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Messages - Empirical1.2

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226
General Discussion / Re: Would you support 2% dilution to BitAsset Yield for a 6 month limited trial?
« on: March 09, 2016, 03:40:50 pm »
Quote from: Akado on March 09, 2016, 03:28:33 pm
What happens when the trial ends? Won't people be disappointed? However, if we keep it going, what if there's a point where we can't dilute any more? People won't care about it any more

If you advertise it as a yield promotion then the market won't expect it to continue beyond the end date/indefinitely.

But yes there is a point where the cost of the reward in terms of BTS sell pressure it creates is more than the amount of corresponding new demand for BTS it brings in. So even if it did work well and was continued at some point in the future it would be phased out/removed. (In that growth stage of Smartcoins though, which could last many years you would have attracted BTS (For BitAsset) Demand at a much higher pace than the cost and so BTS value would grow in that time in the process bootstrapping SmartCoins.)

By becoming the Smartcoin market leader by CAP and number of holders we will be the most attractive to merchants and other services because of the size of our potential market much the same way 100 000+ offer products and services for BTC instead of a much smaller market/offering like BTS. This utility will add value & liquidity to BitAssets and so make them more attractive than competitors even without yield.

There are also expectations of widespread negative interest rates in the coming years well below -1%. http://www.zerohedge.com/news/2016-02-10/something-very-disturbing-spotted-morgan-stanley-presentation-slide
So once BitAssets are bootstrapped most people may still rather keep them in BitUSD at 0% where they are also private, unseizable and free from capital controls etc. 

This other post discussing it may be of interest https://bitsharestalk.org/index.php?topic=21641.0



227
General Discussion / Re: too many bts in centralized exchanges. Danger!
« on: March 09, 2016, 03:26:16 pm »
Quote from: mf-tzo on March 09, 2016, 03:22:14 pm
Please consider withdrawing your bts from external exchanges if you do not intend to sell them.. More than 30% of BTS are in the top two exchanges. This is very dangerous and if something goes wrong with any of these exchanges you can kiss goodbye your bts investment forever.

If you do not sell your bts, why not just held them in your wallet and be the king to your castle?

Many POS/DPOS coins have POS rewards which encourage people to keep their coins in their respective wallets and off the exchanges earning the reward in what is a fairly circular cost.

The 2% dilution to BitAsset yield proposal is a form of POS rewards which shareholders can earn by removing their BTS from exchanges and yield harvesting BitAssets. https://bitsharestalk.org/index.php/topic,21597.0.html

Therefore besides many other positive benefits listed in the OP, that proposal would rapidly remove a lot of BTS from centralized exchanges for a fairly circular and very low by POS staking standards, cost and so help make BTS more secure.

(It's hard to be a DEX when as you say you are extremely exposed to CEX risk)

228
General Discussion / Re: Lets woo basic coins to migrate natively to our blockchain.
« on: March 09, 2016, 03:11:09 pm »
Quote from: Akado on March 09, 2016, 02:58:11 pm
Quote from: BunkerChain Labs on March 09, 2016, 02:50:02 pm
Quote from: Akado on March 09, 2016, 02:40:25 pm
On top of the Get listed on the Bitshares DEX, we should also have "BitShares is looking for business partners" or "Looking to help new businesses/services" and then we show multiple use cases and how our tech can help, ie: exchanges, crowdfunding, etc

That should help attract new businesses, people will immediately know they can use BitSHares for

Tough to make that case when just last week the community decided to remove the partners section of the forum claiming we should have no partners.

https://bitsharestalk.org/index.php/topic,21699.0.html

Partners or 3rd party services, I think it's just semantics.. The idea is to advertise we want businesses and services using BitShares and have them quickly understand how they can do it via use cases

I doubt BTS holders would object to having a "Looking to help new businesses/services" section.

'Partnerships' impact reputation though and reputation has a very tangible impact on market value. (The impact of reputation on market value - http://www.reputationdividend.com/files/4713/4822/1479/Reputation_Dividend_WEC_133_Cole.pdf )

So BTS can have partners, but what you tend to see is BTS holders doing a lot more due diligence and interrogation of potential 'partners' because they understand the reputation risk and impact on BTS value if they turn out to be duds/viewed as shady by the market, whereas they are mostly welcoming and positive of third parties that integrate/adopt BTS.

As most prefer to see BTS be highly positive and welcoming, you're probably usually better off avoiding the 'partner' descriptor imo.



229
General Discussion / Re: Would you support 2% dilution to BitAsset Yield for a 6 month limited trial?
« on: March 09, 2016, 12:55:18 pm »
Quote from: Erlich Bachman on March 09, 2016, 12:00:52 pm
Yes, it does appear that this "yield harvesting" is no different than what  DASH has successfully done with its "Masternode" incentive to lock up value on the blockchain creating scarcity on the open market and raising its share price. 

And since DASH has an enviable market cap from our perspective (one that would speed up our development funding), then I am on board.  Because after all, the one thing we need in order to achieve our dreams here is dev funding.  Imagine what we could do, and how fast we could do it if our market cap was around 30 million like DASH.

 +5% The higher the BTS valuation the more we potentially have in $ terms to spend on development.   

Offerings like DASH have to offer much higher POS rewards because the currency they're offering it on is very volatile. Whereas with BTS a very low amount directed to BitUSD will make it very attractive, due to USD's low volatility. So I believe thanks to Smartcoins we can attract higher BTS demand for a much lower cost. (However in both cases you can mitigate the individual cost by participating in the reward yourself.)

Decred is also interesting. (I own some but I'm generally not a fan as they have 150%+ year 1 inflation so their upside/ability to maintain a very high valuation is limited.) However in order to participate in their lock up POS rewards you need to buy a ticket which are limited to circa 40 000. (So these DCR tickets are a good proxy for a very limited BTS) While currently overvalued imo, you can see the DCR POS ticket price has increased over 1400% in 14 days (from 2-29) as demand for that limited gateway token increases to participate in their POS rewards. https://dcrstats.com/

Similarly we could expect demand for BitUSD rewards flowing through a very limited BTS to have a strong positive price effect on BTS. (& because BitUSD has low volatility, variable BitUSD yield will create constant new BTS demand unlike DCR who will see demand for their POS rewards fluctuate considerably.) 

230
General Discussion / Re: Would you support 2% dilution to BitAsset Yield for a 6 month limited trial?
« on: March 09, 2016, 10:13:10 am »
Quote from: Samupaha on March 09, 2016, 10:02:44 am
Quote from: Rune on March 08, 2016, 07:56:36 am
Quote from: cylonmaker2053 on March 07, 2016, 05:11:37 pm
Quote from: Rune on March 07, 2016, 04:53:10 pm
I would recommend against this. I actually proposed something similar myself more than a year ago, but I have since then learned a lot more about economics.

what about economics makes you recommend against this experiment? i'm personally about indifferent on this hypothesis, but usually ere on the side of experimentation.

This is in essence a bet against the market by a public agent. I don't think it can possibly be profitable in the long run.

I'm also just speculating, macroeconomics are  mostly guesswork. I don't think there's anything wrong with experimenting but I wouldn't do that on the main bitshares blockchain.

I see this more like a kickstart project than a longterm solution. I'm also quite sure that this wouldn't be profitable in the long run, but this might be a good way to get liquid markets kickstarted. Although I'm still inclined to think that best way to pay yield is to pay it only for smartcoins that are in the orderbook.

+5% I agree that it's not profitable in the long, long run but I believe it is during the Smartcoin growth phase which could end up being as long as 5 years+ depending. Of course it can be removed or phased out if it's not creating more value than it's costing BTS shareholders at the time. https://bitsharestalk.org/index.php/topic,21541.msg283518.html#msg283518



I'm also in favour of paying yield to orders on the books within a useful range around the peg as a liquidity measure & think this can be done cost effectively. Personally I've been impressed with NBT level liquidity which uses a similar approach and while most of us disagree with how NBT are created/collateralised their separate liquidity operations are fairly cost effective.  https://bitsharestalk.org/index.php/topic,21800.0.html

However yield for orders off the books is important in attracting man in the street money (who never want to see the exchange) into holding value in BTS collateralised BitAssets imo.  As BM said back in the day...

Quote from: bytemaster on December 28, 2013, 06:48:58 am
If the largest banks can achieve deposits of over $1 trillion dollars with no meaningful interest, how many deposits could BitShares attract and what would that mean for the value of the bank?

(Once the yield promotion is over in 6 months to 5 years+, banks will likely be in NIRP territory so at that point no yield will actually be the equivalent of yield - we cost less than banks.) The yield promotion described in this thread can also be mitigated by shareholders via yield harvesting, which also has a lot of positive side effects of it's own.

231
General Discussion / Re: [Pool] After Stealth and RLFT, what would you like to do next?
« on: March 09, 2016, 09:43:51 am »
Regards BTC sidechains you're increasing BTC utility and BTC demand (value) at BTS shareholders expense in the hopes that doing so will create exposure, help BTS PR, increase BTS network effect and ultimately help SmartCoins (BTS).

Considering we have no/low TX & trading fees we'll only benefit if they go onto to use other BitAssets and start collateralising them with BTS.  However BTS shareholders will have to lay out reasonable $ today for something that may take 2-4 months to develop & in the hope of that outcome maybe 12+ months in the future.

Whereas we can see from competitors like Uphold/NBT/other being able to buy an attractive SmartCoin product at close to 1-1 with BTC is all that is required to increase usage and adoption from BTC holders. In our case this can be achieved with a yield and liquidity subsidy which could easily attract BTC demand in a way that increases BTS value because they're BTS collateralised BitAssets & it could all happen in 30-60 days & you only continue paying if it's shown to bring in more value than it costs. If it does then there's far more money available for other development at a higher valuation too.

232
General Discussion / Re: Is Bitshares attempting to get on Microsoft Azure?
« on: March 09, 2016, 03:35:23 am »
Quote from: Fox on March 09, 2016, 12:08:52 am
Below is another revision, as I prepare to send it off for (hopeful) inclusion in the upcoming blog post this week.  I've attempted to highlight many attributes within BitShares, without diving into details.  Foremost, I want to ensure the content is accurate.  As we all know, to understand BitShares is to undertake quite a steep learning curve.  Let's invite those future conversations.

Quote
The BitShares blockchain is a Financial Services platform for SmartCoins coupled with a decentralized asset exchange. SmartCoins are price-stable digital assets pegged to the current value of various currencies, commodities, stocks and other financial instruments within a derivatives market.  This is accomplished by sourcing pricing information from world financial markets, then publishing it to the blockchain to inform the decentralized asset exchange.  Markets are made between any asset pairs therein on a serialized order book to mitigate frontloading.  The industrial-grade blockchain currently operates at a 3-second block interval with peaks to thousands of transaction per second. BitShares accomplishes this speed while maintaining transaction and identity security through a unique democratic consensus algorithm. 

BitShares is delivering today on the promises of blockchain functionality, scalability and speed.  Spin up an Ubuntu VM with the software to get connected in about 15 minutes.

 +5% Sounds pretty good to me

233
General Discussion / Re: [Pool] After Stealth and RLFT, what would you like to do next?
« on: March 09, 2016, 03:29:27 am »
Could you add yield subsidy to the list?
https://bitsharestalk.org/index.php/topic,21597.0.html

Besides that I'm a fan of a liquidity subsidy be it maker/taker, negative fees or liquidity pool, whichever will help achieve a tight peg with a reasonable amount of daily liquidity for the lowest cost.

My personal feeling is that if we can attract long term demand for BitAssets we'll rise in value due to the fact BitAssets are collateralised with BTS and going from 2.5% market share to BitAsset Market leader will see our future potential and thus valuation rise to the point where there is more money available for development from a much lower % of dilution. This massive change of status, valuation and increase in new BitAsset (BTS) demand can transpire in under 30 days for a cost that is fairly circular/neutral in that the majority goes back to existing long term BTS holders in a process similar to POS rewards.

Other initiatives are a continuation of a strategy that has seen BTS's valuation, adoption and network effect languish for 16 months+. Shareholders today pay now for features that often take 3 months+ & hope in 5-6 months they will have an impact on bootstrapping the DEX. As we can discern from Uphold supposedly the fastest growing money platform in the world and poorly collateralised NBT, additional nice to have features aren't a necessary ingredient in creating BitAsset demand. (Also if you want to rapidly grow total BitAssets (which BTS does because it locks up BTS) beyond having people trade in/out based on BTC up/down then you need the holding/yield incentive during the bootstrapping phase.)

234
General Discussion / Re: Lets woo basic coins to migrate natively to our blockchain.
« on: March 08, 2016, 06:03:43 pm »
Quote from: xeroc on March 08, 2016, 05:45:35 pm
Quote from: Empirical1.2 on March 08, 2016, 05:25:06 pm
I don't understand. Why would a sophisticated fee system translate into increased network effect and value for the underlying blockchain those assets are based on?
Take a look at what happens in Ethereum already: Developers complain about high fee prices.
Basically because the fee in Ethereum depends on the architecture of the contract you want to run .. but NOT on the value that the smart contract brings to Ethereum as a business. They could reduce the fees and thus remove a chunk of their "income" (so to speak) .. or increase the fee and lose developers/dapps .. and all of this just because they cannot give different fees to different apps ..

Thanks for the reply, that is interesting.

I also think adoption of BTS collateralised Smartcoins is where BTS will gain the most value so attracting coins/communities to BTS and by extension potential customers for Smartcoins is perhaps also how we will gain additional value from them where XCP/NXT/MSC have failed.


235
General Discussion / Re: Lets woo basic coins to migrate natively to our blockchain.
« on: March 08, 2016, 05:25:06 pm »
Quote from: xeroc on March 08, 2016, 05:20:50 pm
Quote from: Empirical1.2 on March 08, 2016, 04:51:35 pm
It's not a bad idea but look at the https://coinmarketcap.com/assets/views/all/

17 of the top 20 blockchain based assets & communities are on XCP, NXT & MSC.

Yet  XCP + NXT + MSC = < BTS

Obviously it's not bad a bad thing to attract as many people as possible but thus far that strategy hasn't translated into increased network effect and value for the underlying blockchains that attract those coins and communities.
Do they have a fee system as sophisticated as us?

I don't understand. Why would a sophisticated fee system translate into increased network effect and value for the underlying blockchain those assets are based on?

236
General Discussion / Re: Lets woo basic coins to migrate natively to our blockchain.
« on: March 08, 2016, 04:51:35 pm »
It's not a bad idea but look at the https://coinmarketcap.com/assets/views/all/

17 of the top 20 blockchain based assets & communities are on XCP, NXT & MSC.

Yet  XCP + NXT + MSC = < BTS

Obviously it's not bad a bad thing to attract as many people as possible but thus far that strategy hasn't translated into increased network effect and value for the underlying blockchains that attract those coins and communities.


237
General Discussion / Re: Liquidity Pool Discussion
« on: March 08, 2016, 07:10:35 am »
Quote from: cylonmaker2053 on March 08, 2016, 12:27:45 am
Quote from: tbone on March 07, 2016, 11:17:37 pm
I'm all for really seeing how it works out.  But I would hate to overpay with more yield than is necessary to incentivize the behavior we seek.   Also, let's assume we do 10% and it works great.  Do you think that would be sustainable going forward?  Do you not think 5% would do the trick? 

Also, I'm sure we won't get the full desired results (or support for this to begin with) without liquidity measures done in conjunction.  So the question is, how much will the liquidity incentives cost and will we be able to add that to the tab?  And let's not forget that there will also be some dev costs.

agreed, which is why we should treat everything as a limited experiment with a priori criteria to test, then adjust after results indicate some path, test again, adjust, etc. no one knows which set of incentives in either structure or magnitude will work for us, so we might as well just get going with the experiments...

I imagine very little yield would be needed going forward as BM says...

Quote from: bytemaster on December 28, 2013, 06:48:58 am
If the largest banks can achieve deposits of over $1 trillion dollars with no meaningful interest, how many deposits could BitShares attract and what would that mean for the value of the bank?

However as a catalyst, which the market will be aware may only be short term, I prefer experimenting with the larger amount. You could see $1 million being created fairly easily without having a major impact on BTS on exchanges and on the market but it's hard to see $2 million+ being created at this valuation (35-40% of all BTS) without seeing a lot of BTS rapidly removed from exchanges, increased BitUSD (BTS) demand & other positive effects. (Especially as we also have price stable alternatives like MKR currently launching.)

But yes, seeing what liquidity measures cost is key as well as taking into consideration the difficulty of getting yield approved by shareholders.

238
General Discussion / Re: Would you support 2% dilution to BitAsset Yield for a 6 month limited trial?
« on: March 08, 2016, 06:45:52 am »
Quote from: tbone on March 07, 2016, 05:42:15 pm
Also, to receive yield, perhaps it should be required to lock up funds for a month at a time.  So yield would be paid every month starting 1 month after lock-up (on an account by account basis), and early withdrawal means yield is forfeited. 

I personally like this idea more & could be in favour of it. This would make the advertisable variable yield higher. In terms of liquidity, you want to increase Makers at key times but also reduce liquidity takers at those key times. This may incentivise those who would probably be liquidity takers to not suck liquidity out of the market as much at key times. (Buying BitUSD when BTC/BTS is rapidly falling & selling BitUSD when BTC/BTS is rapidly rising) So besides all the other benefits of yield, this would be a way of using yield to improve liquidity imo.

Edit: At the same time once we have merchants accepting BitUSD this might be a negative in terms of getting the good liquidity in terms of people easily spending their BitUSD & creating the Pool to customer to merchant back to pool liquidity cycle.

239
General Discussion / Re: Liquidity Pool Discussion
« on: March 07, 2016, 10:53:14 pm »
Quote from: tbone on March 07, 2016, 08:51:13 pm
Quote from: Empirical1.2 on March 07, 2016, 06:14:40 pm
Quote from: cylonmaker2053 on March 07, 2016, 06:00:02 pm

wow, $120k in yield payments to bitUSD short sellers in 6 months? is that just an estimate of what 2% APR on borrowed funds would entail? i thought the proposed experiment was 2%?

interesting point re: NuBits. still, i'd rather start with wider upper and lower bounds around a single smartcoin to experiment; something like 20% spread would be a good starting point IMO, but i'm a fan of experimenting and adjusting based on results.

I think a 20% spread on fixed settlement ranges would be OK but not on the spread in which we subsidized liquidity. If the spread was very much wider than 0.99 - 1.01 the majority of the time, I don't think BitUSD would be very appealing to the man on the street but I also agree with experimenting and adjusting results. (If we have a liquidity pool and there is excess demand at 1.01 we would either raise the interest to attract more BitUSD to the pool like the implementation in the OP or raise it to 1.02 and so on. You could also have daily limits.)

Regards the yield, the poll was for diluting BTS at a rate of 2% a year for 6 months. (Or as some prefer to say, using 30% of the  daily worker budget https://bitshares.org/technology/stakeholder-approved-project-funding/ ) Of course you could yield harvest and provided total BitUSD was < 1/2 CAP of BTS your return would be greater than the % BTS was being diluted, so basically it's a cost every sharholder can at least mitigate. 

Quote
wow, $120k in yield payments to bitUSD short sellers in 6 months?

Not to short seller but to BitUSD yield or a combo of BitUSD yield and BitUSD shorts.
(If we added yield we would also probably lower forced settlement which would also be a positive for shorts.)

I think using 30% of available worker funds might be a bit much considering we still need to fund liquidity, not to mention we don't want to crowd out other development.  And don't forget, some here would rather we stagnate and die on the vine as long as we don't spend any money.  So we'll have somewhat of head wind on this by default. 

However, looking at the numbers, you mentioned $120k total yield over 6 months equating to 10% APR on $1.2M.  Correct me if I'm wrong, but 10% APR on $1.2M over 6 months would only be $60k, which would be $10k per month, no?  And based on current prices, our worker budget is ~$60k/month.  So if my math is correct we would be looking at only about ~17% of total budget for workers.  Am I missing something?

You are correct the numbers I mentioned in that particular reply were wrong. 120k over 6 months would be the equivalent of 10% yield on $2.4 million.

We could certainly use a lower amount, I'd certainly still support it, though if you look at the poll only 3.5% of voters were in favour of 1% instead. Personally I'm in favour of using the higher amount as I'd like to see where the market finds the BTS to create that much BitUSD... (I think we'd see a lot of positive effects very rapidly.)


240
General Discussion / Re: Liquidity Pool Discussion
« on: March 07, 2016, 06:14:40 pm »
Quote from: cylonmaker2053 on March 07, 2016, 06:00:02 pm
Quote from: Empirical1.2 on March 07, 2016, 05:41:36 pm
Quote from: cylonmaker2053 on March 07, 2016, 04:20:20 pm
i'm also in the market making business for our USD, BTC, and SILVER markets and so i'm viewing these ideas from that perspective.

#1 we have a natural supply limit to any smartcoin, which is some function of excess BTS people are willing to lock up in collateral for that particular smartcoin. there's also an upper bound based purely on exchange rate and amount of BTS required per unit of that smartcoin. 1 million bitUSD is far too large a number. we're probably looking at more like 100,000 bitUSD at current BTS valuation and amount people are willing to tie up in collateral.


If we implement the BitUSD yield trial you are in favour of we should see a substantial increase in BitUSD creation. (The trial would pay out circa $120 000 in yield over the following 6 months, which would be the equivalent of 10% p.a on $1.2 million BitUSD for those 6 months, so I believe we'll see at least that amount created.)

Quote from: cylonmaker2053 on March 07, 2016, 04:20:20 pm
#2 juicy spreads are what induce liquidity providers to enter markets. in absence of any support/intervention, simply observing spreads shows us what kind of risk/reward market makers imply for our assets. artificially narrowing this spread (albeit by fixing settlement ranges and thereby reducing some risk) could easily induce market makers to leave the DEX.

I agree that some fixed settlement ranges on either side of the peg but quite far away to reduce some risk would be a positive. (Forced settlement at 1-1 for example actually discourages shorts/liquidity imo.)

However I believe narrowing spreads combined with partially subsidized returns will attract market makers. NuBits for example artificially narrows the spread but pays circa 0.2% a day for a set amount of liquidity on each exchange. The Buy/Sell walls you see on CCDEK for example 'appear' to be achieved for $40 a day.

http://cybnate.github.io/index-liquidbits.html
https://www.ccedk.com/nbt-usd

I imagine we can do the same at a wider spread and achieve similar results. I have messaged the creator of the pool mentioned in the OP and invited him to this thread to hopefully learn more about that and the cost.

wow, $120k in yield payments to bitUSD short sellers in 6 months? is that just an estimate of what 2% APR on borrowed funds would entail? i thought the proposed experiment was 2%?

interesting point re: NuBits. still, i'd rather start with wider upper and lower bounds around a single smartcoin to experiment; something like 20% spread would be a good starting point IMO, but i'm a fan of experimenting and adjusting based on results.

I think a 20% spread on fixed settlement ranges would be OK but not on the spread in which we subsidized liquidity. If the spread was very much wider than 0.99 - 1.01 the majority of the time, I don't think BitUSD would be very appealing to the man on the street but I also agree with experimenting and adjusting results. (If we have a liquidity pool and there is excess demand at 1.01 we would either raise the interest to attract more BitUSD to the pool like the implementation in the OP or raise it to 1.02 and so on. You could also have daily limits.)

Regards the yield, the poll was for diluting BTS at a rate of 2% a year for 6 months. (Or as some prefer to say, using 30% of the  daily worker budget https://bitshares.org/technology/stakeholder-approved-project-funding/ ) Of course you could yield harvest and provided total BitUSD was < 1/2 CAP of BTS your return would be greater than the % BTS was being diluted, so basically it's a cost every sharholder can at least mitigate. 

Quote
wow, $120k in yield payments to bitUSD short sellers in 6 months?

Not to short seller but to BitUSD yield or a combo of BitUSD yield and BitUSD shorts.
(If we added yield we would also probably lower forced settlement which would also be a positive for shorts.)

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