number Bts X is going with?)


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clout

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Re: BitShares XX
« Reply #1 on: January 26, 2014, 05:52:14 PM »
Because then there is less incentive to short. The disparity between the prices of bitassets and the price of the real assets they're derived from will be greater. The lower the dividend/cost of shorting, the more stable and accurate the prices on the exchange will be.

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Offline ruletheworld

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Re: BitShares XX
« Reply #2 on: January 26, 2014, 06:51:12 PM »
There was a discussion about the number "5" previously. The only good solution that needs to be worked out is to have a floating rate, which means having a prediction market for the interest itself.
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Offline Pocket Sand

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Re: BitShares XX
« Reply #3 on: January 26, 2014, 08:06:55 PM »
There was a discussion about the number "5" previously. The only good solution that needs to be worked out is to have a floating rate, which means having a prediction market for the interest itself.
Floating would be ideal if we could work out an effective system to do this.

Offline cob

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Re: BitShares XX
« Reply #4 on: January 26, 2014, 08:39:46 PM »
Yes if they find a way for the market to find the exact rate that would be excellent.
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.

bitbro

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Re: BitShares XX
« Reply #5 on: January 26, 2014, 08:49:36 PM »
I think they not only should, they need to.


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clout

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Re: BitShares XX
« Reply #6 on: January 27, 2014, 03:42:51 PM »
Floating rate is not as good for adoption. It will most likely be much less than 5%. There isn't that big of a cost to lending money in a controlled and automated environment as bitshares x. 5% interests on savings is much more competitive than traditional banking systems. I imagine that at some point a floating rate will be used, but I think that 5% is a good incentive for people to store money in the bitshares bank as opposed to traditional banks given the uncertainty of associated with this emerging industry of DACs

Offline Markus

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Re: BitShares XX
« Reply #7 on: January 28, 2014, 02:13:24 AM »

Offline Pocket Sand

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Re: BitShares XX
« Reply #8 on: January 28, 2014, 06:01:35 AM »
Floating rate is not as good for adoption. It will most likely be much less than 5%. There isn't that big of a cost to lending money in a controlled and automated environment as bitshares x. 5% interests on savings is much more competitive than traditional banking systems. I imagine that at some point a floating rate will be used, but I think that 5% is a good incentive for people to store money in the bitshares bank as opposed to traditional banks given the uncertainty of associated with this emerging industry of DACs
Won't this cause everyone to want to hold BitAssets and force the price of the assets through the roof?

Offline Pocket Sand

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Re: BitShares XX
« Reply #9 on: January 28, 2014, 06:13:54 AM »
Because then there is less incentive to short. The disparity between the prices of bitassets and the price of the real assets they're derived from will be greater. The lower the dividend/cost of shorting, the more stable and accurate the prices on the exchange will be.

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+ 1
« Last Edit: January 28, 2014, 08:04:07 AM by Pocket Sand »

Offline Markus

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Re: BitShares XX
« Reply #10 on: January 28, 2014, 07:50:20 AM »
Floating rate is not as good for adoption. It will most likely be much less than 5%. There isn't that big of a cost to lending money in a controlled and automated environment as bitshares x. 5% interests on savings is much more competitive than traditional banking systems. I imagine that at some point a floating rate will be used, but I think that 5% is a good incentive for people to store money in the bitshares bank as opposed to traditional banks given the uncertainty of associated with this emerging industry of DACs
Won't this cause everyone to want to hold BitAssets and force the price of the assets through the roof?

That's exactly what I think. IMHO the only major flaw with BitShares X at the moment.
If you get 5% on everything it will inflate the price of most BitAssets significantly - especially those where you normally don't fetch high interest (Gold, Silver, JPY etc.)

I tried to estimate by how much in the thread I posted the link to earlier.

clout

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Re: BitShares XX
« Reply #11 on: January 28, 2014, 04:25:38 PM »
Floating rate is not as good for adoption. It will most likely be much less than 5%. There isn't that big of a cost to lending money in a controlled and automated environment as bitshares x. 5% interests on savings is much more competitive than traditional banking systems. I imagine that at some point a floating rate will be used, but I think that 5% is a good incentive for people to store money in the bitshares bank as opposed to traditional banks given the uncertainty of associated with this emerging industry of DACs
Won't this cause everyone to want to hold BitAssets and force the price of the assets through the roof?

That's exactly what I think. IMHO the only major flaw with BitShares X at the moment.
If you get 5% on everything it will inflate the price of most BitAssets significantly - especially those where you normally don't fetch high interest (Gold, Silver, JPY etc.)

I tried to estimate by how much in the thread I posted the link to earlier.

This has been discussed before... It doesn't matter whether or not the price of bitassets are "inflated." Within bitshares you trade in derivatives not actual assets. Parity doesn't matter, correlation matters. Pegging the interest rate at 5% may have some unforeseen  and undesirable effects to the stability of prices from short term perspectives but the long term trends should be consistent with a steady 5% return on all assets.

I can't tell if the 5% interest is necessary for adoption of bitshares or not. Even if people dont get a higher yield on there money than a typical savings bank, the advantage of holding your money in bitshares rather than a bank is that you can hold your money in completely liquid assets. I think that 5% interest perturbs this advantage of bitshares because then prices are less stable and at a given moment that you want to pull your money out of a particular asset, that asset might be relatively undervalued by the markets (the asset can also be overvalued).

 

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