BM recently suggested diluting BTS at a rate of up to 3% a year to subsidize market liquidity,
https://bitsharestalk.org/index.php/topic,21544.0.htmlThis got me thinking about diluting for BitAsset yield and I realised the cost to shareholders could be fairly neutral? provided they were willing to yield harvest but doing so possibly has a lot of worthwhile benefits...
What are the benefits of diluting for BitAsset yield, (which you could mitigate by yield harvesting.) - BitAssets would offer the mythical
yield at a time when banks will be moving to negative interest rates.
- The BitAsset CAP would increase and we would become in nominal terms the Crypto USD market leader.
(Instead of only being percieved to have 2% market share atm.)
- Hundreds or thousands? Of BTS shareholders who haven't used the DEX before would be holding BitAssets.
Now we and other businesses can start pricing & offering products in BitAssets because most shareholders hold it.
- This would get people to remove their BTS from the centralized exchanges and move it to the DEX
- With hundreds of people moving in and out of BitAssets and also lots of demand for them due to yield it would positively affect liquidity.
(That's not to say other liquidity centric measures couldn't be adopted if shareholders agree the cost of diluting for yield is fairly low considering it can be mitigated by yield harvesting?)
This is not dissimilar to POS minting rewards where the coin is diluted but to avoid it, you just have to make the effort to take part in the minting process which usually infers some benefit to the coin such as security/mining/removing supply etc.
Other:
Diluting 2.5% creates at least
BitAsset yield because at most only 1/2 of all BTS could be in BitAssets while most of the other 1/2 would have to be short those BitAssets? So 2.5% dilution translates to at least circa 5% yield on BitAssets I think.
BTS could decline in value reducing relative yield but as not everybody would yield harvest, a lot of BTS remains unclaimed, many remains on exchanges and many short term speculators and traders would not get involved, it's likely the BitAsset yield would consistently be much higher than
Edit: (There might be something simple I'm missing here of course)