bytemaster,
What is your view on bitShares borrowing from the market to help fund development? Depending on the size of such loans, the possibility of dilution may not sit well with those who think of BTS as a currency, but if we think of BTS as a growing business in need of development capital, giving bitShares more flexible options in its own capital structure could increase our ability to manage for growth while still doing it all on the block-chain. Clearly this is partly a question of philosophy.
[BM, if you want more colour on it beforehand, see discussion here... https://bitsharestalk.org/index.php/topic,16973.msg217478.html#msg217478]
I'm not Bytemaster, but I'm happy to answer since I'm not technically required to know what I'm talking about.
(After all, this is not rocket science.)
But the question is not where to obtain BitShares, it's the fact that you intend to liquidate them that matters.
Whether you borrow or print or "earn" them doesn't matter if you intend to HODL until 2099.
Now if you issue a vesting asset that someone can use as collateral to borrow against outside BitShares, then you've got something.
They will be spending other assets while the BTS stay locked up until a time far, far away when BTS will be the global reserve currency and no one will care if you sell them into a deeply liquid market.
That said, viewed as a business, that is exactly what Silicon Valley startups do. They issue equity for work, which the workers are happy to take with the hope it will result in higher value than a paycheck if the company is successful. But if you get into a situation where the workers must immediately liquidate their shares to buy food, then you are hurting your share price.
This is fine in normal startups where investors understand that they will not be able to sell for many moons.
It is not so fine if investors can sell now and buy back later when all the hard work is complete.
Disclaimer: I am not an economist, I only play one late at night to amuse myself.
Thanks for your comment Stan.
The main purpose of the loans would be to have a deeper pool of development funds than currently available through delegate pay alone, so that bitShares can directly pay for all the developers it needs,
and pay them a competitive rate. It doesn't directly tackle the questions you raise about how those payments should be packaged to align the interests of the developers with the stakeholders, as well as ensure they are not unduly pressuring the price of BTS through sales. But now you raised it, I'll add some thoughts on these issues, which are also important.
I suspect whether you pay the developers in BTS, bitUSD or something else doesn't really matter from their perspective, as long as they are free to convert one to the other at market prices. And it doesn't matter from the perspective of BTS owners, because whatever currency you pay them in is the same currency that has to be extracted from the market in the first place to lend to the bitShares development pool (just to be clear, lent funds must be taken from the market - they are
not produced by dilution). There is only a timing difference in the end, although if such loans were spread over time, a lot of the timing differences would smooth out anyway. What the market will be concerned with is any potential dilution to make maturity payments should the reserve pool be insufficient.
As far as alignment goes, some developers will want the security of a competitive income stream, and then they can decide after the fact if they want to save some of this in the form of BTS or not. This is like a typical employee wage. Others will be happy to get paid at a
higher rate, by sacrificing secure wages now in order to be paid in equity that only vests after some period (say 3 years). bitShares should also be happy to pay these people at a higher rate, because the interests of both parties are aligned by future share performance. This is like startup equity. And there may be other developers whose risk tolerance sits somewhere in the middle.
I doubt there is any easy way to meet your suggestion for a developer to get vested equity,
and be able to borrow against that to cover daily expenses. If they could do this, they would be building a risky leveraged position for themselves. Their only realistic choice is somewhere on the spectrum of secure income to vesting equity. And that may come down to each individual.
I hope this helps and I have not gone on a completely different tack. I'll copy these comments to the original discussion thread so that we don't steal fuzzy's thread here.
[Edit: Copied here...
https://bitsharestalk.org/index.php/topic,16973.msg217559.html#msg217559]