How effective do you think this would be if we offered a smaller % on a trial basis, perhaps 2-3% instead of 5%, just to prove the concept? Actually, maybe 2-3% would be fully sufficient, especially as we move toward an environment when zero or negative bank interest rates become the norm? Either way, could the % be dynamic based on different needs in different market conditions?
Yeah 5% or greater, was the variable yield, BitAssets would hopefully achieve if you offered BTS minting rewards at 2.5%. However you could trial it at less than that, say 1% and probably still achieve a large increase in total BitUSD and number of holders. (At a fairly neutral cost thanks to yield harvesting.) It could also be dynamic in that it could be changed based on results, also with some of the rewards going to the short side as tonyk suggested earlier in the thread.
(1% dilution going to BiAsset yield would be $100 000 a year, which should still incentivize many millions of BitUSD)
For that reason, I would personally be likely to dedicate at least 1M BTS of my own funds to a liquidity pool such as the one you're describing. Although of course I would first need to better understand the mechanics of it all, as well as the full implications for individual shareholders in different circumstances (i.e. Those yield harvesting, those not. Those participating in the liquidity pool, those not. Those bullish on BTS, those bearish. Etc).
Looking at the NuBits model we should be able to create fairly low risk pools with fairly high rates of interest for very low dilution.
It may be cheaper though because we'll all be yield harvesting anyway and have BitUSD we'd be willing to contribute for additional yield.
I don't know much about the mechanics so I'll see if BM, experienced market makers and perhaps some existing NuPool operators can comment to give us an idea of the cost/benefit vs. other approaches.
@Empirical1.2: I love your ideas on offering yield to incentivize the creation of BitAssets. In my estimation there is NOTHING more important we could be doing right now than ensuring many people have BitAssets in their possession that they'll be ready to spend once merchants start coming online with @kenCode's POS systems.
Thanks, I agree. A lot of the Chinese market especially are opposed to dilution in general. So while I think we can make the case dilution for yield will significantly increase BitUSD CAP and number of users for a 'fairly' neutral cost. The liquidity proposals whether it's the one described in the other thread or a subsidized liquidity pool making use of the yield harvesting BitUSD are the ones that need to draw in new money to offset their cost to BTS so those are the ones I'd trial at a lower amount first to evaluate their efficacy.