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Offline santaclause102

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CPOS (cooperative proof of stake) discussion thread
« on: May 25, 2014, 01:18:26 AM »

Thanks Stephen for presenting and discussing your approach on mumble.

You can find his white paper here: https://docs.google.com/document/d/1C4m-MFnxw0JjDorzrKs_IRQRqD9ila79o0IDt6KsbcE/edit?pli=1
Here is a relevant thread on BTT: https://bitcointalk.org/index.php?topic=584719.0;topicseen

This thread is for discussing CPOS by itself and in comparison with DPOS.

To me Stephen brought up a few new concepts.
1) Diluting shareholders as Bitcoin does now and spending this money / those coins on marketing ("paying Amazon to accept Bitcoin") instead of paying it to miners or shareholders - would this be an advantage to DPOS/bitshares? Also see Agent86's suggestion here https://bitsharestalk.org/index.php?topic=4660.0
2) Autonomous agents (instances in the standard software everyone runs) select, testify and fire nodes and super nodes - where are the limits and the advantages of this approach?
3) Increasing scalability by establishing two layers of nodes (super nodes and full nodes) - would this be applicable and helpful for DPOS?

What other new concepts did you spot?

What is not yet clear to you?

Happy discussing!
« Last Edit: May 25, 2014, 01:52:17 AM by delulo »

Offline StephenReed

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Re: CPOS (cooperative proof of stake) discussion thread
« Reply #1 on: May 25, 2014, 04:50:43 AM »
Thanks for inviting me. It was enjoyable and will help me polish the presentation of my ideas. I plan to listen when I can to the progress of the bitshares project and learn what I can.

I linked to here from my bitcointalk forum project thread.

Offline santaclause102

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Re: CPOS (cooperative proof of stake) discussion thread
« Reply #2 on: May 25, 2014, 09:59:26 AM »
From the Bitcointalk thread:
Quote
I introduced a new thought that is not in the whitepaper and that is that the block creation reward, in addition to funding infrastructure and developers, could also subsidize transactions to the extent of negative transaction fees, should the abuse problem be addressed. Imaging paying Amazon or any other global Internet retailer a week's worth of block creation rewards, i.e. $13 million to get them to accept bitcoins as payment. I call this notion paying for order flow.
Would negative tx fees allow anyone to send coins back and forth and make money this way? Would the increased demand for coins through this way of making money overcompensate Bitcoin holders (on the one site the price might increases and on the other side negative tx fees have to be paid through dilution by holders)? 

Offline CLains

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Re: CPOS (cooperative proof of stake) discussion thread
« Reply #3 on: May 25, 2014, 01:43:10 PM »
Is it not obvious that inflation is a brilliant way to force everyone to continually donate a tiny amount? Does it not effectively solve the tragedy of the commons problem? Are we sure our idealist attitudes are not interfering with our judgement? What does it matter that voting etc. on how to spend this influx of money is flawed, when we know that it can solve at least one problem that individuals as individuals can not, namely the situation where each donating a tiny amount would be "rational" if they all did it, but they do not do it since they can not be sure everyone or even anyone else does. Pending a perfect solution, do we not already know that we require both types of spending for the whole system to be supra-rational?

I have never read a book on economy in my life so feel free to point of where I go wrong here.
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Offline bytemaster

Re: CPOS (cooperative proof of stake) discussion thread
« Reply #4 on: May 25, 2014, 01:46:42 PM »
Is it not obvious that inflation is a brilliant way to force everyone to continually donate a tiny amount? Does it not effectively solve the tragedy of the commons problem? Are we sure our idealist attitudes are not interfering with our judgement? What does it matter that voting etc. on how to spend this influx of money is flawed, when we know that it can solve at least one problem that individuals as individuals can not, namely the situation where each donating a tiny amount would be rational if they all did it, but they do not do it since they can not be sure everyone or even anyone else does. Pending a perfect solution, do we not already know that we require both types of spending for the whole system to be supra-rational?

I think of it more like shareholders agreeing to a dilution in exchange for a capital infusion.    I think it is indeed a good idea in the short run and works well for DPOS.   Early on in a networks life transaction fees are unlikely to be sufficient to motivate growth.  They will merely cover costs.   

So I have thought about it some and recognized that no company pays a dividend while in its growth phase.   Only after it has matured does it start paying dividends.   

So paying 100% of transaction fees to the delegates is a middle ground.   Have the percent paid to delegates decrees down to 10% over 10 years as the network matures.   

On the other hand, paying dividends is marketing in its own right and is effectively paying every shareholder to grow the network.   

I think that transaction fees will more than cover infrastructure growth as the network grows. 
For the latest updates checkout my blog: http://bytemaster.bitshares.org
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 santaclause102

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Re: CPOS (cooperative proof of stake) discussion thread
« Reply #5 on: May 25, 2014, 05:41:08 PM »
Quote
So I have thought about it some and recognized that no company pays a dividend while in its growth phase.   Only after it has matured does it start paying dividends.   
In reality companies only pay dividends when they think that they can not invest the revenue anymore profitably and can't grow anymore (e.g. coka cola)

Quote
On the other hand, paying dividends is marketing in its own right and is effectively paying every shareholder to grow the network.   
The reality of the crypto market is: 5% per year is a nothing against the potential of mainstream adoption and shareholders might appreciate it if a specialized group does the marketing for them.
« Last Edit: May 25, 2014, 05:46:33 PM by delulo »

Offline Agent86

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Re: CPOS (cooperative proof of stake) discussion thread
« Reply #6 on: May 25, 2014, 06:09:20 PM »
I think DACs that can hire employees could easily outcompete ones that can't.  We could poach active members of other communities.  Why do volunteer work for NXT and donate your money to the community marketing fund while someone with a bigger stake doesn't do anything when you can work for BitShares X?

As far as guaranteed dividends, there's something that doesn't sit right with me the idea that someone can have a big stake of a DAC in a cold wallet somewhere and not do much of anything and be guaranteed that their proportional ownership goes up over time.

I totally agree with Claims that there are many situations where everyone would agree to give money to something as long as everyone has to give.  You can be in favor of taxes for roads that everyone must pay but still know you wouldn't pay the tax if it was just optional for each person.

Offline santaclause102

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Re: CPOS (cooperative proof of stake) discussion thread
« Reply #7 on: May 25, 2014, 06:25:43 PM »
You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.
« Last Edit: May 25, 2014, 06:27:36 PM by delulo »

Offline bytemaster

Re: CPOS (cooperative proof of stake) discussion thread
« Reply #8 on: May 25, 2014, 06:36:26 PM »
You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.

Yep...
For the latest updates checkout my blog: http://bytemaster.bitshares.org
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 onceuponatime

Re: CPOS (cooperative proof of stake) discussion thread
« Reply #9 on: May 25, 2014, 06:47:47 PM »
You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.

Yep...

I'm sorry, I'm a little slow today. Couldn't catch the meaning here. Would you kindly extrapolate a bit?

Offline santaclause102

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Re: CPOS (cooperative proof of stake) discussion thread
« Reply #10 on: May 25, 2014, 07:21:31 PM »
You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.

Yep...

I'm sorry, I'm a little slow today. Couldn't catch the meaning here. Would you kindly extrapolate a bit?
So POS is more efficient than POW, meaning higher security and less costs for the network to provide the security. This leaves room to take the tx fees and either pay dividends or use them to grow the network (pay amazon to accept your tokens or other marketing efforts). You can cover marketing expenses by diluting shareholders = issue new shares (bitcoin issues 25 new coins / 10 minutes and dilutes shareholders by 10% per year this way). Now you can first dilute shareholders to pay for marketing which hurts those the most that have the biggest stake (in absolute terms). In absolute terms those that have the most also get the highest dividends when later marketing is not necessary any more because everyone understands how to use crypto currencies and sees the benefits etc...   

*If the "Bitcoin is a company" analogy applies it can't be that wrong for Bitcoin (and any other crypto service) what has evolved over decades for brick and mortar companies (the above; in the brick and mortar world: In reality companies only pay dividends when they think that they can not invest the revenue anymore profitably and can't grow anymore (e.g. coka cola))

Offline onceuponatime

Re: CPOS (cooperative proof of stake) discussion thread
« Reply #11 on: May 25, 2014, 08:22:16 PM »
You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.

Yep...

I'm sorry, I'm a little slow today. Couldn't catch the meaning here. Would you kindly extrapolate a bit?
So POS is more efficient than POW, meaning higher security and less costs for the network to provide the security. This leaves room to take the tx fees and either pay dividends or use them to grow the network (pay amazon to accept your tokens or other marketing efforts). You can cover marketing expenses by diluting shareholders = issue new shares (bitcoin issues 25 new coins / 10 minutes and dilutes shareholders by 10% per year this way). Now you can first dilute shareholders to pay for marketing which hurts those the most that have the biggest stake (in absolute terms). In absolute terms those that have the most also get the highest dividends when later marketing is not necessary any more because everyone understands how to use crypto currencies and sees the benefits etc...   

*If the "Bitcoin is a company" analogy applies it can't be that wrong for Bitcoin (and any other crypto service) what has evolved over decades for brick and mortar companies (the above; in the brick and mortar world: In reality companies only pay dividends when they think that they can not invest the revenue anymore profitably and can't grow anymore (e.g. coka cola))

Got it. Thank you.

Offline santaclause102

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Re: CPOS (cooperative proof of stake) discussion thread
« Reply #12 on: May 25, 2014, 08:25:03 PM »
You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.

Yep...

I'm sorry, I'm a little slow today. Couldn't catch the meaning here. Would you kindly extrapolate a bit?
So POS is more efficient than POW, meaning higher security and less costs for the network to provide the security. This leaves room to take the tx fees and either pay dividends or use them to grow the network (pay amazon to accept your tokens or other marketing efforts). You can cover marketing expenses by diluting shareholders = issue new shares (bitcoin issues 25 new coins / 10 minutes and dilutes shareholders by 10% per year this way). Now you can first dilute shareholders to pay for marketing which hurts those the most that have the biggest stake (in absolute terms). In absolute terms those that have the most also get the highest dividends when later marketing is not necessary any more because everyone understands how to use crypto currencies and sees the benefits etc...   

*If the "Bitcoin is a company" analogy applies it can't be that wrong for Bitcoin (and any other crypto service) what has evolved over decades for brick and mortar companies (the above; in the brick and mortar world: In reality companies only pay dividends when they think that they can not invest the revenue anymore profitably and can't grow anymore (e.g. coka cola))

Got it. Thank you.
You're welcome.

Offline Troglodactyl

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Re: CPOS (cooperative proof of stake) discussion thread
« Reply #13 on: May 25, 2014, 08:48:21 PM »
The problem with this is that if you're reinvesting profits funneled through a small number of individuals, it isn't exactly a DAC anymore, and you start having more of the problems you have with traditional centralized structures.  Funneling the profits through the delegates who are elected by stakeholders I think mostly solves this, but I don't see a need to artificially fix the percentage of transaction fees available to them for profit and reinvestment in the success of the network.

Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.

Offline santaclause102

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Re: CPOS (cooperative proof of stake) discussion thread
« Reply #14 on: May 25, 2014, 09:02:15 PM »
The problem with this is that if you're reinvesting profits funneled through a small number of individuals, it isn't exactly a DAC anymore, and you start having more of the problems you have with traditional centralized structures. Funneling the profits through the delegates who are elected by stakeholders I think mostly solves this, but I don't see a need to artificially fix the percentage of transaction fees available to them for profit and reinvestment in the success of the network.

Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.

Quote
Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.
This might be good for political delegates (potentially not trustworthy?) and not sustainable for those delegates that only do it for profit.

Quote
The problem with this is that if you're reinvesting profits funneled through a small number of individuals, it isn't exactly a DAC anymore, and you start having more of the problems you have with traditional centralized structures.
Companies like DACs can hire other companies and outsource something that can not be done inhouse. This is the case anyway because there will de facto always be a developer (team) that maintains the DAC and thus performs such an outside service to it.

Quote
Funneling the profits through the delegates who are elected by stakeholders I think mostly solves this
Of course delegates have to be paid sufficiently. But that was not the point. The point was whether is makes sense to invest the companies revenues and / or shares into marketing so the price increase because of adoption increase can (by far) make good the expenses. 
Or do you mean that the delegates should decide how to invest the money? That could make a lot of sense. It would be like the CEOs of a company deciding what to do with the money from revenue and whether it makes sense to issue new shares and then reinvest it or pay dividends.
« Last Edit: May 25, 2014, 09:07:50 PM by delulo »

 

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