Author Topic: Super Delegates - The Future of DACs  (Read 2350 times)

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Offline arhag

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OldMan, please read this in full if you haven't already: https://bitsharestalk.org/index.php?topic=9603.msg125130#msg125130

What you call Super Delegates I call workers. They are basically the same, but I go into a bit more detail on how they are elected and how their pay (as well as other DAC operating expenses such as BitAsset yields) are determined given varying DAC revenue.

One addition I would make to my model after reading your post is the ability to optionally specify expiration periods of worker incomes, thus requiring a renewal proposal to be ratified at least once every 2 years (for example) for the worker to keep their same income. Shareholders could always pass a proposal cutting their funding at any time if there was enough support (unlike Congress), but this way workers cannot rely on voter apathy to maintain their incumbent position.

Also:
Superdel fund allocations that are not used by the end of the year are burned, ie. unused value is returned to shareholders.
This is unnecessary and pointless. Super delegates would just "spend" all the money by moving it from their fund to another account and as far as the DAC is considered they spent all of it for the purpose shareholders voted them in for. The real check and balance is the shareholders determining whether to keep giving them income or not (or to increase or decrease their pay rate) based on their performance.

Offline pariah99

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I think that what you're talking about is basically a steward for the DAC.  I think that I3 is fulfilling that role right now.  The purpose of Angelshares was to provide a funding campaign for exactly the purpose that you seem to be talking about.

The DPOS system itself was a compromise between a desire to reduce confirmation times and enabling a large number of people to verify the transactions.  I think a superdelegate would be redundant, and providing a tiered delegate system would put people an additional tier above end users, which would be bad because it consolidates some of the authority of the network, i.e. increased centralization.

Offline oldman

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Why the need to distinguish them as "super"? Shareholders already evaluate pay on a per-delegate basis. Your only functional proposal is how the delegate's pay is decided.

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Super Delegates would be in addition to the 101 'Security' Delegates and Superdels do not sign transactions.

BTSX needs to 'hire' folks that know how to market etc., not just those that are able set up a server... and I don't want limit the candidate pool to only those folks that happen to know how to run servers.

The idea is to leverage the existing delegate infrastructure to provide additional functionality.

'Super Delegates' was simply a catchy way to title the post.

Perhaps a better generic term would be 'Operations Delegate' (OpDel?) and each one would be titled according to function:

- Marketing Delegate

- Development Delegate

- Legal Delegate

etc.
« Last Edit: October 05, 2014, 01:32:34 am by OldMan »

Offline toast

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Why the need to distinguish them as "super"? Shareholders already evaluate pay on a per-delegate basis. Your only functional proposal is how the delegate's pay is decided.

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Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline oldman

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The CFO Super Delegate, can try finding funding using:

-Outside financing (aka loan of some kind) - success of this is highly unlikely...

-'Issue' DAC Bond - hopefully someone will figure a way how to do it technically.

- Finance the DAC by issuing new shares... aka the d.../i.../d...

My personal opinion is that Chief-anything positions should be avoided like the plague - they are simply not needed because the Bitshares platform allows direct representation.

My other personal opinion is that if a business with effectively zero CAPEX needs to get a loan something is seriously wrong.

Offline Chuckone

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The CFO Super Delegate, can try finding funding using:

-Outside financing (aka loan of some kind) - success of this is highly unlikely...

-'Issue' DAC Bond - hopefully someone will figure a way how to do it technically.

- Finance the DAC by issuing new shares... aka the d.../i.../d...

The first two would require BitsharesX to pay back either the financial institution providing the loan (+ interest), or the capital to the bond holder (also + interest). In both cases, if tx fees aren't increased to cover those expenses as Oldman proposes, the third one becomes inevitable.

Offline tonyk

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The CFO Super Delegate, can try finding funding using:

-Outside financing (aka loan of some kind) - success of this is highly unlikely...

-'Issue' DAC Bond - hopefully someone will figure a way how to do it technically.

- Finance the DAC by issuing new shares... aka the d.../i.../d...
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline oldman

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So basically the tx fees would be adjusted to increase revenue, instead of using dilution to get funds for particular needs in the future?

Yes; transaction fees will need to reflect the cost of operating the business.

Right now operating costs are effectively being subsidized by AGS funding (similar to a startup/VC funding).

Eventually operating cost will need to be covered by revenue.
« Last Edit: October 05, 2014, 12:05:38 am by OldMan »

Offline Chuckone

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So basically the tx fees would be adjusted to increase revenue, instead of using dilution to get funds for particular needs in the future?

Offline oldman

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Sorry, that post was huge.

TL;DR:

Expenses such as marketing, development, legal etc. should be funded from revenue rather than dilution.

Revenue allocations should be determined using the voting mechanism.

Revenue not used to fund operating expenses should be returned to shareholders via burn.

Offline oldman

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We know DACs can generate and distribute profits... but how does a DAC manage operating expenses?

Currently BTSX is able to effectively manage OPEX for security via the delegate pay rates, but how can funds be raised/allocated for marketing, maintenance, development etc?

There is an important thread on this subject (https://bitsharestalk.org/index.php?topic=9603.0 where folks are struggling with the use of dilution/inflation/debasement to fund a marketing campaign.

Issuing new shares to raise capital, or printing money to stimulate an economy, are common practices in centralized systems that work reasonably well (corporate share issues) to horribly (fiat debasement).

Dilution/inflation/debasement schemes end badly more often than not (ie. current global economy, denarius through USD) and have a disturbing tendency to funnel value from the many to the few.

A decentralized system has no need to dilute/inflate/debase nor should such schemes be permitted under any pretense.

Currently:

BTSX Revenue = Transaction fees etc.

BTSX Expenses = Security via delegate pay

BTSX Profit = Revenue - Expenses = Burn

It is not a reasonable/sustainable to assume the only OPEX will be paying delegates to provide network security.

Suppose (ha!) a new class of delegates, Super Delegates, are created to manage these other operating expenses - marketing, development, legal, etc:

- One superdel position is created for each operating expense, ie. Brian would be the Marketing SD, Dan would be the Development SD, [a lawyer] would be the Legal SD etc.

- The superdel is responsible for administering fund allocations to further the interests of the DAC in the most effective and efficient manner possible.

- If the superdel is not effective, he/she is voted out and a new superdel voted in.

- A short grace period (term) would be required to allow Superdels some time to implement their platform, say three or six months. Thereafter any Superdel candidate with a higher percentage of votes can replace the current Superdel. Upon being appointed the new Superdel then has the grace period, etc.

- Superdel fund allocations that are not used by the end of the year are burned, ie. unused value is returned to shareholders.

Now... how are the pay rates/allocations set and adjusted?

Each Superdel pay rate/allocation is determined in exactly the same way as delegates are elected, by shareholder vote:

- The entire burn is available for OPEX, ie. security and Superdels

- Whatever is left over after security is paid is eligible for Superdel allocation

- Whatever is not allocated to Superdels is burned

A quick/simple example of how this mechanism would operate:

Currently marketing is a high priority; shareholders vote Brian in as the Marketing Superdel and allocate 100% of the burn to Marketing.

Over the next three months Brian rolls out marketing campaigns that flop.

Meanwhile MeTHoDx has been killing it on the message boards and has all kinds of good ideas backed by the community. Brian's grace period expires and the community votes in MeTHoDx as the Marketing Superdel. He goes to town and market cap skyrockets.

BTSX hits a $1T cap and plateaus; all demographics have achieved critical mass and marketing campaigns no longer meaningfully impact market cap.

Shareholders vote to reduce the Market Superdel allocation and thereby increase the burn. Market cap starts ticking up because of the increased ROI to shareholders.

Shortly thereafter Big Gov/Bank collude to introduce legislation aimed at dismantling decentralized finance platforms.

Shareholders vote to allocate 100% of the burn to the Legal Superdel. The legal Superdel receives the fiat equivalent of millions of USD in funding and is able to retain a high profile legal team who successfully challenge the proposed legislation.

Etc. etc.

Once the AGS funds are spent the training wheels come off - a mechanism such as this is the only way to ensure DACs don't crash once Daddy lets go.

Such a system will make DACs truly sustainable by giving the DAC the means to grow, adapt and evolve.

For consideration and review.
« Last Edit: October 05, 2014, 01:35:24 am by OldMan »