Thanks Arhag. I really enjoy your posts by the way.
Thanks. I enjoy your contributions as well. Your videos have been really great.
So delegates do not get any fees or they do get fees from bitUSD transactions?
When you say the "DAC automatically manages" You are saying the formula for distribution is hardcoded into the btsx protocol? If so what is it? If not what is the mechanism? and what are the fees?
So, the following is my understanding of how it all works. I make no guarantees that it is 100% accurate nor is it complete. Hopefully the devs or other members of the community will correct me if I got some details wrong.
The revenue of the DAC currently consists of: fees on transfers of BTSX, BitAssets, and user-issued assets; price overlap of bids and asks taken as a fee; 5% fee on remaining collateral in the case of a margin call on shorts; market order fees; user/delegate registration and update fees (registering as a delegate has a much larger fee); and delegate price feed update fees. Future fees that have not yet been implemented are the interest paid by the shorts and perhaps a 5% inactivity fee on BTSX and BitAssets that haven't been moved for a year (but from my understanding the latest decision was to not bother implementing these inactivity fees).
The expenses of the DAC currently consist of: paying the delegates and paying the BitAsset yields.
There are two classes of funds to consider: the accumulated BTSX fees fund and the yield funds of each BitAsset. I will use only BitUSD as an example to represent BitAssets in the rest of this post but keep in mind the same applies independently to all other BitAssets.
The following fees (all fees are collected as BTSX) go into the accumulated BTSX fees fund:
- fees on transfers of BTSX
- fees on transfers of user-issued assets
- 5% fee on remaining collateral in the case of a margin call on shorts
- user/delegate registration and account update fees
- delegate price feed update fees
- market order fees when pushing or canceling an order where BTSX is used to buy or short BitAssets
- 5% inactivity fee on BTSX (if ever implemented)
The money in this fund is used to pay out to the delegates. The exact formula
isn't too important, but it tries to smooth payments per block out so that the fund maintains on average 2 weeks worth of delegate income payments. The DAC decides, using a formula dependent on the amount of BTSX in the fund, what the maximum payment to the delegate producing the block should be. However, every delegate has set a pay rate (between 0% and 100%). The DAC will only pay the delegate the fraction of the maximum payment they specified and it will "burn" the rest, effectively treating it like a stock buyback or dividend to shareholders.
The following fees (all fees are collected as BitUSD) go into the BitUSD yield fund:
- fees on transfers of BitUSD
- price overlap of bids and asks in the BitUSD/BTSX exchange
- market order fees when pushing or canceling an order where BitUSD is used to buy BTSX (and I think also when covering a BitUSD short)
- interest paid by the BitUSD shorts
- 5% inactivity fee on BitUSD (if ever implemented)
The money in this fund is used to pay yield on BitUSD. Again the exact details aren't too important (you can read this thread
and in particular this post
for details), but the idea is that every time you move your BitUSD balances (assuming they have been held for more than a day and ideally, but not necessarily, less than a year) you will automatically get your "fair share" (drltc and I actually argue that the current formula isn't very optimal or fair actually) of yield, pulled out from the yield fund, added on top of your existing balance.