Author Topic: Marketing Fund to Subsidize BitUSD / BitBTC yield?  (Read 6294 times)

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Offline santaclause102

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I like the intention to have something fixed yield savers can rely on.

But I would say this (if my question in the previous post can be answered with yes):
1) The problem is not that the yield is too low. Problem is more that the system is too new and people that ask for FIXED yields normally are conservative and would either
a) Want to understand the system fully (difficult but maybe possible with a lot of good analogies and without exaggerated future outlooks / promises which just create resistance and doubt) or
b) Want some authority they trust to "confirm" that it is safe. Those sources of trust are: "scientists", banks, big companies / merchants accepting bitusd, marketers they trust (not saying that this should be so, it is just my observation; for many ppl trust in an institution correlates with TV time and size).
2) Yield could be stated as "*average yield of the last month extrapolated to one year*.
3) People might say: "They have to subsidize their yield because there really is non"
Subsidized yields might also disguise the actual nature of the real yield.

I personally trust things when I can see trough them and when things are presented to me as they are. The yield could be best described by "trading fee yields". This makes sense to everyone and does not generate the "this must be a scam, they have more interest on USD than established banks and they created the usd from nothing" response.

But there are two sides to every coin... So the question is: How much yield per year would we have at current trading volume?  Is the height or the unpredictability of the yield the problem?

Offline arhag

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I only support this if we first have ways of prioritizing which BitAsset yields we care about, what the yield caps for each should be, AND an ability to convert the value from fees from one BitAsset that we don't care to subsidize into BitAsset yields for the BitAsset we do care to subsidize (e.g. convert BitBTC market fees in excess of its 1% yield into BitUSD to top off the 5% BitUSD yield). Otherwise, I would hate to see BTSX inflation go towards BitAsset yields haphazardly (e.g. stupidity like 5% yield to all BitAssets). Or did you mean doing all of this manually by having the delegates purchase and burn BitAssets with their inflated BTSX stake rather than having the DAC automatically manage it?

Also, can we just use a simple linear yield (who cares if people want to spend transaction fees for compounding) so that the accounting is simpler (although I think drltc has a more complex solution that could allow for continuous compounding interest)? Meaning BitUSD funds in the reserve fund can be moved into a yield fund every block by an amount equal to a variable percentage of issued BitUSD (all except the ones in the reserve and yield funds) at the time of the block. Then the variable percentage is accumulated over each block and that sum is known for any given block. Then a transaction being moved simply requires adding a percent yield on the balance (and deducting the corresponding amount from the yield fund) where that percentage is calculated as the difference between the sum at the current block at which it is being moved and the sum at the block in which the transaction was created. This way the yield on all BitAsset balances increases monotonically. The per block percentage would of course still be variable because of all the unknowns you mentioned. However, if you really want to subsidize it to some fixed percentage, you could make sure there was enough BitAssets in the reserve fund to be able to pull out the same targeted per block percentage by first keeping considerable padding (which could also act as a black swan fund) and making up for deficiencies in refilling that fund from bid-ask overlap and BitAsset tx fees by simply buying the BitAsset on the open market with the inflated BTSX.
« Last Edit: October 01, 2014, 01:55:34 pm by arhag »

Offline santaclause102

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Do you mean that AGS funds would be used to guarantee a min. yield?

Offline bytemaster

I have been thinking that a good way to bootstrap interest in BitUSD is to have the yield subsidized.   A kind of promotion to encourage people to try it out.   

We also need an honest way to account for "projected yield" but I don't know how to do that because there are too many variables:

1) trade volume could increase generating increased fees and higher yield
2) USD supply could increase decreasing average yield
3) USD supply could decrease increasing average yield
4) an unknown percent of USD never claims yield (turn over, short holding period)

Without knowing all of these things it is impossible to predict exactly the yield in BitUSD..
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