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Offline coolspeed

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Why inflation?
« on: August 03, 2014, 07:03:05 AM »

The inflation model of the DotP2P DAC has aroused antipathy in the Chinese community. And I found that many old BTS participants also can't answer to "why inflation".

If you have pressed other where through out other posts in this forum, do you mind answer directly to the question?

The main accusation of this inflation model is, Big Mans can always stay to be delegates and win all the new minted coins / shares. And it's a positive feedback loop which can destroy whole economic balance.

I've always been a Bitshares missionary in the Chinese community. But when I was asked this question, I could't give an answer.

What is your answer to this?
« Last Edit: August 03, 2014, 07:11:40 AM by coolspeed »
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Offline Frodo

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Re: Why inflation?
« Reply #1 on: August 03, 2014, 07:55:41 AM »
I think this post explains in simple terms why it is a good idea.

https://bitsharestalk.org/index.php?topic=6512.msg87206#msg87206

There is also one good post from BM that I can't find right now, that makes the point that the DNS DAC needs a lot of infrastructure build. More than X. Hence the inflationary model. At least that's what I understood.

Offline tonyk

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Re: Why inflation?
« Reply #2 on: August 03, 2014, 02:09:32 PM »
The above linked post from toast +
this one from BM, was what worked for me getting it.

https://bitsharestalk.org/index.php?topic=6512.msg87351#msg87351

Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline toast

Re: Why inflation?
« Reply #3 on: August 03, 2014, 05:13:55 PM »
Ask them if they'd prefer a 30% preallocation for devs with no control over how it is spent. This DAC isn't getting bootstrapped from domain sales, that's for sure.
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Offline luckybit

Re: Why inflation?
« Reply #4 on: August 04, 2014, 08:53:39 AM »
The inflation model of the DotP2P DAC has aroused antipathy in the Chinese community. And I found that many old BTS participants also can't answer to "why inflation".

If you have pressed other where through out other posts in this forum, do you mind answer directly to the question?

The main accusation of this inflation model is, Big Mans can always stay to be delegates and win all the new minted coins / shares. And it's a positive feedback loop which can destroy whole economic balance.

I've always been a Bitshares missionary in the Chinese community. But when I was asked this question, I could't give an answer.

What is your answer to this?

Not just the Chinese community is against this idea. A lot in the American community are against it too and have voiced their opinions.

The only reasoning I have for why inflation is that the developers didn't have the foresight to budget in the cost of development into the DAC by giving the developers a percentage up front like what Mastercoin did.

The problem with inflation is instead of a fixed amount of tokens set aside for development, there is now an unpredictable indefinite element to the process. Clarity and precision are preferred in matters such as these and inflation doesn't give a good impression in that regard.

Ask them if they'd prefer a 30% preallocation for devs with no control over how it is spent. This DAC isn't getting bootstrapped from domain sales, that's for sure.

I can't speak for the Chinese community or anyone else really but I would prefer that. I'd rather developers get their fair share up front.

The problem with going with inflation is it validates the concept and psychology of it.  Why validate a concept which is inherently bad? Companies use dilution because they went over budget and it's not usually something investors see as a good thing. Investors don't invest to have their shares diluted after the fact. If it happens as a pre-allocation then there is not the same psychology of being taxed, or diluted, or being messed with by an invisible hand reaching into the pockets of investors after the fact.

I prefer to do my calculations prior to investing and inflation, dilutions and other things such as this make it a lot more complicated.
« Last Edit: August 04, 2014, 08:57:18 AM by luckybit »
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Offline luckybit

Re: Why inflation?
« Reply #5 on: August 04, 2014, 09:03:27 AM »
I think this post explains in simple terms why it is a good idea.

https://bitsharestalk.org/index.php?topic=6512.msg87206#msg87206

There is also one good post from BM that I can't find right now, that makes the point that the DNS DAC needs a lot of infrastructure build. More than X. Hence the inflationary model. At least that's what I understood.

Of course developers will all say it's a good idea. Maybe right now it seems like a good idea because we still need a lot of development but what happens when this becomes the norm and we are stuck with share dilution?

I just don't like the psychology of this. I want developers to get paid but the budget or slice of the pie set aside for developers should be set at genesis. Just as Satoshi Nakamoto set the cap on Bitcoin at 21 million.

Inflation is a tax. It pays developers at the expense of investors. When it's done pre-allocated and investors buy in then it's safe to say the market already accounted for all this inflation. When inflation happens continuously the price fluctuates creating unnecessary volatility.

Investors who buy in early thinking their buying power will be going up might be shocked to find out that their buying power is going down. If we are going to have inflation without mining then what exactly did we gain as investors? Developers will say we gain security and other benefits which is fine and that is stuff developers can appreciate but the investors want ROI.
 
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Offline bytemaster

Re: Why inflation?
« Reply #6 on: August 04, 2014, 12:26:59 PM »
Think of it as an upfront allocation that is slowly paid out over time to the developers so that the developers cannot dump

think of it as an upfront application for the community retains the right to change developers rather than mean committed to oneself developers

There is a hardcoded limit just like bitcoin. 

Think of it as allocated to the developer and the developer decides to give it to a delegate. 

Think of the initial delicates as a development team. 

If investors invest according to the total share supply at the end of the day then there is no dilution for them. 

There is nothing unpredictable other than the fact that there might be less dilution then they expect

Think of it as investors have an opportunity to direct the development team by buying in And making a change this in turn gives the investors an opportunity to increase their ROI. 




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Offline xeroc

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Re: Why inflation?
« Reply #7 on: August 04, 2014, 01:02:28 PM »

Think of the initial delicates as a development team. 
nice one ;)
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Offline Troglodactyl

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Re: Why inflation?
« Reply #8 on: August 04, 2014, 01:22:32 PM »
It seems like a lot of people missed the fact that there's a hard cap on this, possibly because some of those arguing for the gradual release of stake through delegates were also arguing against a cap.  The cap is why I stopped arguing against this, because with the cap it is nothing more than the developers delegating the distribution of their stake to the protocol, rather than true inflation.

The strength is that it allows voting on diverse delegates to receive funds for growth without relying on any bottlenecks, and could allow replacing developers.  The weakness is that delegates offering payment for votes or other "pork" spending for some stakeholders could loot the development fund if they get enough support.  I think a significant amount will still go to the intended purposes, so with the amount at risk capped I can accept that.

Offline BldSwtTrs

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Re: Why inflation?
« Reply #9 on: August 04, 2014, 01:31:20 PM »
So shareholders will vote for delegates who will decide on how to spend the money?

Lol, I see where it's heading.

Offline bytemaster

Re: Why inflation?
« Reply #10 on: August 04, 2014, 01:35:53 PM »
So shareholders will vote for delegates who will decide on how to spend the money?

Lol, I see where it's heading.

Like most crypto projects, this is an experiment.   If the shareholders of PTS/AGS are smart it will work out well and they will be awarded this privilege in future DACs, if they shareholders are stupid they will vote for PORK and Kickbacks and  future systems will know they cannot trust the shareholders to vote on anything important. 


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Offline Empirical1

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Re: Why inflation?
« Reply #11 on: August 04, 2014, 05:30:55 PM »
The inflation model of the DotP2P DAC has aroused antipathy in the Chinese community. And I found that many old BTS participants also can't answer to "why inflation".

The main accusation of this inflation model is, Big Mans can always stay to be delegates and win all the new minted coins / shares. And it's a positive feedback loop which can destroy whole economic balance.


Yes I feel this is a concern too. From BTSX we can see that in the early months of the DAC, overall shareholder participation will be low and the developer stake should be able to dictate the delegates. Which is a good thing in BTSX but given the huge year 1 equity release, this does seem like a potential recipe for the model you describe in the Namespaces DAC.

A better model may probably be a much lower year 1 equity release, with a pause for the first few months while average shareholders made their way into the voting pool.


Online Shentist

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Re: Why inflation?
« Reply #12 on: August 04, 2014, 05:51:11 PM »
Think of it as an upfront allocation that is slowly paid out over time to the developers so that the developers cannot dump

think of it as an upfront application for the community retains the right to change developers rather than mean committed to oneself developers

There is a hardcoded limit just like bitcoin. 

Think of it as allocated to the developer and the developer decides to give it to a delegate. 

Think of the initial delicates as a development team. 

If investors invest according to the total share supply at the end of the day then there is no dilution for them. 

There is nothing unpredictable other than the fact that there might be less dilution then they expect

Think of it as investors have an opportunity to direct the development team by buying in And making a change this in turn gives the investors an opportunity to increase their ROI. 


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i like your thinking and it would be much better if it would be communicated like this. More people would understand this. Problem is and was always the same. Before the community has been asked of their opionen of allocation and then it is a total different model. No offense here, but the communication was again poorly and should addressed better in the future. You want a successful chain from the start, then you need the majority of "believers" behind your project.

Offline CLains

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Re: Why inflation?
« Reply #13 on: August 04, 2014, 09:15:04 PM »
If voters are voting intelligently on behalf of the DAC then it will profit immensely from inflation. This is obvious, DAC-staff will get nothing if they launch "fairly" due to the tragedy of the commons problem. A DAC with no one working for it will die a quick death. It will have no developers, no marketers, etc. Inflation with spending authorized by vote IS a solution to the tragedy, if it works in practice or not is impossible to tell yet.

Note that IF it does not work, BitShares will have to compete in the market-place on the same terms as everyone else. IF it works, however, we will be miles ahead of the competition because we have solved a problem they have not (how to solve tragedy of the commons in a decentralized way).

This situation is analogous to our aspirations and hope to establish a decentralized market-peg mechanism. IF it does not work, then BitShares will have to compete in the market-place on the same terms as everyone else, establishing trusted price feeds for bitUSD etc. IF it works, however, we will be miles ahead of the competition because we have solved a problem they have not (how to do trustless, decentralized market-pegging).

These are asymmetrical scenarios. We must TEST and EXPERIMENT.

Offline CLains

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Re: Why inflation?
« Reply #14 on: August 04, 2014, 09:28:21 PM »
Given that a DAC is a sort of organism..

Deflation-centric views center on conserving energy and trying to avoid spending. This refers to the internal dynamic of the DAC as an idealized, perfect balance sheet.

However DACs also have external conditions that determine its growth and death, such as competing DACs and core development. These are radically outside the scope of the idealized balance sheet.

Unless the DAC can dynamically spend resources to address such issues, it will not last in the marketplace.

/Progress on Metaphor 3.0

 

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