Author Topic: Proposed Future DAC Delegate Pay Model  (Read 24743 times)

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Offline CLains

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Many have expressed the opinion that dilution should be avoided and that is the preferred solution.  It is always better to fund growth from profits rather than via dilution if you have enough profits to grow fast enough.

I am going to contend that dilution and spending from profits are the same thing.

1) Lets suppose that BTSX takes off and delegates are earning $10,000 per day
2) Lets suppose that the cost for running a node is $100 per day.

Under the no dilution argument $9900 per day should be paid to the shareholders rather than left to the discretion of the delegates because this will maximize shareholder value "today".   Spending this $9900 is diluting the shareholders by denying them a potential buyback. 

It all comes down to something fundamental that this analogy will explain:

If you are starting a road construction company and on day one you have enough money to hire a bunch of people with shovels then you can build 1 mile per day and earn $100.  It will require 4 years of operation to save enough to backhoes and bulldozers and once you have the backhoes and bulldozers you can build 100 miles per day and earn $20,000 per day. 

If the company had issued shares earlier to buy the bulldozers and backhoes in year 1 then the profits of the company would be significantly higher for the next 3 years. 

Companies that have a "no dilution clause" in the shareholders agreement cannot attract new capital to grow and thus the new capital flows to competitors which see the successful business model of the road building company with shovels and puts their money into a competitor.

So you can never stop dilution because if you don't dilute your own shares to raise capital the market will dilute your market share with competitors who issued shares in their own companies that are now competing with your company.

Take Bitcoin for example:  it is unable to fund more than a small team of developers paid for by DONATIONS which in turn centralize development decisions in the hands of those paying the bills.   In order to grow people have to build companies AROUND bitcoin but gain nothing from the value this adds to Bitcoin.   Thus as fast as the Bitcoin ecosystem appears to be growing it is very slow compared to what could be done if the money spent on mining were spent on providing payment infrastructure and adoption incentives.

Do you really think that BTSX can fund 10 years of development on a couple million dollars?   Here is what BTSX needs to grow to the Multi-Billion dollar network we all want to see:

1) A web development team of 10 people producing and maintain a web wallet.
2) A backend development team of 10 c++ developers producing countless tests, enhancing performance, and improving security.
3) A mobile app development team of 10 people focusing only on maximizing ease of use on mobile apps.
4) A legal team working around the clock to lay the ground work for companies like Overstock and help guide the development team
5) A massive referral network / marketing campaign similar to how PayPal got bootstrapped.
6) A dozen exchanges / gateways facilitating bringing money into/out of BTSX while following all regulatory issues. 
       - each of these exchanges/gateways needs a team of people to integrate their systems with BTSX

Total cost of maintaining that kind of infrastructure?  At least $10 million per year for 10 years or $100 million dollars.

Do you really think a project can raise enough funding prior to having a proven / working base system and expect that funding to last for 10 years?
Do you really want a foundation to be sitting on 10 years worth of funding in advance?
Do you really want it to be forever centralized in the original developers / foundation with the initial funding?
Do you really want developers to be developing at a slower pace despite having funds today so they don't run out of funds in the future?

These are all the issues people must grapple with.   

I am working on a plan to keep BTSX up to date with the best possible software for 10+ years without adding dilution to BTSX.   But for new systems AGS/PTS holders benefit greatly from a larger initial allocation + dilution under their control rather than a smaller initial allocation with no control over how the 80% dilution they could face would be allocated.

 +5% +5% +5%

Infinitely curious about dat plan now :D

Offline emski

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I just want to add, as BM himself said, if we do not include it in the toolkit the competitors will.

So, what is the reason to not include 2 kind of delegates (i.e. delegates and workers) in the toolkit, again?

"Business offer" is essentially a worker. It could be anything - Marketing, Infrastructure Builder, CEO, Strategic Deal, Partnership.
Delegates still only sign blocks and support the network. "Workers" have no responsibility other than doing their job.
I don't see a point where you should merge these 2 roles.

Offline tonyk

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I just want to add, as BM himself said, if we do not include it in the toolkit the competitors will.

So, what is the reason to not include 2 kind of delegates (i.e. delegates and workers) in the toolkit, again?
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline emski

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I have an alternative proposal:

Define a Business offer as follows:
1 Pay a fee in order to register "Business Offer". The amount of the fee is X * <requested income per block>
2 Delegates publish approved Business Offer slate which can be empty. When you approve a delegate your balance automatically approves the delegate's Business Offer slate.
3 "Business Offers" collected 50% + 1 of all voting balances are granted <requested income per block> each block.

Assumptions: We can determine the amount of all voting balances.

Side Feature Proposals/Requests: "Voting Transaction" defined as follows:
A transaction that changes a vote for a balance. It needs to be signed by the private key corresponding to the address holding the balance OR an "Active Voting Key".
"Active Voting Key" being a key assigned to an address that can sign only "Voting Transaction" but not spending transactions. (Similar to account active key)
This will resolve the issue with cold storage voting. Furthermore it should allow voting for BTSX held in collateral (we want that right? I think all BTSX balance should vote and none of the bitassets should vote).

Offline donkeypong

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I have spent the last couple of days following this thread and trying to understand the proposal better. It didn't taste good at first, but the more I've understood of this, I think I like it. Set a maximum dilution rate and the number of business delegates that this community can agree on. Start modest and be willing to expand those later. Then if delegates are essentially bringing in more business for us, that will more than justify a bit of dilution, since everyone ultimately profits. Those things don't worry me, because I think we'll get it right. And if we don't, there will be more fine-tuning until the tweaks hit the proper balance.

We're watching evolution take place here in fast motion; it's like watching a time-lapse video of natural selection in action.

The only thing that still bothers me about this is that we must take care not to make the voters' job too difficult. It has to be simple. And yet there needs to be some assurance that a cadre of delegates cannot easily take over the system by manipulating those simple voters.

I think this proposal will make BitShares more flexible to allow for growth, while funding development, which is essential. If we're greedy on the Social Consensus now, then someone will fork the shit out of these while we're arguing about allocations, and they won't look back because they'll have all the investment they need (and we won't). I continue to be amazed by Bytemaster's acumen. Ultimately, this proposal solves issues that could come up 6-24 months from now. I'd much rather deal with them now.

Offline muse-umum

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Here are my suggestions:

1. To have two kinds of delegates.  The normal delegates like the ones we have in BTSX, and the delegates who are going to launch projects (dilute, the so called business delegates).

2. The pay fee per block for the normal ones can’t be more than 2*average.

3. Only after getting at least X% ( X= 50 or 30...) of all the votes should a business delegate be able to produce blocks.  He should burn Y * pay fee per block (Y = 100 or 300…..) to register.

4. The total number of all the active delegates is 101. The number of active business delegates can’t be more than Z (Z= 10 or 5…).

5. Set upper bound for the inflation. Suppose initial supply of Notes is 2 billion, 35% are allocated to PTS holders, 35% are allocated to AGS holders, which means 700 million for each.  Then the upper bound of Notes that all the delegates can get paid together is 5 billion, which means P/A holders eventually are allocated by at least 10% of all the supply (2 + 5 = 7 billion). Each year at most A% (A = 5, or 10) of 5 billion Notes can be produced by delegates.

I also have them posted on cob's music launch model thread.

Offline bitcoinerS

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I promised myself not to post in this thread!

Now, go spank yourself.  :P
>>> approve bitcoiners

Offline bitcoinerS

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You cannot know what percent of shares are "apathetic" or "available for voting" because shares held as bids/asks/collateral/cold storage may not be voting. 

Shares should be voting while sitting in open orders or as collateral. I do not see why they would not.
>>> approve bitcoiners

Offline Riverhead


You will never see 51% approval due to apathy, lost stake, etc.

Motivation to avoid downtime helps the entire network... delegates should be doing that anyway.

51% is a pipe dream. Look at the current state of things. We have about six thousand delegates waiting in the wings and only about 15% - 18% of the shares voting. I suppose technically that's 25% - 30% since nearly half the shares are unclaimed as of yet.

Offline amencon

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Sorry if I missed the explanation reading through the thread but how does the increased delegate pay (shares added through dilution) get allocated for the benefit of the DAC?

Let's say a DAC has been in existance for a couple years and shareholders decide some capital needs to be raised to develop a better web wallet (or whatever).  With this new proposal, would competing development individuals or companies all create delegates with a pay rate than they deem sufficient to compensate them for the work and compete to be voted in by shareholders?  Would that mean that every vendor "hired" by the DAC to do contract work would then need to introduce themselves as a delegate and "campaign" for a chance to be paid for the work they intend to do?

Thanks for any clarification.

Offline gamey

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Why are we trying combine a Board of Directors with normal employees?


Because this is primarily software development and this how software development is done.  You do things in stages and complexity is usually added in pieces.  We still have either late stage alpha or beta software, so adding levels of complexity is not really a good idea unless they are absolutely needed.
I speak for myself and only myself.

Offline Pheonike


Why are we trying combine a Board of Directors with normal employees? There is a reason why there is a separation. Delegates are the like someone said the IT department. Signing blocks are there primary job. If they want to be on the BoD then they should campaign separately and get paid independently for that work.

I think Delegates should just get paid on pure block performance with a flat fee per block. The shareholders can vote on how much that fee is. Then the only decision a delegate has to make is if he can afford to continue being a delegate. We should also put the lower third delegates(by votes) plus the 101 standbys on a rotating time or block limit. This will allow standbys a change to earn income to help pay for their resources. It also makes colluding a little harder. 

A Board members role to make sure all facets of the Bitshares eco-system are running smooth and find profitable ways to grow it. They are responsible for finding the best proposals and bringing them to shares holders to vote. They also responsible for overseeing those projects.  I'm not saying a delegate can't be a Board member, but board members shouldn't have to be delegates.

Offline Empirical1.1

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I even like having as little as 5 positions to focus on that can get access to a budget flow and be the accountable face of the DAC.

The 101 Delegates are like an IT role to me, while incredibly important it is separate and can't be followed all the time especially in multiple DAC's whereas the top 5 key people can.

I also still don't like inflation/dilution. I prefer setting aside 10% of the shares initially with a social consensus on how many will be released a year. (Like 25% of the remaining total a year).
So unless the business plan is flawed/there's a great opportunity/there's a great emergency, then there will be no need for inflation, only the distribution of shares that have been set aside in the business plan.

So you would say that only the top 5 delegates can receive more income than transaction fees.

If we were going to keep the existing system then yes, I would be happier if only the top 5 trusted delegates got more than transaction fees and allocated them as necessary. (They would be the most well known, trusted and it would be easier to track and hold 5 people's actions to account than 101.)

But I also don't mind if there ended up being up to 5 key separate positions, like some are suggesting, so Brian could campaign to be 'marketing director' & get access to the/a budget without running a delegate for example.

Offline theoretical

I propose 101 "technical delegates" as currently, plus up to 101 "business delegates"

This proposal was unexpectedly contentious.  The key words are up to -- I expect the number of business delegates at any one time to be very far below the limit.  I don't think there are anywhere near 101 organizations currently operating within the BitShares space whose models justify inflation.  I'm not sure that there will ever be anywhere near 101 organizations that we want to be funding directly from inflation.

The 101 number was intended to be more along the lines of a technical protocol-level limit.  Initially recipients of the inflation would likely be I3 and perhaps one to three other key partners.

But if we get a couple more solid partners, we don't want to be in a situation of "A quorum of shareholders agrees this fifth partner would really help us, but the code really can't support more than four, so to add them we have to kick somebody out, oh noes what do we do?"
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Offline bytemaster

I even like having as little as 5 positions to focus on that can get access to a budget flow and be the accountable face of the DAC.

The 101 Delegates are like an IT role to me, while incredibly important it is separate and can't be followed all the time especially in multiple DAC's whereas the top 5 key people can.

I also still don't like inflation/dilution. I prefer setting aside 10% of the shares initially with a social consensus on how many will be released a year. (Like 25% of the remaining total a year).
So unless the business plan is flawed/there's a great opportunity/there's a great emergency, then there will be no need for inflation, only the distribution of shares that have been set aside in the business plan.

So you would say that only the top 5 delegates can receive more income than transaction fees. 

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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 Empirical1.1

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I even like having as little as 5 positions to focus on that can get access to a budget flow and be the accountable face of the DAC.

The 101 Delegates are like an IT role to me, while incredibly important it is separate and can't be followed all the time especially in multiple DAC's whereas the top 5 key people can.

I also still don't like inflation/dilution. I prefer setting aside 10% of the shares initially with a social consensus on how many will be released a year. (Like 25% of the remaining total a year).
So unless the business plan is flawed/there's a great opportunity/there's a great emergency, then there will be no need for inflation, only the distribution of shares that have been set aside in the business plan.

Offline liondani

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to many changes* in a short period of time, I am afraid, don't create the necessary confidence ...
maybe I am wrong (I hope so)


* even if they are in the right direction

Offline gamey

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 +5% for separate business (sub)accounts.  I propose 101 "technical delegates" as currently, plus up to 101 "business delegates", each requires 51% approval.  Keep the design simple and conservative.

Having non-separate accounts as in the original proposal would mean the business delegates' funding is contingent on their ability to produce blocks, which means they should invest a substantial portion of that funding into making their block production infrastructure ironclad against failures ($10 million / year ~ $1000 per hour of downtime).  You'd basically force delegates to use a portion of the created inflation to pay IT costs that are not required for the network to function.


do we really need 101 delegate to take the inflation road? what about to split them 81 block producer 20 inflators? so we could increase pressure to the inflators. I don't see 101 delegates who will spend the shares for the future of the blockchain. Only some people will want to do it.

I'm not necessarily against the board of directors approach, but I also see no need to force it.  So in that regard the KISS principle kicks in  and I am completely fine with just leaving the delegates as is, and give them a way to point their inflation payment to an account.  The transparency etc will not go on so much at that level, but the actual people/services being funded by these accounts will have to provide transparency or have the delegates stop paying them.  The delegates will be responsive.  Perhaps the delegates can pay for a couple of independent auditors.

I speak for myself and only myself.

Offline Agent86

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Network Maintainers' (aka Delegate's) job is measurable, strictly defined, and can be audited. It can even be decentralised (Imagine each delegate split into X different subdelegates that need all approve the same block). Their job is network support and security.

You propose to merge these accountable/auditable strictly defined jobs with investment politics, dilution and subjective  "increase the value of DAC".
Here I disagree with you.
I am also of the opinion that delegates should be separate from workers.  I also feel strongly that dilution should require majority (50%+) approval of "active" shares. 

Gamey, I think your idea that merging this function into the role of delegate simplifies things is wrong and it will have the opposite effect.  It creates more complication and need for "brainpower" than keeping the roles separate.

discussion from a while back:
https://bitsharestalk.org/index.php?topic=5467.msg73251#msg73251

You operate under the assumption that people have spare time to learn the 101 delegates to begin with.  This has shown to be wrong.

We haven't really cracked keeping track of 101 delegates. 

A person spending their inflation in a wasted manner will be likely brought to light quite quickly. 

Having 2 lists of people keep track of etc just adds obvious complexity, but it might happen not be as novel and so it makes more sense to people.  So I agree if the board of directors is sufficiently small it could make it simpler for a user to keep track of, yet it is still another page on the GUI, another separate race, etc etc.  I understand it fits into pre-existing defined roles, but that doesn't mean it actually makes it all simpler.  Perhaps it does, but it definitely does not from the coding end and makes the codebase even more complex.

Also by making a smaller board of directors, you give any 1 person more power than spreading the power around 101 delegates. I'm not sure thats actually a good thing.

I'm not advocating starting another "list of 101 people."  With workers you just approve who you want and ignore the rest.  If they get over 50% approval they are in so the list can be as small as 0 or 1 (you don't have to vote for 101 people to maximize your influence).

You operate under the assumption that people have spare time to learn the 101 delegates to begin with.  This has shown to be wrong.

We haven't really cracked keeping track of 101 delegates.
I never agreed with having a fixed number of 101 delegates people must keep track of.  I think I have cracked this problem, I just haven't taken the time to write it up.  I support a dynamic number of delegates so there is no harm in only voting for a handful of delegates.
« Last Edit: September 29, 2014, 07:07:00 pm by Agent86 »

Offline arhag

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You will never see 51% approval due to apathy, lost stake, etc.

I am trying to understand your position. Do you have a philosophical objection to a proposal system ratified by shareholder vote? Or is it just that you think the added code complexity is not worth the development time for the benefits (if you believe there are any benefits) it provides?

Keep in mind, the proposal system is far more general than how much inflation trusted actors get to create and spend to improve the DAC. It allows shareholders to modify parameters that govern the DAC: imagine adjusting interest rate caps on BitAssets, or minimum collateral reserve requirements, or even the number of active delegates. It allows shareholders to decide when/if to upgrade features in the DAC that require a hard fork. Currently that is done by the core developers telling the delegates to upgrade and the delegates following orders. That is centralization. That is okay in these early stages, but I am trying to future-proof this design so we can eventually transition to more decentralization.

That said, even though I am still a huge supporter of delegate proposals ratified by shareholder vote, I realize that maybe it is not the right time to try to get an implementation of this proposal ready for DACs like Music, Vote, and DNS. I don't know how much development time it would take to implement and I don't think it is that important currently to take away precious time that can be spent on more important features and of course killing bugs and improving BitShares X. So further discussion about the proposal system is a hypothetical discussion about the potential benefits of a feature on my wishlist, but one I still really wish to have, time permitting.
« Last Edit: September 29, 2014, 07:05:20 pm by arhag »

Offline Shentist

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 +5% for separate business (sub)accounts.  I propose 101 "technical delegates" as currently, plus up to 101 "business delegates", each requires 51% approval.  Keep the design simple and conservative.

Having non-separate accounts as in the original proposal would mean the business delegates' funding is contingent on their ability to produce blocks, which means they should invest a substantial portion of that funding into making their block production infrastructure ironclad against failures ($10 million / year ~ $1000 per hour of downtime).  You'd basically force delegates to use a portion of the created inflation to pay IT costs that are not required for the network to function.


do we really need 101 delegate to take the inflation road? what about to split them 81 block producer 20 inflators? so we could increase pressure to the inflators. I don't see 101 delegates who will spend the shares for the future of the blockchain. Only some people will want to do it.

Offline gamey

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Network Maintainers' (aka Delegate's) job is measurable, strictly defined, and can be audited. It can even be decentralised (Imagine each delegate split into X different subdelegates that need all approve the same block). Their job is network support and security.

You propose to merge these accountable/auditable strictly defined jobs with investment politics, dilution and subjective  "increase the value of DAC".
Here I disagree with you.
I am also of the opinion that delegates should be separate from workers.  I also feel strongly that dilution should require majority (50%+) approval of "active" shares. 

Gamey, I think your idea that merging this function into the role of delegate simplifies things is wrong and it will have the opposite effect.  It creates more complication and need for "brainpower" than keeping the roles separate.

discussion from a while back:
https://bitsharestalk.org/index.php?topic=5467.msg73251#msg73251

You operate under the assumption that people have spare time to learn the 101 delegates to begin with.  This has shown to be wrong.

We haven't really cracked keeping track of 101 delegates. 

A person spending their inflation in a wasted manner will be likely brought to light quite quickly. 

Having 2 lists of people keep track of etc just adds obvious complexity, but it might happen not be as novel and so it makes more sense to people.  So I agree if the board of directors is sufficiently small it could make it simpler for a user to keep track of, yet it is still another page on the GUI, another separate race, etc etc.  I understand it fits into pre-existing defined roles, but that doesn't mean it actually makes it all simpler.  Perhaps it does, but it definitely does not from the coding end and makes the codebase even more complex.

Also by making a smaller board of directors, you give any 1 person more power than spreading the power around 101 delegates. I'm not sure thats actually a good thing.
I speak for myself and only myself.

Offline bytemaster


 +5% for separate business (sub)accounts.  I propose 101 "technical delegates" as currently, plus up to 101 "business delegates", each requires 51% approval.  Keep the design simple and conservative.

Having non-separate accounts as in the original proposal would mean the business delegates' funding is contingent on their ability to produce blocks, which means they should invest a substantial portion of that funding into making their block production infrastructure ironclad against failures ($10 million / year ~ $1000 per hour of downtime).  You'd basically force delegates to use a portion of the created inflation to pay IT costs that are not required for the network to function.

You will never see 51% approval due to apathy, lost stake, etc.

Motivation to avoid downtime helps the entire network... delegates should be doing that anyway.
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 theoretical


 +5% for separate business (sub)accounts.  I propose 101 "technical delegates" as currently, plus up to 101 "business delegates", each requires 51% approval.  Keep the design simple and conservative.

Having non-separate accounts as in the original proposal would mean the business delegates' funding is contingent on their ability to produce blocks, which means they should invest a substantial portion of that funding into making their block production infrastructure ironclad against failures ($10 million / year ~ $1000 per hour of downtime).  You'd basically force delegates to use a portion of the created inflation to pay IT costs that are not required for the network to function.
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Offline Shentist

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The direction is right!

But Bytemaster maybe you can explain it a little better with examples.

if i understand it correct i could create a delegate and burn 100.000 BTSX (for sake of any DAC). If i get elected i will "earn" 100.000 BTSX every block i sign?

Question:
1.
How long? As long as i am elected? Or could we vote for something like a campaign? Delegate A wants to be elected and raise 2.000.000 BTSX and burns 100.000 BTSX. After 2.000.000 BTSX are earned his delegate will automatically only take transaction fees. Or runs he all the years with 100.000 BTSX per signed Blocks?

2.
Problem is here (example of Music DAC) Founders holds 10% and via PTS allocation Invictus holds roughfly 9 % of the shares. We already see in BTSX here is not much voting from the stakeholders so in reality both partys will set the course of which delegates are elected and which not. Which this saying i would prefer something as a plan for the near future for the voting of their shares. The 2 biggest known stakeholders would make a official statement how they intent to vote in the next 1-3 years.

3.
To compare it with a company. We would vote for delution, but the new shares will not be allocated to the shareholders, but only to elected delegates. Why would i do this? No one guarantees that the delegate will spend the shares for the DAC and don't run with it. I would prefer that the delegate will post for what reason he need the money. The elected client will automatically posting every transaction they make public on the blockchain. With this feature we could audit them and can downvote for broken promises. For this reason the 28 hours are much to short and should be days and not hours. We need some form of communication from the delegate to the voters in the client. Maybe integration of the forum and every delegate should have a thread for his projects.

Offline Agent86

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Network Maintainers' (aka Delegate's) job is measurable, strictly defined, and can be audited. It can even be decentralised (Imagine each delegate split into X different subdelegates that need all approve the same block). Their job is network support and security.

You propose to merge these accountable/auditable strictly defined jobs with investment politics, dilution and subjective  "increase the value of DAC".
Here I disagree with you.
I am also of the opinion that delegates should be separate from workers.  I also feel strongly that dilution should require majority (50%+) approval of "active" shares. 

Gamey, I think your idea that merging this function into the role of delegate simplifies things is wrong and it will have the opposite effect.  It creates more complication and need for "brainpower" than keeping the roles separate.

discussion from a while back:
https://bitsharestalk.org/index.php?topic=5467.msg73251#msg73251

Offline bytemaster

I propose that the ratio be decided by the voters....

Looks good to me!

 Ability to "hire" entities is always good for a DAC. Imagine a future where a DAC hires another DAC ... :)

So that leaves us with just deciding on the required approval percentage.

51% ?
75% ?
Dilution based on approval ?

You cannot know what percent of shares are "apathetic" or "available for voting" because shares held as bids/asks/collateral/cold storage may not be voting.  Voter turnout may be low and an apathetic vote can be thought of as "consent" to the active voters. 

You can rank all contestants by their approval level to get a measure of "most approved" and "least approved"
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Offline emski

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I propose that the ratio be decided by the voters....

Looks good to me!

 Ability to "hire" entities is always good for a DAC. Imagine a future where a DAC hires another DAC ... :)

So that leaves us with just deciding on the required approval percentage.

51% ?
75% ?
Dilution based on approval ?

Offline gamey

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There is also the fact that a lot of the inflation payments will be publicly discussed.  So in that regard it is not likely to be a single IT guy which you guys seem to fear making decisions. 

If you want to make decisions about whom and what to pay, then put yourself out there, have them pay your firm and be transparent.   The inflation can be directed at someone else to make the decisions. 

If you dislike the decisions delegates are doing, then start a thread and start to discuss it.  If your points are strong then they will likely be accepted.

Please do not attack this by making the software and participation level required even more complicated. 

edit - being a victim of limited brainpower - the above commentary is made not fully understanding what the current model is.  Seems like you guys are going with a board, so nevermind.
« Last Edit: September 29, 2014, 06:13:57 pm by gamey »
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Offline blahblah7up

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and so the first DPOS CEOs are born?  :)

Offline bytemaster

I propose that the ratio be decided by the voters....

Looks good to me!

 Ability to "hire" entities is always good for a DAC. Imagine a future where a DAC hires another DAC ... :)

So that leaves us with just deciding on the required approval percentage.
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Offline emski

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I propose that the ratio be decided by the voters....

Looks good to me!

 Ability to "hire" entities is always good for a DAC. Imagine a future where a DAC hires another DAC ... :)

Offline bytemaster

Network Maintainers' (aka Delegate's) job is measurable, strictly defined, and can be audited. It can even be decentralised (Imagine each delegate split into X different subdelegates that need all approve the same block). Their job is network support and security.

You propose to merge these accountable/auditable strictly defined jobs with investment politics, dilution and subjective  "increase the value of DAC".
Here I disagree with you.

I don't do anything of the sort but for the sake of discussion lets simply make ONE change:

90 block signing positions (audit-able, etc, paid as percent of trx fees)
10 business policy positions (paid as proposed in their bid for the position)

Each of which requires approval of the shareholders....

Do you really think that the people in the business policy positions position couldn't also sign blocks or hire someone who could for them?

Now all you are debating is the voting threshold for the 2 different positions...
Now all we are debating is what the proper ratio is between the two types of users...

Logic prevails. I'm onboard with that provided the numbers above are further discussed.

I propose that the ratio be decided by the voters....
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Offline emski

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Network Maintainers' (aka Delegate's) job is measurable, strictly defined, and can be audited. It can even be decentralised (Imagine each delegate split into X different subdelegates that need all approve the same block). Their job is network support and security.

You propose to merge these accountable/auditable strictly defined jobs with investment politics, dilution and subjective  "increase the value of DAC".
Here I disagree with you.

I don't do anything of the sort but for the sake of discussion lets simply make ONE change:

90 block signing positions (audit-able, etc, paid as percent of trx fees)
10 business policy positions (paid as proposed in their bid for the position)

Each of which requires approval of the shareholders....

Do you really think that the people in the business policy positions position couldn't also sign blocks or hire someone who could for them?

Now all you are debating is the voting threshold for the 2 different positions...
Now all we are debating is what the proper ratio is between the two types of users...

Logic prevails. I'm onboard with that provided the numbers above are further discussed.

Offline bytemaster

Keep it simple.  You guys don't have a huge budget.  We are already victims of complexity.  Guy who like designing things come through and don't see the sky for the grass... or whatever that metaphor is..  (oh yea see forest for the trees!) 

We really don't need to make things more complicated.  The separation can always be applied in the future.  Keep it simple !  Keep the costs down required to implement ! Keep the complexity involved minimal to invite participation and adoption !

People are stupid.  That isn't an insult, thats just how it is.  Everyone has a limited amount of brain power and attention they are willing to give things.  Never overestimate that brain power.

We obviously need the DAC model with inflation.  We don't need another model where there are 2 elections to keep track of.  This will *not* help adoption.

+1
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Offline bytemaster

Network Maintainers' (aka Delegate's) job is measurable, strictly defined, and can be audited. It can even be decentralised (Imagine each delegate split into X different subdelegates that need all approve the same block). Their job is network support and security.

You propose to merge these accountable/auditable strictly defined jobs with investment politics, dilution and subjective  "increase the value of DAC".
Here I disagree with you.

I don't do anything of the sort but for the sake of discussion lets simply make ONE change:

90 block signing positions (audit-able, etc, paid as percent of trx fees)
10 business policy positions (paid as proposed in their bid for the position)

Each of which requires approval of the shareholders....

Do you really think that the people in the business policy positions position couldn't also sign blocks or hire someone who could for them?

Now all you are debating is the voting threshold for the 2 different positions...
Now all we are debating is what the proper ratio is between the two types of users...

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Offline gamey

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Keep it simple.  You guys don't have a huge budget.  We are already victims of complexity.  Guy who like designing things come through and don't see the sky for the grass... or whatever that metaphor is..  (oh yea see forest for the trees!) 

We really don't need to make things more complicated.  The separation can always be applied in the future.  Keep it simple !  Keep the costs down required to implement ! Keep the complexity involved minimal to invite participation and adoption !

People are stupid.  That isn't an insult, thats just how it is.  Everyone has a limited amount of brain power and attention they are willing to give things.  Never overestimate that brain power.

We obviously need the DAC model with inflation.  We don't need another model where there are 2 elections to keep track of.  This will *not* help adoption. 

I speak for myself and only myself.

Offline arhag

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The network administrator for the national ballerina society archive is also not likely voted into their position by approval voting of the society.  If they were however, it would seem reasonable to expect that they could make a competent decision on who should give the year's presentation.

What if we don't want the network administrator to decide who gives the presentation? What if we (the shareholders) want to decide who should give the presentation? But how do we do that? We need to vote on it. How do we vote on it? Well the network administrator can set up a server that allows us to use cryptography to vote on who should present. They cannot falsify the votes, they can only exclude votes. But since we want this particular decision to be done by majority voting because it is important to us, they cannot change the results of the election, they can only delay allowing us to find out what the verified result are. But we still do need network administrators we can trust to run the election system for us. We ultimately control who these people are with our votes, but we only trust them with the very limited responsibility of running the consensus machinery that allows us (the shareholders) to make the rest of the decisions or delegate them to qualified people who will make those decision on our behalf (these qualified decision makers might be the network administrators but they most likely will not be).
« Last Edit: September 30, 2014, 03:55:07 am by arhag »

Offline emski

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Network Maintainers' (aka Delegate's) job is measurable, strictly defined, and can be audited. It can even be decentralised (Imagine each delegate split into X different subdelegates that need all approve the same block). Their job is network support and security.

You propose to merge these accountable/auditable strictly defined jobs with investment politics, dilution and subjective  "increase the value of DAC".
Here I disagree with you.

Offline theoretical


I am on board with bytemaster's suggestion for future DAC's.

I would even go so far as to say we could even increase max delegate pay in BTSX without breaking the social contract, so long as the total delegate pay never exceeds total fees / burn.

But I am worried about arhag's objection [1] that delegates with support from a substantial minority of the network may be able to game the system and introduce a level of inflation that is neither justified by their activities nor approved by a majority.

How about having each balance vote for a desired overall inflation cap as well as a slate of delegates?  Then we can determine a "consensus inflation cap" as the point where 50% [2] of outstanding shares have approved that cap or some higher cap.  We can implement this by giving only e.g. 256 choices for the desired inflation cap, and keeping track of the number of votes for each choice.  Then you sum the table from highest inflation cap down, stopping when you've accumulated more than 50% of the total share supply -- the inflation cap at which that happens is the maximum desired inflation the shareholders are willing to tolerate.

If all delegates' requested funding can be provided within the inflation cap, then everything is OK.  Otherwise, we adjust the delegates' pay rates downward proportionally [3] until the effective inflation level is equal to the consensus level.  And prominently display some "WE ARE IN A BUDGET CRISIS" banner on everyone's client until the situation is resolved, which happens when:

- Some or all delegates reduce their requested funding levels so the inflation cap is no longer exceeded ("management cuts costs to avoid shareholders' wrath")
- Shareholders agree to more dilution by adjusting their inflation cap upwards ("shareholders approve management's request for greater funding")
- Shareholders vote out delegates with high funding requirements in favor of delegates with lower expenses ("shareholders fire management for blowing the budget")

The banner would fight voter apathy by serving as a call to action to all delegates and shareholders that now is a time to get involved in the debate and examine your votes, regardless of which of the above policy choices you support.

[1] https://bitsharestalk.org/index.php?topic=9452.msg122842#msg122842

[2] Instead of 50%, you could make this a parameter MAX_INFLATION_QUORUM and require e.g. 55%, 60% or 66.7% quorum to set the inflation cap.

[3] Other downward adjustment schemes are possible, where e.g. the pay of the delegates with the most recent raises is cut first, or there is some explicit prioritization of delegates.  These likely would be additional implementation complexity for unclear benefits.
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Offline bytemaster

I'm referring to how I think things are running now of course.  I don't know how many delegates are currently competent directors employing others managing the IT side of the operation.

Exactly, the current slate of delegates would simply campaign as IT guys with a small budget of 2 BTSX per block or less in pay.   
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Offline gamey

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The network administrator for the national ballerina society archive is also not likely voted into their position by approval voting of the society.  If they were however, it would seem reasonable to expect that they could make a competent decision on who should give the year's presentation.
I speak for myself and only myself.

Offline blahblah7up

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I'm referring to how I think things are running now of course.  I don't know how many delegates are currently competent directors employing others managing the IT side of the operation.

Offline blahblah7up

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I didn't know network specialists made for qualified directors either.

Offline bytemaster

You have it backwards.  Delegates will be directors that hire IT experts not IT experts managing a business.
« Last Edit: September 29, 2014, 05:42:46 pm by Stan »
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Offline blahblah7up

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You don't seem to be getting the reason why I want a separation of roles between delegates and other workers of the DAC. If some magic consensus technology meant delegates weren't necessary, that would be ideal. I would still want to have workers that are paid by the DAC to improve it. Delegates to me are only necessary to make the consensus technology work. In my opinion that should be their only role.

Let me put it another way. To me delegates are not the board of directors of the company. They are the machinery of the company that unfortunately needs a human element to it. In my proposed system, either there is no board of directors at all and the company is run by code that is modified in limited ways by shareholders directly with their votes, or alternatively shareholders could even appoint specific workers through the proposal system to act as a limited board of directors that get to direct some of the decisions of the DAC. Either way, the delegates should have a very limited role in my view. I don't want shareholders choosing delegates because of the promises they provide on how they will improve the DAC. The only promise I want the delegates to fulfill is to keep the DAC running and not collude to filter transactions or double spend. In my view, complicating their role adds new attack vectors for malicious actors to trick shareholders into voting for their delegates.

This is so fundamental.  Delegates will be network specialists by default.  But that does not in the least qualify them to be decision makers for the direction the DACs should take.  It is a question of competencies and qualifications...yes, they exist!  Does the network administrator for an online national ballet archive need to know which choreographer is the best to invite for this year's presentation?

Offline bytemaster

I really, really, really dislike politics of delegates and inflation.

You have already established that centralization with scale is inevitable, so that's useless to dislike. Voting could perhaps be replaced by prediction markets. Inflation seems required to solve tragedy of the commons, but perhaps some alternative is possible.

Yes... I just wanted to re-iterate for those who may read this and think I am a big fan of democracy or inflation and to know that I am *NOT INTERESTED* in harming coin holders or wealth redistribution. 
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Offline bytemaster

Quote
Dilution is a serious matter that should be voted on separately of delegate approval process.

Delegate selection is equally serious.

Here we agree!
What about the separation?

Assume things are separated:
1) Users now vote on budgets separately from delegates.
2) Users now have to consider every individual on the budgets.
3) Proposing items to be included in the budget becomes becomes a challenge.
4) Delegates will end up trading budget items (I'll approve your spending if you approve mine)
5) Users will be left to vote for the same or similar sets of budgets because they were all filtered by the same/similar sets of delegates.
6) Users now have to review every item on the budget (which could be in excess of 101 delegates).
7) Changes to the budget are very slow because it requires share holder approval again.

At the end of the day you add bureaucracy to the DAC.  If a delegate cannot be trusted to honor a his campaign budget then he should not be a delegate.  If he can be trusted to honor his budget then there is no need for the bureaucracy.   If you can have 101 individual budgets each 1% the size of the "master budget" you have far more flexibility. 

If and when a consensus model allows delegates to be removed from block production, then that is just one less job they would have to do and the network can continue to function.

I think the goal is to give each delegate control of a percentage of the budget proportional to how much the community trusts them.  Asking for direct democracy on proposed budgets is intractable.
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Offline CLains

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I really, really, really dislike politics of delegates and inflation.

You have already established that centralization with scale is inevitable, so that's useless to dislike. Voting could perhaps be replaced by prediction markets. Inflation seems required to solve tragedy of the commons, but perhaps some alternative is possible.

Offline emski

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Quote
Dilution is a serious matter that should be voted on separately of delegate approval process.

Delegate selection is equally serious.

Here we agree!
What about the separation?

Offline bytemaster

Quote
Dilution is a serious matter that should be voted on separately of delegate approval process.

Delegate selection is equally serious.

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Offline Frodo

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You gain nothing by separating the roles out other than increasing the number of people, costs, and complexity. 

I strongly disagree. I want to vote for delegates who I think are capable of keeping the network running, upgrade promptly as necessary, are spread throughout the globe to reduce risk, and who can be trusted to not collude to damage the network. And that is it! I don't want to now start considering other frivolous stuff like are they donating their money to a charity I like, or are they the best people to manage the funds for development, or any number of other things. Once we have delegates we can trust enough to keep the network running and the consensus of the blockchain working, we can then utilize the blockchain to vote for the BEST people to handle all the other important tasks that grow the value of the DAC.


This is exactly what I think. What BM said about increasing the amount of people involved by separating the roles is in my opinion absolutely wanted. Because in this case we can vote for delegates that give the DAC the highest possible security and vote for other individuals who are performing well at their tasks.

The only disadvantage I see is the increased complexity which can be handled by an approach similar to RDPOS. With this approach you select your trusted set of delegates but instead of paying them directly you give them the far easier task to select projects for funding.
« Last Edit: September 29, 2014, 04:27:09 pm by Frodo »

Offline arhag

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Quote
I don't want to now start considering other frivolous stuff like are they donating their money to a charity I like, or are they the best people to manage the funds for development, or any number of other things. Once we have delegates we can trust enough to keep the network running and the consensus of the blockchain working, we can then utilize the blockchain to vote for the BEST people to handle all the other important tasks that grow the value of the DAC.

So only vote for delegates that have no inflation to speak of?   Nothing prevents you and the entire network from doing this.  This leaves only a small handful of delegates that you must think harder about (or not even consider).

You don't seem to be getting the reason why I want a separation of roles between delegates and other workers of the DAC. If some magic consensus technology meant delegates weren't necessary, that would be ideal. I would still want to have workers that are paid by the DAC to improve it. Delegates to me are only necessary to make the consensus technology work. In my opinion that should be their only role.

Let me put it another way. To me delegates are not the board of directors of the company. They are the machinery of the company that unfortunately needs a human element to it. In my proposed system, either there is no board of directors at all and the company is run by code that is modified in limited ways by shareholders directly with their votes, or alternatively shareholders could even appoint specific workers through the proposal system to act as a limited board of directors that get to direct some of the decisions of the DAC. Either way, the delegates should have a very limited role in my view. I don't want shareholders choosing delegates because of the promises they provide on how they will improve the DAC. The only promise I want the delegates to fulfill is to keep the DAC running and not collude to filter transactions or double spend. In my view, complicating their role adds new attack vectors for malicious actors to trick shareholders into voting for their delegates.

Yes you could have a table... but how do shares vote on that table... how many line items go in that table.

The blockchain has some state defining important parameters that govern how the DAC operates. A proposal is a delta update to this state. From the perspective of the voter, the client helps them visualize the state before and after the proposal would become active. The proposal will either be activated or not (if majority disapprove it will be removed automatically, otherwise the delegates will eventually get rid of the failed proposal to make room). Shares only vote yea or nay on proposals which determine whether they become activated or not.

As for how many line items in the table. Is that really important? Make it variable amount with a sensible limit. The proposals are likely going to be relatively rare things and only need to be submitted by a delegate once into the blockchain. It is not like it is going to cause a lot of blockchain bloat (and the small cost of that transaction can be paid out of all of the delegates' income if approved by a majority of delegates or entirely by the submitting delegate if it is not approved).

« Last Edit: September 29, 2014, 04:35:24 pm by arhag »

Offline bytemaster

I really, really, really dislike politics of delegates and inflation.

With deflation there is nothing to argue over other than where delegates spend their income from fees.





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Offline emski

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Why do you want to burden the delegates with anything except block signing?
What you propose can be described to the blockchain the same way:
Send X of the fees to address Y until the total accumulated funds becomes greater than Z if this is approved by shareholders.

It is essentially the same as your proposal with the exception that the recipient is not a delegate.

95% of delegates would take no pay have have no burden beyond what they have today.

Anyone who wants some large amount of money to fund development, marketing, legal, etc should find that producing a block nothing to be concerned about and can easily hire someone to help them maintain their delegate node.

It is completely different story.
Remaining an active delegate in top101 approval voting system (or whatever future voting system is decided) is not necessarily enough to pass a vote for a dilution.
See current top101 rankings. 101th delegate has 5% approval. (... Ok bad example, people could vote more and so on...)

Dilution is a serious matter that should be voted on separately of delegate approval process.

Offline bytemaster

Quote
I don't want to now start considering other frivolous stuff like are they donating their money to a charity I like, or are they the best people to manage the funds for development, or any number of other things. Once we have delegates we can trust enough to keep the network running and the consensus of the blockchain working, we can then utilize the blockchain to vote for the BEST people to handle all the other important tasks that grow the value of the DAC.

So only vote for delegates that have no inflation to speak of?   Nothing prevents you and the entire network from doing this.  This leaves only a small handful of delegates that you must think harder about (or not even consider).

Yes you could have a table... but how do shares vote on that table... how many line items go in that table.   
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Offline arhag

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There are many proposals floating around about how things could be done... such as share holders voting on a limited set of proposals that are filtered by delegates.  But these proposals all have the issue of 'how do you describe them to the DAC'?    Ethereum like scripting?   A set of addresses to be paid upon approval? 

Oh cmon now. It's like you are not even trying anymore. I'm not asking for a Turing complete scripting language. Let's keep it really simple for now and then we can complicate as necessary in the future with hard forks (which by the way can poll shareholders for approval of these hard forks in advance through the proposal system!). So to start with, how about a table of accounts to pay and the rate (denominated in BitUSD) at which to pay them. You can still pay them in XTS to avoid buying up BitUSD on the exchange if that makes things simpler: just take the current price at the time of payment and multiply it with the amount you are supposed to pay them as listed in the proposal. If you cannot pay everyone without going over inflation caps do the following: first try to pay all the delegates their minimum amounts, and if you cannot reduce the pay equally until you meet the inflation cap; if you paid the delegates then you can pay the rest to the other workers; if you cannot pay the workers their full amounts, reduce their pay in proportion until you meet the inflation cap.


You gain nothing by separating the roles out other than increasing the number of people, costs, and complexity. 

I strongly disagree. I want to vote for delegates who I think are capable of keeping the network running, upgrade promptly as necessary, are spread throughout the globe to reduce risk, and who can be trusted to not collude to damage the network. And that is it! I don't want to now start considering other frivolous stuff like are they donating their money to a charity I like, or are they the best people to manage the funds for development, or any number of other things. Once we have delegates we can trust enough to keep the network running and the consensus of the blockchain working, we can then utilize the blockchain to vote for the BEST people to handle all the other important tasks that grow the value of the DAC.


Making it difficult to "increase your pay" by forcing election of a new delegate is the entire POINT and is no different than requiring a new proposal to be accepted by the shareholders in terms of complexity.

It is less elegant. I may want to still vote for a particular delegate (as in the person) but simply have them increase their inflation rate to provide funds to some third-party. The delegate inflation model requires that delegate to produce a new account, register it with a new fee, and get people to vote it up to the top 101 rank while at the same time voting his old delegate out. Then we need to trust the delegate to actually send that money to the third-party. If they don't, we now have to vote them out and replace them with another person.


« Last Edit: September 29, 2014, 04:04:34 pm by arhag »

Offline bytemaster

Why do you want to burden the delegates with anything except block signing?
What you propose can be described to the blockchain the same way:
Send X of the fees to address Y until the total accumulated funds becomes greater than Z if this is approved by shareholders.

It is essentially the same as your proposal with the exception that the recipient is not a delegate.

95% of delegates would take no pay have have no burden beyond what they have today.

Anyone who wants some large amount of money to fund development, marketing, legal, etc should find that producing a block nothing to be concerned about and can easily hire someone to help them maintain their delegate node.



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Offline emski

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Why do you want to burden the delegates with anything except block signing?
What you propose can be described to the blockchain the same way:
Send X of the fees to address Y until the total accumulated funds becomes greater than Z if this is approved by shareholders.

It is essentially the same as your proposal with the exception that the recipient is not a delegate.

Offline bytemaster

Quote
Shareholders (or delegates) vote on dilution "offers" by 3rd parties.

Giving the delegate "spending authority" up to some limit is an explicit form of trust.
Asking a delegate to ratify an arbitrary 3rd party proposal means all delegates are required to have the same level of "spending authority" which is not ratified.

There are many proposals floating around about how things could be done... such as share holders voting on a limited set of proposals that are filtered by delegates.  But these proposals all have the issue of 'how do you describe them to the DAC'?    Ethereum like scripting?   A set of addresses to be paid upon approval? 

You don't want "one-time offers" you want subscription, pay-as-you-go (review-as-you-go).   

Delegates are individually voted on and approved by the shareholders.  Anything they do is effectively "trusted" within the limits the shareholders placed on them (pay rate).   Every other proposal adds complexity and does nothing other than defend a technical job. 

You gain nothing by separating the roles out other than increasing the number of people, costs, and complexity. 

One thing I can see is a maximum pay based upon approval voting even if they are in the top 101.   Namely, someone with less than 10% approval is limited to some pay cap. 

Making it difficult to "increase your pay" by forcing election of a new delegate is the entire POINT and is no different than requiring a new proposal to be accepted by the shareholders in terms of complexity. 
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Offline Empirical1.1

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Do you really think that BTSX can fund 10 years of development on a couple million dollars?   Here is what BTSX needs to grow to the Multi-Billion dollar network we all want to see:

1) A web development team of 10 people producing and maintain a web wallet.
2) A backend development team of 10 c++ developers producing countless tests, enhancing performance, and improving security.
3) A mobile app development team of 10 people focusing only on maximizing ease of use on mobile apps.
4) A legal team working around the clock to lay the ground work for companies like Overstock and help guide the development team
5) A massive referral network / marketing campaign similar to how PayPal got bootstrapped.
6) A dozen exchanges / gateways facilitating bringing money into/out of BTSX while following all regulatory issues. 
       - each of these exchanges/gateways needs a team of people to integrate their systems with BTSX

Total cost of maintaining that kind of infrastructure?  At least $10 million per year for 10 years or $100 million dollars.

Do you really think a project can raise enough funding prior to having a proven / working base system and expect that funding to last for 10 years?
Do you really want a foundation to be sitting on 10 years worth of funding in advance?
Do you really want it to be forever centralized in the original developers / foundation with the initial funding?
Do you really want developers to be developing at a slower pace despite having funds today so they don't run out of funds in the future?

These are all the issues people must grapple with.   

I am working on a plan to keep BTSX up to date with the best possible software for 10+ years without adding dilution to BTSX.   But for new systems AGS/PTS holders benefit greatly from a larger initial allocation + dilution under their control rather than a smaller initial allocation with no control over how the 80% dilution they could face would be allocated.

First off, all of that sounds awesome and I appreciate the hard work and plan you are putting in place to avoid adding dilution to BTSX.

However to me, it seems DAC's can achieve it by setting aside as little as 10% of the initial shares.

Using BTSX CAP as an example. If 10% of shares were set aside (200 Million BTSX) and 25% are made available to spend the following year.

Then at the end of this year if BTSX was worth $200 million, there would be $5 million worth of shares (10%*0.25 = 50 million BTSX) available to spend in 2015 in addition to revenue.

At the end of 2015 if BTSX is $500 million. Then (7.5%*0.25=1.875%) there would be $9 million + revenue available to spend in 2016.

At the end of 2016 BTSX is $1 Billion. Now (5.6*0.25=1.4%) $14 million is available for year 3.

So to me it seems setting aside a small % of shares can achieve a similar result without having dilution.
(Even if that is kind of like pre-dilution, it's a big difference shareholders knowing it in advance and having a fixed initial share amount vs. constant dilution/inflation. Even though their may be occasional separate situations such as the one Stan described.)   

What I meant was that delegate's pay shouldn't dilute the DAC. Delegates should get percentage of fees. (An option is instead of burning the remainder of the fees to go to a fund controlled by shareholders).

Yeah I don't think delegates pay should dilute the DAC.

« Last Edit: September 29, 2014, 03:41:48 pm by Empirical1.1 »

Offline emski

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Quote
What I meant was that delegate's pay shouldn't dilute the DAC

A delegate with HIGH PAY doesn't just get to "keep it"... they are spending it on the DAC and only keeping a small part necessary to compensate them for their time.

So shareholders vote on delegates that in their turn dilute and "promise" to do something to increase the value of the DAC.

How is this better than "normal" delegates with the following addition:
Shareholders (or delegates) vote on dilution "offers" by 3rd parties.

EDIT: I like the proposal in the post above mine. I think it is sane approach. Delegates support the network by signing blocks. Other functions should be taken care of someone else.
« Last Edit: September 29, 2014, 03:29:25 pm by emski »

Offline arhag

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1) Delegates are already a trusted source and continually competing for the approval of "shareholders". 

The purpose of my proposal is to separate out the roles. The delegates are elected only for a specific role: keep the DAC functioning, include all valid transactions, and maintain consensus in the blockchain. They also have to maintain price feeds but that role can even be delegated to others if necessary in the future. With my proposal they would have one more role: publish and approve proposals to become available for shareholder ratification if the proposal seems to be a reasonable one that shareholders might approve. Every other role can be delegated to other entities who are specialized to handle that role.

2) Asking shareholders to consider 1001 individual proposals AND vote for 101 delegates would increase transaction sizes 10x because at a technical level, voting for a proposal and voting for a delegate are tied to shares not people and thus every transaction affects the votes / accounting. 

I am not sure what you are envisioning the implementation to be, but let me tell you how I envision it. There would be at most 4 active delegate proposals at any given time (Slot 0 to Slot 3). Any delegate could suggest a proposal for a given slot. If at least 51 delegates approve of the proposal, that proposal becomes up for consideration at the given slot (replacing any proposal already in that slot). If 51 delegates agree, they can also remove a proposal from a slot at any time.

Every transaction with BTSX stake as an output balance would have just 5 extra bytes attached to it. Four of those bytes would designate a block number N in the past. The signatures of the transaction would be modified to not sign the hash of the transaction but rather hash((transaction hash) concatenated with (block N hash)). For the transaction to be valid for inclusion in a block, the block N would have to be far enough in the past in the blockchain such that 51 unique active delegates have signed blocks adding on to the designated block (meaning the block can be as early as 8.5 minutes in the past). This is basically TaPOS. The fifth byte attached to the transaction consists of a sequence of four 2-bit flags. These flags refer to the respective proposals up for consideration in each of the four slots (if they existed) by the time of the block N. One of the bits of the 2-bit flag designates whether the transaction acknowledges the existence of the proposal in that slot. If it does, then the second bit of the 2-bit flag designates whether the stake is voting in approval or disapproval of the proposal.

This way, with just 5 extra bytes, it is possible for shareholders to vote yea or nay on any of the up to 4 active proposals. Having four proposals simultaneously can be useful, because some of the proposals may require a longer period of time to get the necessary votes before ratification. For example, a proposal changing the inflation caps may require majority approval. That proposal can sit in slot 0, even as other more urgent proposals get added in and ratified earlier (because they require less shareholder participation to get ratified).

3) If proposals should require X% of voter turn out and  X% is higher than the minimum delegate can achieve then that is a problem.  Delegates should be campaigning for high approval and increasing their pay when they are elected is a major way to do this.
4) It has already been pointed out that apathy is the default mode when "everything is ok".... but as soon as there is a threat suddenly everyone cares.  This will drive voter turnout for delegates and improve security.

I agree that low minimum delegate approval ratings are a problem. And maybe your proposal is a clever way to reduce voter apathy and scare shareholders into increasing the minimum delegate approval rating which in turn increases blockchain security. But what if it doesn't? Then like I already pointed out, we risk inflation even when only a relatively small percentage of the stake wants it. I think inflation rates are a very big deal that it should only be adjusted with majority shareholder agreement. And even if we got the minimum delegate approval above 50%, it still doesn't change the fact that this method is less agile than the proposal system. For example, there is no way to print a lump sum of inflated stake to pay for large unexpected expenses (for example legal expenses). And even for continuous slow inflation, it still requires the (in my opinion) inelegant hack of a delegate registering a new account to be voted in to replace the old delegate every time they want to adjust the inflation.

5) Allowing the delegates to approve spending bills like a congress is the "delegated approach", but this approach doesn't give shareholders a chance to review and grants many low-trust delegates (those only trusted to sign blocks) a blank check.   

I am not sure which system you are comparing to here. But it is certainly not the proposal I am making, since it requires shareholders to directly ratify any of the delegate's proposals with their votes before they become active. And what you are saying here actually supports my argument. People are voting for and trusting delegates for a very specific job. Why unnecessarily entangle another very important role (managing funds for development, marketing, legal, etc.) to their job requirements? Separate roles out to entities who are specialized to handle it.

Offline bytemaster

Quote
What I meant was that delegate's pay shouldn't dilute the DAC

A delegate with HIGH PAY doesn't just get to "keep it"... they are spending it on the DAC and only keeping a small part necessary to compensate them for their time. 
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Offline emski

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I agree with the examples. However the OP discussed delegate registration fees and not DAC dilution by shareholder voting.

DAC is a company, If shareholders vote on dilution => obviously it should be done.

What I meant was that delegate's pay shouldn't dilute the DAC. Delegates should get percentage of fees. (An option is instead of burning the remainder of the fees to go to a fund controlled by shareholders).

Offline Empirical1.1

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It certainly isn't merely about Delegate Pay Models but a rather sweeping proposal effecting the entire ecosystem structure.
*agreed* .. it's currently a little difficult for me to grasp all consequences of the proposal .. need to re-read that thread more some times

I have to read it more myself. I know like many I have some instant negative associations to inflation/dilution even when I don't understand the proposal.

Think of it this way:  One year after this DAC gets launched, it's growth and performance comes to the attention of a major music industry player who represents, say, 200 of the biggest names.   She agrees to bring her clients to the table in exchange for, say, 2% (or 20%) of the business.  In doing so, she doubles the value of the business overnight and sets it on a new accelerated growth path because all of their fans are now going to learn about BitShares Music in a real and viral way.

That sounds like a separate situation and while events like that could be VERY favourable,  they would only happen a couple of times in the life of a DAC though & can be voted on separately when they occur.

Offline bytemaster

Many have expressed the opinion that dilution should be avoided and that is the preferred solution.  It is always better to fund growth from profits rather than via dilution if you have enough profits to grow fast enough.

I am going to contend that dilution and spending from profits are the same thing.

1) Lets suppose that BTSX takes off and delegates are earning $10,000 per day
2) Lets suppose that the cost for running a node is $100 per day.

Under the no dilution argument $9900 per day should be paid to the shareholders rather than left to the discretion of the delegates because this will maximize shareholder value "today".   Spending this $9900 is diluting the shareholders by denying them a potential buyback. 

It all comes down to something fundamental that this analogy will explain:

If you are starting a road construction company and on day one you have enough money to hire a bunch of people with shovels then you can build 1 mile per day and earn $100.  It will require 4 years of operation to save enough to backhoes and bulldozers and once you have the backhoes and bulldozers you can build 100 miles per day and earn $20,000 per day. 

If the company had issued shares earlier to buy the bulldozers and backhoes in year 1 then the profits of the company would be significantly higher for the next 3 years. 

Companies that have a "no dilution clause" in the shareholders agreement cannot attract new capital to grow and thus the new capital flows to competitors which see the successful business model of the road building company with shovels and puts their money into a competitor.

So you can never stop dilution because if you don't dilute your own shares to raise capital the market will dilute your market share with competitors who issued shares in their own companies that are now competing with your company.

Take Bitcoin for example:  it is unable to fund more than a small team of developers paid for by DONATIONS which in turn centralize development decisions in the hands of those paying the bills.   In order to grow people have to build companies AROUND bitcoin but gain nothing from the value this adds to Bitcoin.   Thus as fast as the Bitcoin ecosystem appears to be growing it is very slow compared to what could be done if the money spent on mining were spent on providing payment infrastructure and adoption incentives.

Do you really think that BTSX can fund 10 years of development on a couple million dollars?   Here is what BTSX needs to grow to the Multi-Billion dollar network we all want to see:

1) A web development team of 10 people producing and maintain a web wallet.
2) A backend development team of 10 c++ developers producing countless tests, enhancing performance, and improving security.
3) A mobile app development team of 10 people focusing only on maximizing ease of use on mobile apps.
4) A legal team working around the clock to lay the ground work for companies like Overstock and help guide the development team
5) A massive referral network / marketing campaign similar to how PayPal got bootstrapped.
6) A dozen exchanges / gateways facilitating bringing money into/out of BTSX while following all regulatory issues. 
       - each of these exchanges/gateways needs a team of people to integrate their systems with BTSX

Total cost of maintaining that kind of infrastructure?  At least $10 million per year for 10 years or $100 million dollars.

Do you really think a project can raise enough funding prior to having a proven / working base system and expect that funding to last for 10 years?
Do you really want a foundation to be sitting on 10 years worth of funding in advance?
Do you really want it to be forever centralized in the original developers / foundation with the initial funding?
Do you really want developers to be developing at a slower pace despite having funds today so they don't run out of funds in the future?

These are all the issues people must grapple with.   

I am working on a plan to keep BTSX up to date with the best possible software for 10+ years without adding dilution to BTSX.   But for new systems AGS/PTS holders benefit greatly from a larger initial allocation + dilution under their control rather than a smaller initial allocation with no control over how the 80% dilution they could face would be allocated.
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Offline CLains

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So what will our dear Toast do?

Offline xeroc

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It certainly isn't merely about Delegate Pay Models but a rather sweeping proposal effecting the entire ecosystem structure.
*agreed* .. it's currently a little difficult for me to grasp all consequences of the proposal .. need to re-read that thread more some times

Offline blahblah7up

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Shouldn't this thread have a different title to attract a more general open discussion?

It certainly isn't merely about Delegate Pay Models but a rather sweeping proposal effecting the entire ecosystem structure.

Offline bytemaster

Thanks for all of the feedback but I think there are a lot of misplaced concerns:

1) Delegates are already a trusted source and continually competing for the approval of "shareholders". 
2) Asking shareholders to consider 1001 individual proposals AND vote for 101 delegates would increase transaction sizes 10x because at a technical level, voting for a proposal and voting for a delegate are tied to shares not people and thus every transaction affects the votes / accounting. 
3) If proposals should require X% of voter turn out and  X% is higher than the minimum delegate can achieve then that is a problem.  Delegates should be campaigning for high approval and increasing their pay when they are elected is a major way to do this.
4) It has already been pointed out that apathy is the default mode when "everything is ok".... but as soon as there is a threat suddenly everyone cares.  This will drive voter turnout for delegates and improve security.
5) Allowing the delegates to approve spending bills like a congress is the "delegated approach", but this approach doesn't give shareholders a chance to review and grants many low-trust delegates (those only trusted to sign blocks) a blank check.   

So the question remains does this "hurt" initial owners?  That depends entirely on how the initial owners "vote" and thus the problem with all voting systems.

1) Voting for charity delegates harms the network (giving away capital with only minimal PR in return)
2) Voting for kickback delegates harms the network (transferring capital from some shareholders to others while producing now value)
3) Voting for high-paid lazy delegates harms the network (giving away capital with minimal work in return)

All of the above can be easily dealt detected and most shareholders will not vote for these kinds of people. 

If they do then there is still one option that remains:
1) Delegates have the option to ignore blocks produced by other delegates, even in BTSX.   This means that the majority of delegates can run on a platform of ignoring blocks produced by kickback delegates or excessive charity delegates or excessively high pay without broad shareholder approval. 

2) By combining delegate pay with funding you require delegates to produce blocks and thus by default the blocks approved must be accepted by the other delegates.   If someone "came from nowhere" and voted themselves a "high pay" position with no public discussion about it then this "delegate" would be seen as a threat.   The other delegates would have an obligation to "black list" their blocks to maintain their own approval.

So the question becomes what is the "break even ratio" and "how fast can the network respond" to said delegate getting elected.   28 hours may not be enough, but 7 days should be enough.  During those 7 days the network has the following options:

1) Increase approval of other delegates to vote him out.
2) Delegates can vote to "black list" the delegate if it is too extreme.
3) Clients can configure their nodes not to "relay" the delegates blocks.
4) The maintainers can "hard-fork" the attacking delegate (and their stake) out of the chain

So there are processes in place with increasing levels of difficulty to deal with a "hostile takeover" by a minority shareholder.

Obviously shared ownership and democratic systems are fundamentally subject to the "group trap" and all the ills and rent seeking that go with it.

My next post will deal with the need for this approach.


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Offline Stan

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The more I think about this proposal the more backwards it seems.  Please convince me otherwise, though.

It actually removes incentive to participate in the initial stages of a project when the most work needs to be done.  To quote from cob's cross post announcing the same novelty for his new Music DAC:

"As the DAC matures, dilution will be less and less necessary, until it becomes a thing of the past."

Imagine I am a web designer and will be payed in the Music DAC's "Notes" (the currency) to make the DAC's first website.  500 Notes is the price. Why would I accept this job offer if I know that in a years time dilution will rapidly negatively affect the value of labor I invested?  Wouldn't I much rather avoid new projects and only participate in those which have established themselves where the currency is less inflationary?

This always happens when early investors look at later investors as competition rather than partners that are joining them.  While the early investors took more risk (compensated in the greater room for growth they might experience), the new investors are performing the same function as the old investors - their contribution just comes in at a later time when they presumably get fewer shares for the same amount of value they create.

Think of it this way:  One year after this DAC gets launched, it's growth and performance comes to the attention of a major music industry player who represents, say, 200 of the biggest names.   She agrees to bring her clients to the table in exchange for, say, 2% (or 20%) of the business.  In doing so, she doubles the value of the business overnight and sets it on a new accelerated growth path because all of their fans are now going to learn about BitShares Music in a real and viral way.

Clearly this is a no-brainer deal that wise shareholders should snap up.  But this opportunity is seldom available at startup.  It comes after the new company has proven itself to the point where other sources of horsepower want to participate.

So almost all startups follow this path.  Release some shares in the beginning to raise startup capital and more shares later when the company is able to attract more value per share released.

This new approach simply recognizes that it is crazy to sell all your shares early when their value is low.  Instead, build that value and reserve the right to sell more shares later when your company has proven itself. 

Naturally, every such decision has to weigh the expected growth of value against the size of the dilution.  Every time that ratio is significantly greater than one, it's a good deal for everybody.  You will know such deals when you see them.

Above all, you don't want to have your DAC hobbled by a Social Consensus that precludes such a smart move when the opportunity presents itself. 

And yes, it is kryptonite - but not the green kind.  This is platinum kryptonite - it enhances a company's super powers.   :)

« Last Edit: September 29, 2014, 02:36:05 pm by Stan »
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Offline emski

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I also think any dilution should be avoided.

Offline Empirical1.1

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In general I personally think any dilution/inflation beyond that clearly laid out in the initial business plan will be cryptonite to a DAC for the next 18 months.

(Until DAC's and the delegate systems around them are far more established, developed and understood any inflation/dilution will be incredibly unpopular imo.)
« Last Edit: September 29, 2014, 02:03:21 pm by Empirical1.1 »

Offline blahblah7up

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The more I think about this proposal the more backwards it seems.  Please convince me otherwise, though.

It actually removes incentive to participate in the initial stages of a project when the most work needs to be done.  To quote from cob's cross post announcing the same novelty for his new Music DAC:

"As the DAC matures, dilution will be less and less necessary, until it becomes a thing of the past."

Imagine I am a web designer and will be payed in the Music DAC's "Notes" (the currency) to make the DAC's first website.  500 Notes is the price. Why would I accept this job offer if I know that in a years time dilution will rapidly negatively affect the value of labor I invested?  Wouldn't I much rather avoid new projects and only participate in those which have established themselves where the currency is less inflationary?

Offline GaltReport

I have to admit that I somewhat dislike the proposed system.
Are there any advantages, that being a delegate and getting funding is so closely entangled? I think it would be better to leave the delegate pay system as it is in BitsharesX right now and implement a more or less independent funding feature. Your proposed system has multiple disadvantages:

1. You need to be a delegate to potentially get funding. Especially in the beginning it is a big hurdle to set up and maintain a delegate node.
2. There is a limited number of delegates. If there are many smaller projects this will probably be a bottleneck. Moreover this might have the effect that projects that aren't finished get voted out just because of the shortage of active delegate positions.
3. There are competing criteria when selecting delegates. It is not only about the trusworthyness and ability of an individual to maintain a delegat node but also independently the plans for projects that need funding. That might lead to an overall decreased blockchain security and stability.
4. Once high payed delegates get voted in they are not incentivised to finish on minimal budget and time. Getting voted out again is the only threat and in my opinion not sufficient to motivate the delegate. This is a general problem of every solution that isn't timely restricted.

I tend to agree with this.  Not sure why being a delegate (paid miner) is related to funding and DAC development.  I'm guessing so that the Music DAC can more easily raise funds to actually make their blockchain a Music DAC?  I'm probably confused.
« Last Edit: September 29, 2014, 01:25:40 pm by GaltReport »

Offline blahblah7up

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This proposal would harm early adopters and AGS donors the most.  And frankly, I don't think there would have been many AGS donors if this model had been revealed as the desired model early on.  It certainly moves the goalpost.

Dilution is also the most cited complaint I have heard from people who chose not to donate to Etherium.

Offline Empirical1.1

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I don't like dilution but if there was dilution at least 51 delegates should be required to approve it or the dilution request should be made well in advance and follow a clear set of procedures and be properly advertised in the client so shareholders can take a position in advance on it.

Example: Delegate.Max issues 14 day notice of a request for 0.01% dilution paid via his delegate for the following program 'Billboard advertising (link)'

Then you have some kind of voting procedure, even if it's as simple as  shareholders removeing approval from Max and getting him out of the 101 delegates. (He will see his approval going lower and will adjust and re-issue his proposal or remove it if there is a negative response.) 

However I don't think dilution should ever be necessary. The initial business plan should set aside a pool of shares that can be used to pay for programmes and expenses using a shareholder voting system. This should fund the development of the DAC until such time as fees are sufficient to cover it.

For BTSX

I think delegates should be paid from  fees but I don't think we should be immediately burning the remaining fees not going to delegates. They should go into a separate pool, then every 4 months we have a 'shareholder meeting' & vote on how to spend those fees. Shareholders can either vote

Burn
Roll-over (Keep fees in pool and roll them over to next 4 month shareholder meeting.)
Fund (Elect to fund 1 or more of the initiatives put down at least 14 days in advance of the shareholder meeting by keeping the delegate proposing it in office.)   

Edit - For AGS

Not exactly related, but off the top of my head I think AGS needs to be made liquid for one month a year, say January to bring in new money and widen it's shareholder base and prevent it from being a closed club.

I think a pool of shares should have been set aside initially for the long term development and promotion of AGS but if they weren't, then it is a case where dilution may be needed and leading up to the liquid month, wecould perhaps vote on a dilution %. So perhaps the majority will agree on a 5% dilution to be given to I3 to promote and develop AGS for the next year for example based on the proposal they give shareholders on what they think they will be able to achieve etc.
« Last Edit: September 29, 2014, 12:29:33 pm by Empirical1.1 »

Offline Frodo

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I have to admit that I somewhat dislike the proposed system.
Are there any advantages, that being a delegate and getting funding is so closely entangled? I think it would be better to leave the delegate pay system as it is in BitsharesX right now and implement a more or less independent funding feature. Your proposed system has multiple disadvantages:

1. You need to be a delegate to potentially get funding. Especially in the beginning it is a big hurdle to set up and maintain a delegate node.
2. There is a limited number of delegates. If there are many smaller projects this will probably be a bottleneck. Moreover this might have the effect that projects that aren't finished get voted out just because of the shortage of active delegate positions.
3. There are competing criteria when selecting delegates. It is not only about the trusworthyness and ability of an individual to maintain a delegat node but also independently the plans for projects that need funding. That might lead to an overall decreased blockchain security and stability.
4. Once high payed delegates get voted in they are not incentivised to finish on minimal budget and time. Getting voted out again is the only threat and in my opinion not sufficient to motivate the delegate. This is a general problem of every solution that isn't timely restricted.

Offline svk

So if I understand this correctly:
  • Transaction fees remain as they are now but will be separate from delegate fees
  • 100% of transaction fees will be burnt
  • Delegates will only be paid through dilution
While I like the idea I too feel like arhag that it's open to abuse, but this can probably be avoided through the tuning of certain parameters. For starters you can probably set the registration multiplier even higher, x300 and ~3.3 days to break even doesn't seem unreasonable to me, the ROI is still incredible.

While this may be more complicated, how about adding a time duration to the increased delegate pay? Say I want to develop a new website for bitshares Music, I propose an increased pay rate for 3 months to fund my development, after which my payrate returns to a standard rate. This would require active voting on the proposal however.
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Offline luckybit

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I have been working through the delegate pay model that I recomend for future DACs including VOTE, MUSIC, DNS, etc.

It works off of the principle that shareholders have a right to dilute to raise capital and that the ability to dilute to raise capital ultimately maximizes shareholder value by allowing rapid growth through many rounds of funding.

1) 100% of all fees are burned. 
2) Delegates can set any fee per block they like measured in XTS (BTSX, VOTES, etc)
3) The cost to register a delegate with a "high fee" is equal to 100x the fee-per-block they want to get paid. 

With this system a delegate must produce at least 100 blocks to break even.  It also naturally limit potential abuses because the cost of registering a HIGH PAY delegate will be VERY HIGH while the probability of getting elected will be very low.  The person registering the HIGH PAY delegate will also lose out on the ability of using their own shares to vote for themselves. 

For starters no one would be able to register a delegate that would pay 2 billion BTSX per block because the cost would be 200 billion BTSX (which don't exist).   This puts a limit to what one could attempt to register to be 20 million BTSX per block... assuming they owned all 2billion BTSX... if we assume the largest stakeholder owns 10% of BTSX and the use 100% of their stake to register a high paying delegate then the maximum pay per block would be 2 million and they would have no stake left to vote for themselves.   

Assume someone used 1% of the BTSX to register their delegate at a pay rate of 200K BTSX per block it would take them over 28 hours to break even during which the rest of the shareholders could coordinate their votes to get them ousted if they didn't consent.

With this setup the DACs can fund development in a decentralized manner for their entire lifetime. 

One thing I would like to mention is that there is a "HARD" limit on the share supply based upon limits of 64 bit numbers and the precision.

My gripe with dilution is it equates to taking a loan. It's growth which relies on debt.

Sometimes corporations need to do this but I think in order to do this there should be a vote and shareholders should be able to set the dilution rate. I don't think dilution should happen by default because it makes it seem like the developers had no business plan in the first place if they didn't factor in paying for continued development.

I still prefer simply raising the transaction fees. I think inflation opens the door to collusion, corruption, and the same sort of problems associated with mining. So now instead of paying miners via dilution/inflation we'll be paying delegates?

Given a choice to support DAC A which has no dilution but all the same features and DAC B which has dilution, it would be rational for me to choose DAC A.

The only time it would be rational for me to choose DAC B is if the developers lay out  comprehensive roadmap, business plan, and can convince me that dilution can increase the utility value of the asset. I think in the case of Bitshares Music, Bitshares Vote and others like it, there is no guarantee that these DACs will ever catch on. Asking for dilution before we have any statistics showing us the rate of growth would in my opinion not go down well with investors.

But if it can be shown that steady growth is happening, adoption is happening, that the idea is sound, then it definitely could make sense to improve on the software as a way to protect the utility value of the DAC from competitors who will make clones/forks. It only makes sense though if adoption is steady.

Right now we don't know the rate that users are adopting Bitshares X. Looking at Bitcoin the adoption rate seems to be a problem. It's not yet shown that people will adopt Bitshares X or the whole Bitshares paradigm.
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Offline zhao150

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不能任由代表设置自己出块的收费,否则票多的大代表,没人能阻值。
关于具体如何限制代表设置的出块收费,我提一个建议:
每个代表设置的收费不能大于所有代表设置的收费的平均值的2倍。
这样可以减轻代表的贫富差距。
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Offline xfund

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I think this is a good idea to help the delegate to dig coin in dns .  But don't too bitter.
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Offline arhag

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Based on current fee revenue, 0.22% of a 2 billion BTSX share supply would be burned yearly. At current prices, that is $1400 per year for each of the 101 delegates. Let's say the delegates are okay with that level of pay for now (they are actually okay with less currently since the average pay rate is 85%). In this case, all the fees would go to the delegates to pay for expenses. Now let's pretend one delegate wants to make a lot of money. If they put down x BTSX as the registration fee, and they get enough approval to become and stay an active delegate for a year, they could earn up to 312*x BTSX per year. Define p = 100 * x / (2 billion), the percentage of the share supply the delegate is willing to spend as a fee. Then the delegate can earn up to (3.12*p)% of the 2 billion BTSX share supply every year. Ignoring the small effects, such as 0.00217% of the delegate's earning being double counted and ignoring the increase in fees due to putting down the large delegate registration fee, it is fair to say that the inflation of the share supply is approximately (3.1*p)% per year (at least for the first few years) due to this delegate getting elected. So what does it take for this delegate to get elected? Well that is complicated to answer properly since the fact that this delegate will be inflating the share supply will likely reduce voter apathy and rally people to start voting for other delegates. But assuming no changes in voter behavior and the current delegate approval ratings, currently it only takes more than 5.25% of the stake to vote one delegate in. So, if a colluding group had s% of the stake, they could burn all but 5.25% of the stake to get their delegate in and inflate the BTSX supply by (3.1*(s-5.25))% per year (unless the shareholders reacted and raised the approval rating bar for delegates). Under this proposal, a colluding group with 8.5% of the stake could (under current conditions) possibly inflate the BTSX supply by 10% per year and reap the rewards of that inflation. Even if the minimum delegate approval was 20%, a colluding group with 25% of the stake could still inflate the share supply by 15% per year. The only way to avoid the situation where a minority of shareholders are able to inflate the BTSX share supply against the wishes of the majority is if the minimum approval rating of a delegate is above 50%. Perhaps this proposal is smart as a way of killing voter apathy and getting shareholders involved for the sake of increasing delegate approval ratings and thus improving blockchain security, but I worry it could have the reverse effect where the minimum delegate approval rating stays low and a minority of stakeholders have the ability to dilute the shares against the wishes of the majority.

My view is that we should always require at least 50% approval by the shareholders when determining the maximum rate of inflation of the BTSX supply. Under the system I propose, which is delegate proposal ratified by shareholder vote, we can have different levels of shareholders approval needed to ratify the rules of a proposal depending on what rules the proposal intends to change. For example, we could require at least 50% shareholder approval to change the per block inflation rate cap. This cap would limit the effect of any other proposals so that ((amount of BTSX created to pay workers in a block) - (amount of BTSX allocated for destruction for that block))/(amount of BTSX in existence) is always less than or equal to (per block inflation rate cap). Then other proposals could have less strict requirements for ratification. For example, a proposal that changed the pay rate of the delegates or other workers (denominated in BitUSD) could only require approval by min(50%, max(delegate approval rating)) percent of shareholder vote, or maybe just a fixed percentage like 20%. You could even set up rules such as at least 15% of shares need to have voted AND the net approval, ((shares approving of proposal) - (shares disapproving of proposal)), would have to be larger than 15% * (100% - (percentage of shares voting)).
« Last Edit: September 29, 2014, 03:19:53 am by arhag »

Offline BTSdac

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it is like a decentralized company , each delegate is the staff of this company , if consider the pay fee as salary to delegate. it like every staff can offer him salary by himself propose. and all stakeholders can accept or reject it proposed salary
but there are two questions
1. 28 hours is too short ,maybe 90 days is enough, it is like company give financial report per 90 days.
2. if DAC is a company , works delegates do in chain (create block ,broadcast,transfer block etc) is`t the whole works of this company.

« Last Edit: September 29, 2014, 03:21:36 am by BTSdac »
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Offline Overthetop

I cant really understand the  meaning of the new solution.

Could anybody or BM help answering the following questions :

1. what the purpose of this New Model of Delegate? (the problem want to be solved)

2. How does the New Model work?(how to solve)

3. What is the desired effect of this New Model? (the advantage of the new solution)

Thanks.

« Last Edit: September 29, 2014, 02:47:04 am by Overthetop »
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Offline BTSdac

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I have a suggestion
1.if resume  max translations per block is N,   fee per translation is 0.1,  exclude the translation fee ,the delegate also can get some fee for creating block ,but this fee is calculation by formulation
addtional fee =(N-N_tx)*R*0.1
N: max translations per block
N_tx: translations of this block
R: a ratio   0<R<1
0.1 : this is equal as fee per translation

so the total fee = N_tx*0.1+(N-N_tx)*R*0.1

I reume R=0.25, N=100
1. if it is a empty block (no translation)  the fee giving to delegate = 100*0.25*0.1=2.5
2. if it is a full block( include Max translation) the fee giving to delegate =100*0.1=10

you can see  delegate can gain some fee even it is a empty block, and if the delegate want to gain more fee ,they must try to include more translations
as the following picture show ,the horizontal mean how many translations in the block , and the vertical mean fees delegate gain.
there are five sulation ,they are R=0.1 , R=0.25 ,R=0.5 , R=0.75, R=1  .

« Last Edit: September 29, 2014, 02:00:25 am by BTSdac »
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Offline BTSdac

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pay fee to delegate directly , how to motivate delegate include more translation ?

Votes and approval.
how to know a translation should been included by a delegate.   time-stamp of this translation , when translation been broadcast ? there have network delay.
I mean the stakes cannot know if this delegate is a positive one
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Offline muse-umum

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Assume someone used 1% of the BTSX to register their delegate at a pay rate of 200K BTSX per block it would take them over 28 hours to break even during which the rest of the shareholders could coordinate their votes to get them ousted if they didn't consent.

Image this scene:

Several big whales together control huge amounts of shares (far more than 1%), which makes it difficult to vote them out. After burning 10,000,000 XTS to register a delegate with 100,000 XTS per block paid they probably still have enough shares to vote that delegate in.

If that happens the 100,000 XTS would be the dilution putting investors off.

This is just a simple case. We may face many other problems with this pay model.
« Last Edit: September 29, 2014, 01:53:02 am by heyD »

Offline zhao150

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can I set 1000000btsx per block fee?
then I will give a lot of btsx to everyone.
I will be a philanthropist. :)
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Offline bytemaster

pay fee to delegate directly , how to motivate delegate include more translation ?

Votes and approval.
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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 BTSdac

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pay fee to delegate directly , is there more way to motivate delegate include more translation
« Last Edit: September 29, 2014, 01:31:40 am by BTSdac »
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Offline arhag

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Is 100x enough? Maybe 200x would be better to give shareholders 56 hours (at least two full days) to respond.

Also, this has the same issue as the pay rate in that delegates need to commit to a pay schedule and it cannot be changed after being elected to dynamically respond to conditions. They would have to create and register a new delegate and get that one elected by shareholders to replace their old delegate.

What is your hesitation against a proposal system ratified by shareholder vote setting wages to workers (which in my view should be different than the delegates who should have a very limited technical role)? I can't imagine it is very hard to implement in the code. Is it because you think voter apathy will result in great difficulty in implementing changes when needed?  Is it a philosophical disagreement with the will of the majority overriding the desires of the minority (although the delegate system with approval voting doesn't actually fix that problem either)?

Offline bytemaster

I have been working through the delegate pay model that I recomend for future DACs including VOTE, MUSIC, DNS, etc.

It works off of the principle that shareholders have a right to dilute to raise capital and that the ability to dilute to raise capital ultimately maximizes shareholder value by allowing rapid growth through many rounds of funding.

1) 100% of all fees are burned. 
2) Delegates can set any fee per block they like measured in XTS (BTSX, VOTES, etc)
3) The cost to register a delegate with a "high fee" is equal to 100x the fee-per-block they want to get paid. 

With this system a delegate must produce at least 100 blocks to break even.  It also naturally limit potential abuses because the cost of registering a HIGH PAY delegate will be VERY HIGH while the probability of getting elected will be very low.  The person registering the HIGH PAY delegate will also lose out on the ability of using their own shares to vote for themselves. 

For starters no one would be able to register a delegate that would pay 2 billion BTSX per block because the cost would be 200 billion BTSX (which don't exist).   This puts a limit to what one could attempt to register to be 20 million BTSX per block... assuming they owned all 2billion BTSX... if we assume the largest stakeholder owns 10% of BTSX and the use 100% of their stake to register a high paying delegate then the maximum pay per block would be 2 million and they would have no stake left to vote for themselves.   

Assume someone used 1% of the BTSX to register their delegate at a pay rate of 200K BTSX per block it would take them over 28 hours to break even during which the rest of the shareholders could coordinate their votes to get them ousted if they didn't consent.

With this setup the DACs can fund development in a decentralized manner for their entire lifetime. 

One thing I would like to mention is that there is a "HARD" limit on the share supply based upon limits of 64 bit numbers and the precision. 

« Last Edit: September 29, 2014, 02:25:59 pm by bytemaster »
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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.