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Offline maqifrnswa

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There is a weird game theory thing happening with delegate payrates, by preventing delegates from raising rates you risk damaging network coverage.

Current Rules:
1) You are allowed to lower, but not increase fees
2) Once elected a delegate, you remain one until votes decrease to eliminate you.

Market forces:
1) BTSX price and BTC are volatile, as is daily fees earned
2) there are fixed expenses (for the most part) for running a node/delegate
3) People are bidding on fees, lowest bids should, in theory win.

Outcome:
1) Delegates bid such that they make a profit
2a) If BTSX increases in value, they can decrease to stay competitive in the market
2b) If BTSX decreases in value, there is no ability to increase fees to stay competitive. The delegate will turn off their machine since income is less than cost. Voting response is slow. Network yield is hurt.

I currently am only running 1 delegate, at 15%, and am providing services to the community (maintaining an ubuntu PPA, bug reporting/testing/validation). Others are running 5 nodes at 100%. That's fine, I don't mind only running one delegate since I believe in decentralization - but now that BTSX is slipping I see I'm stuck with the choice of losing money or hurting the system. I'm going to keep it running, but others in my situation will hurt the system.

Could there be a mechanism by which delegates increase their fee? perhaps they declare a fee change and have to wait x number of days before it is implemented so voters can vote them out if they think it is unfair?
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Offline bdnoble

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I never really understood why increasing fees was not allowed. That's why I chose to start with 100% because of the risk of not being able to increase it. I plan to lower my rate as the market dictates. I should be able to increase it for the same reason. And in either case if someone doesn't like my rate/service then they can vote me out.
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Offline Riverhead


The way BM explained it another thread was that your pay rate was part of your campaign platform and making it so you could reduce your income but not raise it would remove at least one thing people needed to trust in their delegates.  He also mentioned that if you want to raise your fee just create another delegate and campaign to have the votes switched to that one.


I'm not saying I agree or disagree; I haven't given this aspect a lot of thought because my delegate is really cheap for me to run and I'm happy to do my bit to secure the network even at a loss.  This is just what was imparted to me in another thread.

Offline maqifrnswa

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The way BM explained it another thread was that your pay rate was part of your campaign platform and making it so you could reduce your income but not raise it would remove at least one thing people needed to trust in their delegates.  He also mentioned that if you want to raise your fee just create another delegate and campaign to have the votes switched to that one.


I'm not saying I agree or disagree; I haven't given this aspect a lot of thought because my delegate is really cheap for me to run and I'm happy to do my bit to secure the network even at a loss.  This is just what was imparted to me in another thread.

That's what I assumed as well. But that thought process is what the OP is about since it leaves the network vulnerable to delegates bailing and hurting the network. Yes, it is temporary, but it does create a market incentive for delegates to intentionally hurt the network. That seems unusual.

The best solution is typically a transparent market solution, so allowing delegates to control their pay rate up and down is a market solution, and giving them a 1 week delay between announcement and implementation will allow for a transparent solution that the market can accept or reject.
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Offline Riverhead

Outcome 2b is not one I had considered and is something that needs to be discussed.  I'm a bit disappointed in myself for not considering that outcome since I have about 18 Mh worth of Scrypt mining gear gathering dust for this exact reason.

I'm also curious how diligent people will be in monitoring network health and delegate reliability once the delegates get so much support that unseating one becomes difficult.

Unrelated: When I post I tend to get a lot of white space that I have to modify my comment to remove.  That happen to anyone else?
« Last Edit: July 30, 2014, 09:17:38 PM by Riverhead »

Offline jshow5555

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I think what you guys forget is that BTSX is deflationary and it will always increase in value.

Offline Riverhead


I think what you guys forget is that BTSX is deflationary and it will always increase in value.


Like LTC?  :-\

Offline biophil

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I think what you guys forget is that BTSX is deflationary and it will always increase in value.

Nothing "will always increase in value." It is our desperate hope that it will always increase in value, but it will only do so if demand is constant or increasing.

The OP makes a good point: even a relatively short-term decrease in value (down 25% for a month?) could put quite a few delegates in the awkward position of needing to create new accounts and get a large portion of voters to switch votes. Doesn't sound like a great situation.

Offline jshow5555

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Demand is forbidden word... there is only one thing and it is called supply!


Demand is forbidden word... there is only one thing and it is called supply!

Supply creates its own demand!

Pretty much all significant discoveries in Economics were made before the start of the 20th century!

The economist did not have much to do and to justify its own existence created a ton of wrong theories!

Demand side economics is a pile of BS!


« Last Edit: July 30, 2014, 09:31:49 PM by jshow5555 »

Offline ag

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It's kind of strange that a delegate can change it's pay rate automatically, arbitrarily. but I agree with OP they should be able to increase. If you make adjustment slow it should be fine. the actual pay could be a moving average of it's rate or just make it so the rate can only adjust by a fixed amount per day.

Offline luckybit

There is a weird game theory thing happening with delegate payrates, by preventing delegates from raising rates you risk damaging network coverage.

Current Rules:
1) You are allowed to lower, but not increase fees
2) Once elected a delegate, you remain one until votes decrease to eliminate you.

Market forces:
1) BTSX price and BTC are volatile, as is daily fees earned
2) there are fixed expenses (for the most part) for running a node/delegate
3) People are bidding on fees, lowest bids should, in theory win.

Outcome:
1) Delegates bid such that they make a profit
2a) If BTSX increases in value, they can decrease to stay competitive in the market
2b) If BTSX decreases in value, there is no ability to increase fees to stay competitive. The delegate will turn off their machine since income is less than cost. Voting response is slow. Network yield is hurt.

I currently am only running 1 delegate, at 15%, and am providing services to the community (maintaining an ubuntu PPA, bug reporting/testing/validation). Others are running 5 nodes at 100%. That's fine, I don't mind only running one delegate since I believe in decentralization - but now that BTSX is slipping I see I'm stuck with the choice of losing money or hurting the system. I'm going to keep it running, but others in my situation will hurt the system.

Could there be a mechanism by which delegates increase their fee? perhaps they declare a fee change and have to wait x number of days before it is implemented so voters can vote them out if they think it is unfair?

I'm not running a delegate because I also saw it as a race to the bottom scenario. If the fees would adjust so that each delegate were at least guaranteed to be paid above the cost of operating then it would make sense.

If you can afford to operate a delegate at a loss then more power to you.

The way BM explained it another thread was that your pay rate was part of your campaign platform and making it so you could reduce your income but not raise it would remove at least one thing people needed to trust in their delegates.  He also mentioned that if you want to raise your fee just create another delegate and campaign to have the votes switched to that one.


I'm not saying I agree or disagree; I haven't given this aspect a lot of thought because my delegate is really cheap for me to run and I'm happy to do my bit to secure the network even at a loss.  This is just what was imparted to me in another thread.

That's what I assumed as well. But that thought process is what the OP is about since it leaves the network vulnerable to delegates bailing and hurting the network. Yes, it is temporary, but it does create a market incentive for delegates to intentionally hurt the network. That seems unusual.

The best solution is typically a transparent market solution, so allowing delegates to control their pay rate up and down is a market solution, and giving them a 1 week delay between announcement and implementation will allow for a transparent solution that the market can accept or reject.

If we had a functioning BitUSD it would be very easy to set a minimum on delegate fees. The minimum should be at or slightly above the expected cost of operating a delegate. I would say for guaranteed uptime a delegate needs to earn at least $10 monthly.
« Last Edit: July 30, 2014, 10:02:24 PM by luckybit »
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Offline Riverhead

If we had a functioning BitUSD it would be very easy to set a minimum on delegate fees. The minimum should be at or slightly above the expected cost of operating a delegate. I would say for guaranteed uptime a delegate needs to earn at least $10 monthly.


Yup, that's about what it's costing me.

Offline Troglodactyl

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Alternately, delegates could use the official delegate pay rate only as a guaranteed maximum to reduce trust required by the voters, and could then manually destroy the current difference between that rate and their actual desired pay rate.

Should there be a hardcoded burn address, and can we choose to do publicly visible transactions yet?

Offline GaltReport

ah, I did not know you couldn't increase your fee!!  Should have read the fine print.  :(

Oh well, I didn't do it to earn any money but figured I could always increase it to cover costs.  I agree that it would be good  to have someway to do it.  Maybe allow 1 change every quarter or something like that.

Offline Riverhead


Here's another perspective.  The number of delegates are currently fixed at 101.  So as the transaction volume ramps up the delegates are only going to make more and more money.  It's not like the system requirements are going to scale at the same rate as transaction volumes.  If the transaction fee is controlled by the delegates then it's just up to the delegates to come up with some balance.  And really once BTSX are worth $1/ea or more than we'll be fine even at 95% burn rate. If BTSX doesn't get higher than that then we're all sort of out of luck anyway :) .

The real control we have to worry about is transaction fee.  Naturally if BTSX goes to $100 no one will want to pay 0.1BTSX so a balance will have to be struck.  Dynamic pay rates is just one lever, the delegates have others.

 

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