Dividends?

[bytemaster]

I think OldMan makes a strong case for monthly dividend payouts. "Destroy continuously and split monthly."   I would like to see this seriously considered as a requirement.

If Bitshares is going to advertise that it pays dividends (as it currently does) then these dividends need to manifest as a concrete inflow value that the user can easily connect to something tangible (IE ooh I can get a free lunch tomorrow). A dividend needs to be a transaction showing a deposit into the user's wallet.  I think it would be a big mistake to punt on implementing dividend transactions and instead think it is acceptable to solve this in the UI layer and display some calculated value percentage of the whole.   I get it that it burning the fees is cleaner and handles the math, but it will not have the same impact on the user's value perception.   

Is there an opportunity to incentivize support of the TaPOS here?  Something like: wallets that have made at least 1 transaction in the past month will receive dividend payout. Inactive wallets are penalized by not getting dividend payout.

I think that we can work it like this:

Balance:              1000 MIPs  (Micro Percents) 
Dividend Earned:  .01345  MIPs (since last transaction)
Total Balance:       1000.01345 MIPs

This way users can 'remember' what they use to own.   Then when they make a transaction the display updates to:

Balance:              1000.0135 BTS 
Dividend Earned:  .0  BTS (since last transaction)
Total Balance:      1000.01345

All of this would be purely on the display side of things.   When the user makes the transaction it will simply show 'dividends earned' as a separate line item.  We can then display:  Dividends Year to Date.

[patrickb323]

I think OldMan makes a strong case for monthly dividend payouts. "Destroy continuously and split monthly."   I would like to see this seriously considered as a requirement.

If Bitshares is going to advertise that it pays dividends (as it currently does) then these dividends need to manifest as a concrete inflow value that the user can easily connect to something tangible (IE ooh I can get a free lunch tomorrow). A dividend needs to be a transaction showing a deposit into the user's wallet.  I think it would be a big mistake to punt on implementing dividend transactions and instead think it is acceptable to solve this in the UI layer and display some calculated value percentage of the whole.   I get it that it burning the fees is cleaner and handles the math, but it will not have the same impact on the user's value perception.   

Is there an opportunity to incentivize support of the TaPOS here?  Something like: wallets that have made at least 1 transaction in the past month will receive dividend payout. Inactive wallets are penalized by not getting dividend payout.   

[bytemaster]

My suggestion would be to show in the wallet, perhaps on an 'Economy' tab:

Balance: 4000 BTS
Percentage of Total: 0.1%
Dividend Yield: 5%

Dividend yield would be the percentage of coins destroyed in the last year.  A graph could also show total supply decreasing as well as yield.

What would be the purpose of displaying the 4000 number? Since the fraction of the money supply is all that matters, the absolute size of your stake in the total supply is unnecessary and misleading.

Instead, the above balance should merely read 100m% (or some other unit that describes fractional quantities), and people are happy because if they just sit on their money, every day they'll own more m% than they did the day before. Done. The only people who ever need to know about the absolute quantities are the programmers.

For transactions, it would be better to show a purchase of 4000 BTS than 0.1%, which actually changes with each transaction due to the destructing fee.

The change in purchasing power for a single transaction is very very small. I don't recall what the fees are, but even if the fee is as high as 1%, you'd have to transact the entire money supply for the purchasing power to change by 1% in a single transaction. The few people who are moving very large amounts of money around are the only ones who will ever notice.

It isn't a matter of the amount of money transacted, but the volume of transactions.  Fees are charged on a per-byte basis.  The total bandwidth is limited by design to maintain low barriers to entry.  This means that price will rise to what the market will bear for transaction fee per byte.   

[oldman]

How about this: once per day the total supply is increased back to 4,000,000 BTS.  OldMan with his 4000 BTS would wake up the next morning to see 4000.5 BTS because 500 coins had been destroyed the previous day, and the block chain updated everyone's wallet balances without actual transactions.

This, except reset monthly instead of daily.

Current practice is monthly distributions and sticking close to what investors are familiar with will help adoption.

[biophil]

My suggestion would be to show in the wallet, perhaps on an 'Economy' tab:

Balance: 4000 BTS
Percentage of Total: 0.1%
Dividend Yield: 5%

Dividend yield would be the percentage of coins destroyed in the last year.  A graph could also show total supply decreasing as well as yield.

What would be the purpose of displaying the 4000 number? Since the fraction of the money supply is all that matters, the absolute size of your stake in the total supply is unnecessary and misleading.

Instead, the above balance should merely read 100m% (or some other unit that describes fractional quantities), and people are happy because if they just sit on their money, every day they'll own more m% than they did the day before. Done. The only people who ever need to know about the absolute quantities are the programmers.

For transactions, it would be better to show a purchase of 4000 BTS than 0.1%, which actually changes with each transaction due to the destructing fee.

The change in purchasing power for a single transaction is very very small. I don't recall what the fees are, but even if the fee is as high as 1%, you'd have to transact the entire money supply for the purchasing power to change by 1% in a single transaction. The few people who are moving very large amounts of money around are the only ones who will ever notice.

[CryptoVape]

How about this: once per day the total supply is increased back to 4,000,000 BTS.  OldMan with his 4000 BTS would wake up the next morning to see 4000.5 BTS because 500 coins had been destroyed the previous day, and the block chain updated everyone's wallet balances without actual transactions.

[CryptoVape]

My suggestion would be to show in the wallet, perhaps on an 'Economy' tab:

Balance: 4000 BTS
Percentage of Total: 0.1%
Dividend Yield: 5%

Dividend yield would be the percentage of coins destroyed in the last year.  A graph could also show total supply decreasing as well as yield.

What would be the purpose of displaying the 4000 number? Since the fraction of the money supply is all that matters, the absolute size of your stake in the total supply is unnecessary and misleading.

Instead, the above balance should merely read 100m% (or some other unit that describes fractional quantities), and people are happy because if they just sit on their money, every day they'll own more m% than they did the day before. Done. The only people who ever need to know about the absolute quantities are the programmers.

For transactions, it would be better to show a purchase of 4000 BTS than 0.1%, which actually changes with each transaction due to the destructing fee.

[biophil]

My suggestion would be to show in the wallet, perhaps on an 'Economy' tab:

Balance: 4000 BTS
Percentage of Total: 0.1%
Dividend Yield: 5%

Dividend yield would be the percentage of coins destroyed in the last year.  A graph could also show total supply decreasing as well as yield.

What would be the purpose of displaying the 4000 number? Since the fraction of the money supply is all that matters, the absolute size of your stake in the total supply is unnecessary and misleading.

Instead, the above balance should merely read 100m% (or some other unit that describes fractional quantities), and people are happy because if they just sit on their money, every day they'll own more m% than they did the day before. Done. The only people who ever need to know about the absolute quantities are the programmers.

[CryptoVape]

My suggestion would be to show in the wallet, perhaps on an 'Economy' tab:

Balance: 4000 BTS
Percentage of Total: 0.1%
Dividend Yield: 5%

Dividend yield would be the percentage of coins destroyed in the last year.  A graph could also show total supply decreasing as well as yield.

[Troglodactyl]

My understanding is that since the unit of measurement for these shares is percentage based, the dividends by destruction will be noticeable by increasing wallet balance.  This is not just monthly, but each block.  The only time a split would be necessary would be when granularity of the underlying technical units became a problem, which may not be for quite a number of years.  Still, it's worth considering building in a solution.

[oldman]

As Bitshares are destroyed and the total trends to zero there will need to be a reset/split at some point.

Splitting on a monthly basis would mirror the monthly dividend payouts most investors are familiar with.

The psychological value of consistent monthly 'payouts' is enormous - both individual and institutional investors place great value on payment consistency ie. dividend aristocrats and are willing to pay a premium for equities with long histories of uninterrupted payouts.

An increasing percentage is mathematically elegant but does not provide investors with tangible 'spendable' income, ie. fungible value. This is what most investors expect when dividends are marketed.

Honestly, if Invictus markets a '5% dividend' and investors show up to find a percentage 'tracker' there will be a sense of being duped. It's human nature.

I agree with dividends-by-destruction 100%, however, I think there is an opportunity to have the cake and eat it too.

Destroy continuously and split monthly. Best of both worlds.

[Troglodactyl]

If a stock split feature is necessary, I would suggest allowing a snapshot style checkpoint block with all balances bit shifted by 1 to double, any time the total supply has shrunk to less than half the initial supply.

[mint chocolate chip]

A stock split feature could possibly prove useful for other DACs.
What is the mechanism for a stock split to be used if it was available?

[amencon]

If you split the stock all the time, you will totally remove the point of having a dividend at all, and it could affect the psychology of the market and the share price.


You probably shouldn't have any plan to split it at all, and only do it like 5 years from now when everyone is crying about it.

I could be wrong but I don't think they are planning any stock splits, just that there will be something displayed that indicates your balance in relation to all existing units.

That way even if your actual balance stays the same, this percentage indicator will go up as BTS is destroyed.

A "stock split" would make your balance show a higher number in the same way.

I haven't looked heavily into it, but I'd assume that handling destructive transaction "fees" based on percentages would mean you never get to 0 BTS since as more is destroyed the actual amount destroyed for the next transaction would be less but still the same percentage of the whole.

Edit: Oops, BM beat me to it.

[bytemaster]

If you split the stock all the time, you will totally remove the point of having a dividend at all, and it could affect the psychology of the market and the share price.


You probably shouldn't have any plan to split it at all, and only do it like 5 years from now when everyone is crying about it.

No plan to split the stock, but it *could* be done if necessary.

[etherbroker]

If you split the stock all the time, you will totally remove the point of having a dividend at all, and it could affect the psychology of the market and the share price.


You probably shouldn't have any plan to split it at all, and only do it like 5 years from now when everyone is crying about it.

[joele]

There should be one page summary of everything.

[mint chocolate chip]

https://bitsharestalk.org/index.php?topic=1306.15

I think the quote, requote thing got messed up, bytemaster is the one who brings up the idea of 'stock split'.

How are dividends paid?

What currency are they paid in, where do dividends go (to your wallet?) and how often are they paid out?

Every transaction destroys currency which increases your cut when displayed as a percentage of remaining BTS.

I am having trouble understanding this, so the number of BTS (4 million) actually decreases over time? until (there are no more BTS???)?

The response:

How are dividends paid?

What currency are they paid in, where do dividends go (to your wallet?) and how often are they paid out?

Every transaction destroys currency which increases your cut when displayed as a percentage of remaining BTS.

BTS are infinitely divisible and at any time the network could perform a 'stock split'

I am having trouble understanding this, so the number of BTS (4 million) actually decreases over time? until (there are no more BTS???)?

[biophil]

There is no explicit "stock split". You just have a bigger fraction after the rest is destroyed.

Bytemaster has suggested just displaying things as shares-of-the-whole so people don't get confused.

Bytemaster did say something about a stock split, but he's actually referencing an idea that currencydebt brought up. I don't think bytemaster himself ever actually said there will be splits.

But I'm curious - would a split be hard to implement? It seems like it shouldn't be hard: say, once a month, just increase all balances proportionally by the amount that would bring the XTS supply back to 4M. I'm worried that dividends-as-destroyed-fees will be too opaque for most people; splits like this would help alleviate confusion.

There's a lot of psychology in this - it's like how your average joe actually prefers to get a tax refund at the end of the year rather than just pay less taxes throughout the year. It's not rational, but rational isn't the point. I think that if it's not too technically challenging to do the split, it would really help people "get it."

[toast]

There is no explicit "stock split". You just have a bigger fraction after the rest is destroyed.

Bytemaster has suggested just displaying things as shares-of-the-whole so people don't get confused.

[fuzzy]

For the sake of the average Joe (of which I am one) please help me run through the math:


I initially hold 4000 BTS and there are 4,000,000 total BTS:

(4000 / 4,000,000) * 100 = 0.1% of total BTS.


At some later point transactions have destroyed 2,000,000 BTS and there are now only 2,000,000 total BTS:

(4000 / 2,000,000) * 100 = 0.2% of total BTS


A 2:1 forward split is implemented, granting shareholders one BTS for each BTS held:

4000 BTS (original holding) + 4000 BTS (granted by split) = 8000 BTS.


The post-split total number of BTS has now increased to 4,000,000:

(8000 / 4,000,000) * 100 = 0.2% of total BTS


Thus the 'dividend' is paid to the shareholder: holdings increase from 4000 BTS to 8000 BTS or alternatively from 0.1% to 0.2% of total market share.

BTS is saved from death by zero.


Assuming the foregoing is correct I have the following questions:

1. What is the mechanism for the split? Does the Bitshares X DAC create/distribute the BTS?

2. Can the splits occur on a daily/biweekly/monthly cycle? This would be extremely desirable in terms of investor familiarity and adoption.


Thank you for your help - I think this an extremely important concept but also a potential stumbling block.

It will be crucial for marketing to communicate the dividend mechanism in clearly and simply.

+5%

[oldman]

For the sake of the average Joe (of which I am one) please help me run through the math:


I initially hold 4000 BTS and there are 4,000,000 total BTS:

(4000 / 4,000,000) * 100 = 0.1% of total BTS.


At some later point transactions have destroyed 2,000,000 BTS and there are now only 2,000,000 total BTS:

(4000 / 2,000,000) * 100 = 0.2% of total BTS


A 2:1 forward split is implemented, granting shareholders one BTS for each BTS held:

4000 BTS (original holding) + 4000 BTS (granted by split) = 8000 BTS.


The post-split total number of BTS has now increased to 4,000,000:

(8000 / 4,000,000) * 100 = 0.2% of total BTS


Thus the 'dividend' is paid to the shareholder: holdings increase from 4000 BTS to 8000 BTS or alternatively from 0.1% to 0.2% of total market share.

BTS is saved from death by zero.


Assuming the foregoing is correct I have the following questions:

1. What is the mechanism for the split? Does the Bitshares X DAC create/distribute the BTS?

2. Can the splits occur on a daily/biweekly/monthly cycle? This would be extremely desirable in terms of investor familiarity and adoption.


Thank you for your help - I think this an extremely important concept but also a potential stumbling block.

It will be crucial for marketing to communicate the dividend mechanism clearly and simply.

[mint chocolate chip]

I consider your question a great question, I had the same one...

How are dividends paid?

What currency are they paid in, where do dividends go (to your wallet?) and how often are they paid out?

Every transaction destroys currency which increases your cut when displayed as a percentage of remaining BTS.

BTS are infinitely divisible and at any time the network could perform a 'stock split'

I am having trouble understanding this, so the number of BTS (4 million) actually decreases over time? until (there are no more BTS???)?

The money supply is infinitely divisible, so losing supply is not a problem.

Bitshares will have the bitcoin quality of being highly divisible.

Instead of having a complicated method of transferring dividends and taking away fees, Invictus has thought of the simple and elegant solution of simply destroying BitShares as a way of charging fees. Less Bitshares in existence means that the remaining shares become more valuable (akin to that of a listed company buying back its own shares to increase shareholder value).

For the stock splitting I'm assuming that this would mean for example: if the number of bitshares is reduced to say 2million, then a stock split could reward share holders by giving them a free bitshare for every bitshare they have. This will bring the total number of bitshares back to 4million.

Brilliant. This whole idea as it rolls out is going to be exciting and a lot of fun. godspeed

[toast]

It does approach 0. Think of all transactions in terms of %

[oldman]

Could someone please explain how, if dividends are 'paid' by destroying BTS, the number of BTS does not eventually approach zero?

Perhaps a dumb question, apologies if I am missing something obvious.

Thank you!