Are we going to be the first, bitAPPLE (article)

[xeroc]

If I understand you correctly: it can still work with MPA, the feed price would just be higher to incorporate value of dividends with value of stock together. In a sense your decreasing the upside of shorters ( effectively removing supply in the supply demand equation).

That's correct, as long as a unit of the MPA reflects a higher quantity of the underlying asset (reflecting a reinvested dividend), so that the price per notional share remains consistent with the underlying asset. See my previous comments.

THIS ^^

Still a feature to be able to easily "airdrop" may be a good idea .. not only to reward those holding onto their brownie.pts

[starspirit]

If I understand you correctly: it can still work with MPA, the feed price would just be higher to incorporate value of dividends with value of stock together. In a sense your decreasing the upside of shorters ( effectively removing supply in the supply demand equation).

That's correct, as long as a unit of the MPA reflects a higher quantity of the underlying asset (reflecting a reinvested dividend), so that the price per notional share remains consistent with the underlying asset. See my previous comments.

[Bitcoinfan]

If I understand you correctly: it can still work with MPA, the feed price would just be higher to incorporate value of dividends with value of stock together. In a sense your decreasing the upside of shorters ( effectively removing supply in the supply demand equation).

[MrJeans]

Buying back stock is Warren Buffett's preferred way of returning cash to shareholders (rather than paying a dividend).

I agree with Buffett.

Its also way easier to implement on a blockchain, by burning an asset, instead of trying to distribute small amounts of an asset among all holders.

This could work for UIAs, but not for MPA where the price is not influenced by supply and demand, right?

[Ander]

Buying back stock is Warren Buffett's preferred way of returning cash to shareholders (rather than paying a dividend).

I agree with Buffett.

Its also way easier to implement on a blockchain, by burning an asset, instead of trying to distribute small amounts of an asset among all holders.

[Bitcoinfan]

In the real market-- since shorts are borrowing the stocks (and therefore pay interest on that) they also have to pay any dividends that are received back to the stock owner.  If you are making a statement that no one will short because it is a bad deal, then you will have to explain why there are so many shorters in the real marketplace, despite the disadvantage you perceive?

This is not really an apples to apples comparison. 

I'm not going to get into the monetary policies that promote borrowing vast sums of money to gamble on the market.

shorting is much more important to a bitasset than it is to a stock.  Since all bitassets require someone to be short to even exist.  Shorts and longs must be balanced.

I am sure some people will short specific bitstocks even if they are required to pay dividends.  I don't think many will, and this will lead to a very shallow market.

Balancing the incentives between shorts and longs is very important.  I think we would be better off with a simple model that doesn't attempt to price in dividends.  I could very well be wrong.

I do think that adjusting the amount of stock a market pegged asset represents is an elegant solution that if done properly could be really neat.

Your objection is more against bitshares 2.0 in general since collateralization of shorts and longs aare required. So your actually pointing out a weakness is bitshares.  That it will never be as large as the market its replicating because it needs two sides to match.  That's true, but is irrelevant to dividend payouts included above the spot stock price. 

 Adding dividend to the stock price makes no difference since dividend policy are consistent and don't change often from day to day or month to month. At most a company may change their dividend rate quarterly, but that's a very active company and its not a big deal.  So if dividend policy is consistent enough for a shorter to make a bet, why would adding it on top the spot deterr shooters?  It shouldn't.  They should still short and make a bet when they believe a stock is going down.  They face the same category of costs ( when you do the math out) as a shorter would on Wall Street.   

.

If adding the dividend makes no difference in the likelihood of a potential shorter going short, I can only assume that it would make no difference to the likelihood of a party going long.  Why add so much complexity to the system then?

Just saw this and wanted to share about Warren Buffet's explanation, which is simpler than mine.  BI cites the two famous nobel winners that I mentioned before in the dividend discount model.  Hopefully this explains it for people are learning financial engineering on the fly.  Buying back stock is Warren Buffett's preferred way of returning cash to shareholders (rather than paying a dividend).


Furthermore, introducing a dividend may turn off investors who don't want dividends.  "Above all, dividend policy should always be clear, consistent and rational," writes Buffett.  "A capricious policy will confuse owners and drive away would-be investors."

"For those who want a dividend, Buffett lays out a scenario where a shareholder can effectively generate dividend-type wealth buy selling shares. (This is an idea that was introduced by Franco Modigliani and Merton Miller.)"

http://www.businessinsider.com/warren-buffett-on-dividends-2013-3

[eagleeye]

This may help with the U.S. Treasury market http://www.bloomberg.com/quote/USGG2YR:IND 2 year U.S. treasury I believe this is the yield.

[cylonmaker2053]

Why add so much complexity to the system then?

at least in the near term, it's most important to get the bitUSD/bitCNY and 30-day, 90-day, and 1-year bond markets functioning and somewhat efficient. if we can't nail that, then there's absolutely no need for synthetic individual corporate stocks.

I couldn't agree more.  I have enjoyed reading the ideas in this thread.  I wasn't trying to be a wet napkin on the discussion.  I just don't think its ready to be implemented.  Perhaps it would be better to say that bitshares isn't ready for it.

true, it's not and we're kind of in limbo until 2.0 is successfully released. for now we can continue drumming up some volume for bitassets, tinker with them on the margins, but the real business will start with the 2.0 bond market.

[MrJeans]

Agreed, lets not avoid thoughts and concepts just because they may seam complicated.

If someone doesnt like the idea of taking about further features they can treat the conversation as an intellectual debate (which is what this thread is).

If we always decided to not make things complicated we should have just made a POW bitcoin clone and not a decentralized exchange.

[fuzzy]

Though I agree with puppies we need to get ready for it regardless.

[puppies]

Why add so much complexity to the system then?

at least in the near term, it's most important to get the bitUSD/bitCNY and 30-day, 90-day, and 1-year bond markets functioning and somewhat efficient. if we can't nail that, then there's absolutely no need for synthetic individual corporate stocks.

I couldn't agree more.  I have enjoyed reading the ideas in this thread.  I wasn't trying to be a wet napkin on the discussion.  I just don't think its ready to be implemented.  Perhaps it would be better to say that bitshares isn't ready for it.

[cylonmaker2053]

Why add so much complexity to the system then?

at least in the near term, it's most important to get the bitUSD/bitCNY and 30-day, 90-day, and 1-year bond markets functioning and somewhat efficient. if we can't nail that, then there's absolutely no need for synthetic individual corporate stocks.

[puppies]

In the real market-- since shorts are borrowing the stocks (and therefore pay interest on that) they also have to pay any dividends that are received back to the stock owner.  If you are making a statement that no one will short because it is a bad deal, then you will have to explain why there are so many shorters in the real marketplace, despite the disadvantage you perceive?

This is not really an apples to apples comparison. 

I'm not going to get into the monetary policies that promote borrowing vast sums of money to gamble on the market.

shorting is much more important to a bitasset than it is to a stock.  Since all bitassets require someone to be short to even exist.  Shorts and longs must be balanced.

I am sure some people will short specific bitstocks even if they are required to pay dividends.  I don't think many will, and this will lead to a very shallow market.

Balancing the incentives between shorts and longs is very important.  I think we would be better off with a simple model that doesn't attempt to price in dividends.  I could very well be wrong.

I do think that adjusting the amount of stock a market pegged asset represents is an elegant solution that if done properly could be really neat.

Your objection is more against bitshares 2.0 in general since collateralization of shorts and longs aare required. So your actually pointing out a weakness is bitshares.  That it will never be as large as the market its replicating because it needs two sides to match.  That's true, but is irrelevant to dividend payouts included above the spot stock price. 

 Adding dividend to the stock price makes no difference since dividend policy are consistent and don't change often from day to day or month to month. At most a company may change their dividend rate quarterly, but that's a very active company and its not a big deal.  So if dividend policy is consistent enough for a shorter to make a bet, why would adding it on top the spot deterr shooters?  It shouldn't.  They should still short and make a bet when they believe a stock is going down.  They face the same category of costs ( when you do the math out) as a shorter would on Wall Street.   

.

If adding the dividend makes no difference in the likelihood of a potential shorter going short, I can only assume that it would make no difference to the likelihood of a party going long.  Why add so much complexity to the system then?

[Bitcoinfan]

In the real market-- since shorts are borrowing the stocks (and therefore pay interest on that) they also have to pay any dividends that are received back to the stock owner.  If you are making a statement that no one will short because it is a bad deal, then you will have to explain why there are so many shorters in the real marketplace, despite the disadvantage you perceive?

This is not really an apples to apples comparison. 

I'm not going to get into the monetary policies that promote borrowing vast sums of money to gamble on the market.

shorting is much more important to a bitasset than it is to a stock.  Since all bitassets require someone to be short to even exist.  Shorts and longs must be balanced.

I am sure some people will short specific bitstocks even if they are required to pay dividends.  I don't think many will, and this will lead to a very shallow market.

Balancing the incentives between shorts and longs is very important.  I think we would be better off with a simple model that doesn't attempt to price in dividends.  I could very well be wrong.

I do think that adjusting the amount of stock a market pegged asset represents is an elegant solution that if done properly could be really neat.

Your objection is more against bitshares 2.0 in general since collateralization of shorts and longs aare required. So your actually pointing out a weakness is bitshares.  That it will never be as large as the market its replicating because it needs two sides to match.  That's true, but is irrelevant to dividend payouts included above the spot stock price. 

 Adding dividend to the stock price makes no difference since dividend policy are consistent and don't change often from day to day or month to month. At most a company may change their dividend rate quarterly, but that's a very active company and its not a big deal.  So if dividend policy is consistent enough for a shorter to make a bet, why would adding it on top the spot deterr shooters?  It shouldn't.  They should still short and make a bet when they believe a stock is going down.  They face the same category of costs ( when you do the math out) as a shorter would on Wall Street.   

. 

[puppies]

In the real market-- since shorts are borrowing the stocks (and therefore pay interest on that) they also have to pay any dividends that are received back to the stock owner.  If you are making a statement that no one will short because it is a bad deal, then you will have to explain why there are so many shorters in the real marketplace, despite the disadvantage you perceive?

This is not really an apples to apples comparison. 

I'm not going to get into the monetary policies that promote borrowing vast sums of money to gamble on the market.

shorting is much more important to a bitasset than it is to a stock.  Since all bitassets require someone to be short to even exist.  Shorts and longs must be balanced.

I am sure some people will short specific bitstocks even if they are required to pay dividends.  I don't think many will, and this will lead to a very shallow market.

Balancing the incentives between shorts and longs is very important.  I think we would be better off with a simple model that doesn't attempt to price in dividends.  I could very well be wrong.

I do think that adjusting the amount of stock a market pegged asset represents is an elegant solution that if done properly could be really neat. 

[Bitcoinfan]

In the real market-- since shorts are borrowing the stocks (and therefore pay interest on that) they also have to pay any dividends that are received back to the stock owner.  If you are making a statement that no one will short because it is a bad deal, then you will have to explain why there are so many shorters in the real marketplace, despite the disadvantage you perceive?

[puppies]

Please don't institute any of this.  I don't think either option i or option ii. Will work without an external infusion of funds.  These reasons have been stated previously in this thread by myself and others before they were ignored. 

puppies, if you are referring to this comment...

I am not 100% on the structure of MPA's in 2.0, and thats why I was talking about the administrator of the asset.  It really doesn't matter if that is an individual or the network as a whole though.  Unless you're suggesting dilution to pay for the dividends (which I would strongly oppose), the funds to pay the dividends would need to come from fees of some sort.  Paying dividends would necessitate reducing the profit of the network, increasing fees, or a combination of both.  I think paying dividends could be a very effective way of getting people to hold bitassets.  I hope to see lots of experiments to find the optimum level of profit for the network, and incentive to hold.  I don't think the network should take on the responsibility of matching the dividends paid out by a centralized company.  BTS holders should not be forced to pay bitAPPLE holders.

...then I wanted to clarify how this is intended to operate. Building dividends into the NAV increases the obligation against shorts, as it rightfully should. There is no need for the network, BTS holders, or anybody else to fund this. Have I understood your concern, and was that your main issue with it?

@fuzzy

Can you ask @bytemaster if he is implementing @starspirit no. 2 of bitAsset valuing in the hangout tomorrow.  And if we are still 3 months away from 2.0 if we are three months away I will start a bounty.

Thank you each individual for your contribution to this thread and for kind words.

It's up to the feed producer and has can be enabled immediately out the gate with bit shares 2.0 presuming it delivers on what it promises

You could publish the value price in the feed with all adjustments baked in.   It doesn't have to match the real price it just has to be correct and verifiable.

What you both say makes sense. As a starting point, the easiest approach is to define the "asset" as a portfolio (that is adjusted from time to time) rather than a single share, and the feed producers could supply the price of that total portfolio rather than on a single share, with the same overall feed mechanics we use today. The same process could apply to more diversified portfolio mixes as well.

The trick is to ensure all the feed producers use a consistent method and timing for adjustments. This raises a few follow-up questions in my mind -

- Should the issuer or feed producers be responsible for alterations to the portfolio composition? Does this legally expose them to having some form of control over the asset?
- How should consensus be reached, especially with new event-types that might require some discussion?
- How can quality be managed, so that valuation inconsistencies do not arise? For example, we would not want feed producers mixing post-event (adjusted) prices with a pre-event (non-adjusted) portfolio for example. This needs to be transparent and able to be filtered out, rather than relying on the median estimate to take care of this.

In the end, these might be pragmatic questions for the issuer as much as they might be questions for the BitShares protocol.

If the shorts are on the hook to match the value provided by owning an actual share, then I think you will have a hard time finding many shorts.

I would have to believe that current market price + all future dividends and splits reinvested in the stock will decline in value compared to the underlying asset. 

Unless I am very bearish on this particular stock I won't take that bet. 

It would be a great deal for the longs, but I think you would have to sweeten the pot to get many shorts involved.

[starspirit]

Please don't institute any of this.  I don't think either option i or option ii. Will work without an external infusion of funds.  These reasons have been stated previously in this thread by myself and others before they were ignored. 

puppies, if you are referring to this comment...

I am not 100% on the structure of MPA's in 2.0, and thats why I was talking about the administrator of the asset.  It really doesn't matter if that is an individual or the network as a whole though.  Unless you're suggesting dilution to pay for the dividends (which I would strongly oppose), the funds to pay the dividends would need to come from fees of some sort.  Paying dividends would necessitate reducing the profit of the network, increasing fees, or a combination of both.  I think paying dividends could be a very effective way of getting people to hold bitassets.  I hope to see lots of experiments to find the optimum level of profit for the network, and incentive to hold.  I don't think the network should take on the responsibility of matching the dividends paid out by a centralized company.  BTS holders should not be forced to pay bitAPPLE holders.

...then I wanted to clarify how this is intended to operate. Building dividends into the NAV increases the obligation against shorts, as it rightfully should. There is no need for the network, BTS holders, or anybody else to fund this. Have I understood your concern, and was that your main issue with it?

@fuzzy

Can you ask @bytemaster if he is implementing @starspirit no. 2 of bitAsset valuing in the hangout tomorrow.  And if we are still 3 months away from 2.0 if we are three months away I will start a bounty.

Thank you each individual for your contribution to this thread and for kind words.

It's up to the feed producer and has can be enabled immediately out the gate with bit shares 2.0 presuming it delivers on what it promises

You could publish the value price in the feed with all adjustments baked in.   It doesn't have to match the real price it just has to be correct and verifiable.

What you both say makes sense. As a starting point, the easiest approach is to define the "asset" as a portfolio (that is adjusted from time to time) rather than a single share, and the feed producers could supply the price of that total portfolio rather than on a single share, with the same overall feed mechanics we use today. The same process could apply to more diversified portfolio mixes as well.

The trick is to ensure all the feed producers use a consistent method and timing for adjustments. This raises a few follow-up questions in my mind -

- Should the issuer or feed producers be responsible for alterations to the portfolio composition? Does this legally expose them to having some form of control over the asset?
- How should consensus be reached, especially with new event-types that might require some discussion?
- How can quality be managed, so that valuation inconsistencies do not arise? For example, we would not want feed producers mixing post-event (adjusted) prices with a pre-event (non-adjusted) portfolio for example. This needs to be transparent and able to be filtered out, rather than relying on the median estimate to take care of this.

In the end, these might be pragmatic questions for the issuer as much as they might be questions for the BitShares protocol.

[eagleeye]

Please don't institute any of this.  I don't think either option i or option ii. Will work without an external infusion of funds.  These reasons have been stated previously in this thread by myself and others before they were ignored.

How much external fusion are you getting at?

We need the developers to chime in @monsterer , @xeroc , @alt and @wackou

We need to know which way these other giants think as well.

[jamesc]

Next issues are front running (you pay more for feeds that are closer to real time). 

Also pricing errors (even happens to MSN), transactions are not reversible.

[jamesc]

@fuzzy

Can you ask @bytemaster if he is implementing @starspirit no. 2 of bitAsset valuing in the hangout tomorrow.  And if we are still 3 months away from 2.0 if we are three months away I will start a bounty.

Thank you each individual for your contribution to this thread and for kind words.

It's up to the feed producer and has can be enabled immediately out the gate with bit shares 2.0 presuming it delivers on what it promises

You could publish the value price in the feed with all adjustments baked in.   It doesn't have to match the real price it just has to be correct and verifiable.

[puppies]

Please don't institute any of this.  I don't think either option i or option ii. Will work without an external infusion of funds.  These reasons have been stated previously in this thread by myself and others before they were ignored. 

[Bitcoinfan]

@fuzzy

Can you ask @bytemaster if he is implementing @starspirit no. 2 of bitAsset valuing in the hangout tomorrow.  And if we are still 3 months away from 2.0 if we are three months away I will start a bounty.

Thank you each individual for your contribution to this thread and for kind words.

It's up to the feed producer and has can be enabled immediately out the gate with bit shares 2.0 presuming it delivers on what it promises

[eagleeye]

@fuzzy

Can you ask @bytemaster if he is implementing @starspirit no. 2 of bitAsset valuing in the hangout tomorrow.  And if we are still 3 months away from 2.0 if we are three months away I will start a bounty.

Thank you each individual for your contribution to this thread and for kind words.

[starspirit]

Starspriit what's your thoughts on the new market mechanism for 2.0.  Do you have any concerns?  what are the biggest weaknesses that will hinder it from working?

This is off-the-cuff, so I might miss a few things.

Positives:

(a) Recently proposed mechanism that Smartcoins are self-created by shorts and then sold into the market, rather than shorts selling directly to create them. Big simplification of market mechanism.
(b) Removal of you-get-what-you-ask-for pricing to approach external market standard. This was an unnecessary cost on users.
(c) Removal of expiries on shorts. Recognition that settlements against shorts can be queued in other ways.
(d) Simplification of collateral rules for shorts, only need to meet minimum.

The biggest areas I still think we need to work on are:

(e) A mechanism to target parity rather than a floating premium. This would be more consistent with what traders are familiar with on competing exchanges.
(f) Option of a direct fee/yield mechanism between longs and shorts to mediate supply and demand. In some cases shorts may need incentive to support the issue.
(g) An ability to define the asset as a function of other inputs, with adjustments for dividends, carry costs, yields, asset replacement etc (as per this this thread).
(h) More diversified collateral, which I suspect the wider market would prefer to forced reliance on BTS (with early stage risk), or a derivative of BTS.
(i) Alternatives to full market liquidation in black swan events. Currently even minor losses could trigger these and impact on the bitShares brand. I've started a discussion in another thread.
(j) Re-assess the method of feed production. Currently there is reliance on a small set shared models for feed production.

(k) Expand the design flexibility available to issuers of privatised Smartcoins to accommodate a wider range of entrepreneurial solutions. Ultimately this is the final solution for most of the challenges (and possibly others) above - let the free market determine the best designs. I'm looking forward to the path toward flexibility that will be opened under 2.0, though its only the tip of an iceberg, and my goal is to keep promoting this direction. In fact, then we can all agree to disagree on the best approach and let the market prove what's most effective.

[Bitcoinfan]

Starspriit what's your thoughts on the new market mechanism for 2.0.  Do you have any concerns?  what are the biggest weaknesses that will hinder it from working?

[starspirit]

There is the stock split too.   It is actually a real challenge/expense to get the detailed dividend and split data required without having rounding errors (which compound over time) or violating someone's terms of service.   It is as if we have the new technology and that it is better if we support companies that upgrade.

Yes, in principle bitAssets should allow for ALL possible corporate actions such as dividends, bonus issues, buybacks, takeovers and share splitting.
The impact of any of these should be a fair adjustment to asset value and obligation of shorts.

There are two ways I can think of to do this in the case of stocks:

i) Replicate the corporate actions for owners of bitAssets. That would involve making distributions from the collateral pool for dividends, splitting the number of bitAssets for stock splits etc. I think to work out all these adjustments, while possible, would be very difficult to implement.

ii) Define a bitAsset as representing a varying number of shares. Then the fair value of the bitAsset can be adjusted over time to reflect all of these events. For example, a dividend would result in an increase in the underlying number of shares represented, essentially assuming reinvestment. A stock split would simply represent a change to the number of underlying shares.

I prefer (ii), at least initially, because I think it is a lot easier to deal with. There are no additional mechanics required for implementation of bitAssets, apart from the flexibility to define fair value as a function of stock price that depends on an adjusted number of shares over time.

Your # 2 is the right idea.  It would be the equivalent of a NAV calculation that a Mutal Fund / Actively manage fund would do at the end of the day.  A feed producers responsbility will be to make these calculations everyday, report and submit.  In the end the Spot Prices will be different between a MPA and a Stock, but the Fair Value will be nearly the same.

Exactly. This was the basis for my idea on ETF-style tracking funds here...(although if you read this thread, note that although the primary concept is unchanged, I have since then changed the application of both yield and settlement to what I think is a more efficient approach)...
https://bitsharestalk.org/index.php/topic,16672.msg213412.html#msg213412

If you want an asset to track a stock over time, it needs to track X shares of the stock, where X increases when a divident is paid, a stock split, etc.

For example, I have an asset which initially represents 1 share of XYZ stock which is priced at $10.

XYZ gives a 10 cent dividend (1% of its value at the time of the dividend).  Now, my asset represents 1.01 share. of the stock.  Later the stock does a 2 for 1 split.  Now, my asset represents 2.02 shares of the stock.  And so on.

If you don't do it this way, any stock split will ruin the asset, and it will lose ground over time as the company issues dividends.

We are in agreement.

Assuming (ii) is the preferred model for now, a follow-up question is then how best to implement this NAV style calculation. At this point I tend to think the easiest way is to trust the feed producers to provide all the relevant inputs, rather than trying to code in all the possible permutations of corporate actions at the outset. Feed producers could provide multiple inputs (for example Price, Quantity, and Time), with guidance provided by the issuer and collectively as to how best to adjust these quantities with upcoming events. From this the NAV could be updated automatically.

NAV, rather than price, would then serve as the basis for settlements and liquidation events also.

the more we flush out this theoretical asset, the more i'm starting to think it's maybe too problematic to worry about, the possible rewards not worth the headache; especially since we have so many possible billions of dollars of capital flows from the simple pegged products, like bitUSD, bitCNY, bitEUR, bitBRENT, bitGOLD, bitSILVER, etc. mimicking corporate equity, which means trying to account for all the possible decision permutations management could make, seems like a mess when we're sitting on a gold mine in possible value with our current products. by no means is this impossible--maybe something to keep flushing out for 3.0--but i sure hope our devs don't divert any brain power or labor hours at this point.

Yes, shares are a level of difficulty up from currencies, commodities and indexes. I agree it is better we set our sights on the lower hanging fruit first and build up. These are issues we will still need to deal with even in the simpler asset classes, although the event-types are more limited. For example, deposits pay yield. Commodities have costs of carry and funding rates to contend with. Indexes also have dividends (but usually there is shandy accumulation index to use).

[MrJeans]

There is the stock split too.   It is actually a real challenge/expense to get the detailed dividend and split data required without having rounding errors (which compound over time) or violating someone's terms of service.   It is as if we have the new technology and that it is better if we support companies that upgrade.

Yes, in principle bitAssets should allow for ALL possible corporate actions such as dividends, bonus issues, buybacks, takeovers and share splitting.
The impact of any of these should be a fair adjustment to asset value and obligation of shorts.

There are two ways I can think of to do this in the case of stocks:

i) Replicate the corporate actions for owners of bitAssets. That would involve making distributions from the collateral pool for dividends, splitting the number of bitAssets for stock splits etc. I think to work out all these adjustments, while possible, would be very difficult to implement.

ii) Define a bitAsset as representing a varying number of shares. Then the fair value of the bitAsset can be adjusted over time to reflect all of these events. For example, a dividend would result in an increase in the underlying number of shares represented, essentially assuming reinvestment. A stock split would simply represent a change to the number of underlying shares.

I prefer (ii), at least initially, because I think it is a lot easier to deal with. There are no additional mechanics required for implementation of bitAssets, apart from the flexibility to define fair value as a function of stock price that depends on an adjusted number of shares over time.

I really like number ii.

[Ander]

If you want an asset to track a stock over time, it needs to track X shares of the stock, where X increases when a divident is paid, a stock split, etc.

For example, I have an asset which initially represents 1 share of XYZ stock which is priced at $10.

XYZ gives a 10 cent dividend (1% of its value at the time of the dividend).  Now, my asset represents 1.01 share. of the stock.  Later the stock does a 2 for 1 split.  Now, my asset represents 2.02 shares of the stock.  And so on.

If you don't do it this way, any stock split will ruin the asset, and it will lose ground over time as the company issues dividends.

[topcandle]

There is the stock split too.   It is actually a real challenge/expense to get the detailed dividend and split data required without having rounding errors (which compound over time) or violating someone's terms of service.   It is as if we have the new technology and that it is better if we support companies that upgrade.

Yes, in principle bitAssets should allow for ALL possible corporate actions such as dividends, bonus issues, buybacks, takeovers and share splitting.
The impact of any of these should be a fair adjustment to asset value and obligation of shorts.

There are two ways I can think of to do this in the case of stocks:

i) Replicate the corporate actions for owners of bitAssets. That would involve making distributions from the collateral pool for dividends, splitting the number of bitAssets for stock splits etc. I think to work out all these adjustments, while possible, would be very difficult to implement.

ii) Define a bitAsset as representing a varying number of shares. Then the fair value of the bitAsset can be adjusted over time to reflect all of these events. For example, a dividend would result in an increase in the underlying number of shares represented, essentially assuming reinvestment. A stock split would simply represent a change to the number of underlying shares.

I prefer (ii), at least initially, because I think it is a lot easier to deal with. There are no additional mechanics required for implementation of bitAssets, apart from the flexibility to define fair value as a function of stock price that depends on an adjusted number of shares over time.

Your # 2 is the right idea.  It would be the equivalent of a NAV calculation that a Mutal Fund / Actively manage fund would do at the end of the day.  A feed producers responsbility will be to make these calculations everyday, report and submit.  In the end the Spot Prices will be different between a MPA and a Stock, but the Fair Value will be nearly the same.

[cylonmaker2053]

There is the stock split too.   It is actually a real challenge/expense to get the detailed dividend and split data required without having rounding errors (which compound over time) or violating someone's terms of service.   It is as if we have the new technology and that it is better if we support companies that upgrade.

Yes, in principle bitAssets should allow for ALL possible corporate actions such as dividends, bonus issues, buybacks, takeovers and share splitting.
The impact of any of these should be a fair adjustment to asset value and obligation of shorts.

There are two ways I can think of to do this in the case of stocks:

i) Replicate the corporate actions for owners of bitAssets. That would involve making distributions from the collateral pool for dividends, splitting the number of bitAssets for stock splits etc. I think to work out all these adjustments, while possible, would be very difficult to implement.

ii) Define a bitAsset as representing a varying number of shares. Then the fair value of the bitAsset can be adjusted over time to reflect all of these events. For example, a dividend would result in an increase in the underlying number of shares represented, essentially assuming reinvestment. A stock split would simply represent a change to the number of underlying shares.

I prefer (ii), at least initially, because I think it is a lot easier to deal with. There are no additional mechanics required for implementation of bitAssets, apart from the flexibility to define fair value as a function of stock price that depends on an adjusted number of shares over time.

the more we flush out this theoretical asset, the more i'm starting to think it's maybe too problematic to worry about, the possible rewards not worth the headache; especially since we have so many possible billions of dollars of capital flows from the simple pegged products, like bitUSD, bitCNY, bitEUR, bitBRENT, bitGOLD, bitSILVER, etc. mimicking corporate equity, which means trying to account for all the possible decision permutations management could make, seems like a mess when we're sitting on a gold mine in possible value with our current products. by no means is this impossible--maybe something to keep flushing out for 3.0--but i sure hope our devs don't divert any brain power or labor hours at this point.

[starspirit]

There is the stock split too.   It is actually a real challenge/expense to get the detailed dividend and split data required without having rounding errors (which compound over time) or violating someone's terms of service.   It is as if we have the new technology and that it is better if we support companies that upgrade.

Yes, in principle bitAssets should allow for ALL possible corporate actions such as dividends, bonus issues, buybacks, takeovers and share splitting.
The impact of any of these should be a fair adjustment to asset value and obligation of shorts.

There are two ways I can think of to do this in the case of stocks:

i) Replicate the corporate actions for owners of bitAssets. That would involve making distributions from the collateral pool for dividends, splitting the number of bitAssets for stock splits etc. I think to work out all these adjustments, while possible, would be very difficult to implement.

ii) Define a bitAsset as representing a varying number of shares. Then the fair value of the bitAsset can be adjusted over time to reflect all of these events. For example, a dividend would result in an increase in the underlying number of shares represented, essentially assuming reinvestment. A stock split would simply represent a change to the number of underlying shares.

I prefer (ii), at least initially, because I think it is a lot easier to deal with. There are no additional mechanics required for implementation of bitAssets, apart from the flexibility to define fair value as a function of stock price that depends on an adjusted number of shares over time.

[jamesc]

There is the stock split too.   It is actually a real challenge/expense to get the detailed dividend and split data required without having rounding errors (which compound over time) or violating someone's terms of service.   It is as if we have the new technology and that it is better if we support companies that upgrade.

[lil_jay890]

Yes how do I avoid Reporting within the bitshares/ Bitcoin/ crypto/ network?  Let's  just keep it at that for now . We wouldn't want others to commit these tax breaches

As I see it now you could keep trading back and forth.  Lets say you grow your account value 10% or 20%, I don't think you would have to report that until you cashed out into fiat or purchased a good or service with your bitAssets.

[Bitcoinfan]

Yes how do I avoid Reporting within the bitshares/ Bitcoin/ crypto/ network?  Let's  just keep it at that for now . We wouldn't want others to commit these tax breaches

[lil_jay890]

MPAs are like derivatives on the underlying asset. They are not required to distribute a dividend like the underlying asset does. However, their valuation would need to reflect the value of any dividends received, otherwise the MPA is a provably inferior investment to owning the underlying asset outright (*). This may not matter as much for low dividend growth stocks, but is significant for higher dividend stocks.

Even on a dividend discount model, the price only ever reflects the valuation of future dividends. At the exact point a stock goes ex-dividend, its price falls (in theory by the value of the dividend). Apple stock holders do not lose value, because they receive the actual dividend. bitAPPLE holders would lose value, if they received no distribution, and the price was defined as the stock price. They can be compensated for this if the price is defined as an accumulation price (i.e. with dividends reinvested), rather than the actual stock price.
As an aside, I would like exactly this sort of flexibility to exist in Smartcoins 2.0, which I have discussed previously.

[**** footnote on why the MPA would be inferior and either price below par, or if forced to par by settlement rules, lack demand.]

(*) If the Apple MPA only ever reflected the price of Apple stock, and never distributed dividends, any user could get paid the dividend stream for free without any price risk. They would do this as follows.

(i) Deposit $250 worth of BTS as collateral to self-create a long and short on bitAPPLE, and sell the bitAPPLE for $125. On this leg, you are short the APPLE price.
(ii) Use the proceeds of your bitAPPLE sale to buy an Apple share for $125. On this leg, you are long the APPLE price, plus long the dividend stream.

In theory the market would be willing to accept a much lower price on bitAPPLE.

I argue that MPA apple is an inferior investment to actual apple stock.  I've made the argument that the stock price is priced w/ dividend annoucements.  MPA Apple also does not have to pay capital gains tax and income tax which can be ranging from 25% - 40% markdown from the sale price of the stock.  MPA Apple is therefore much more superior  even though it doesn't give out dividends.

You would still have to pay capital gains tax on anything you make within the bitshares system... You could try to avoid it, but I think the IRS would see it as capital gains.

[Bitcoinfan]

MPAs are like derivatives on the underlying asset. They are not required to distribute a dividend like the underlying asset does. However, their valuation would need to reflect the value of any dividends received, otherwise the MPA is a provably inferior investment to owning the underlying asset outright (*). This may not matter as much for low dividend growth stocks, but is significant for higher dividend stocks.

Even on a dividend discount model, the price only ever reflects the valuation of future dividends. At the exact point a stock goes ex-dividend, its price falls (in theory by the value of the dividend). Apple stock holders do not lose value, because they receive the actual dividend. bitAPPLE holders would lose value, if they received no distribution, and the price was defined as the stock price. They can be compensated for this if the price is defined as an accumulation price (i.e. with dividends reinvested), rather than the actual stock price.
As an aside, I would like exactly this sort of flexibility to exist in Smartcoins 2.0, which I have discussed previously.

[**** footnote on why the MPA would be inferior and either price below par, or if forced to par by settlement rules, lack demand.]

(*) If the Apple MPA only ever reflected the price of Apple stock, and never distributed dividends, any user could get paid the dividend stream for free without any price risk. They would do this as follows.

(i) Deposit $250 worth of BTS as collateral to self-create a long and short on bitAPPLE, and sell the bitAPPLE for $125. On this leg, you are short the APPLE price.
(ii) Use the proceeds of your bitAPPLE sale to buy an Apple share for $125. On this leg, you are long the APPLE price, plus long the dividend stream.

In theory the market would be willing to accept a much lower price on bitAPPLE.

I argue that MPA apple is an inferior investment to actual apple stock.  I've made the argument that the stock price is priced w/ dividend annoucements.  MPA Apple also does not have to pay capital gains tax and income tax which can be ranging from 25% - 40% markdown from the sale price of the stock.  MPA Apple is therefore much more superior  even though it doesn't give out dividends. 

[Bitcoinfan]

Not the solution your looking for but: The MPA owner could sell right before dividend disbursement date and then purchase afterwards when the stock price is lower from distributing dividends.  Therefore It would have the same effect. The gains in the transaction will equal the dividend. 

[MrJeans]

MPAs are like derivatives on the underlying asset. They are not required to distribute a dividend like the underlying asset does. However, their valuation would need to reflect the value of any dividends received, otherwise the MPA is a provably inferior investment to owning the underlying asset outright (*). This may not matter as much for low dividend growth stocks, but is significant for higher dividend stocks.

Even on a dividend discount model, the price only ever reflects the valuation of future dividends. At the exact point a stock goes ex-dividend, its price falls (in theory by the value of the dividend). Apple stock holders do not lose value, because they receive the actual dividend. bitAPPLE holders would lose value, if they received no distribution, and the price was defined as the stock price. They can be compensated for this if the price is defined as an accumulation price (i.e. with dividends reinvested), rather than the actual stock price.
As an aside, I would like exactly this sort of flexibility to exist in Smartcoins 2.0, which I have discussed previously.

[**** footnote on why the MPA would be inferior and either price below par, or if forced to par by settlement rules, lack demand.]

(*) If the Apple MPA only ever reflected the price of Apple stock, and never distributed dividends, any user could get paid the dividend stream for free without any price risk. They would do this as follows.

(i) Deposit $250 worth of BTS as collateral to self-create a long and short on bitAPPLE, and sell the bitAPPLE for $125. On this leg, you are short the APPLE price.
(ii) Use the proceeds of your bitAPPLE sale to buy an Apple share for $125. On this leg, you are long the APPLE price, plus long the dividend stream.

In theory the market would be willing to accept a much lower price on bitAPPLE.

Good summary.
We need to find some kind of solution for dividend paying stocks.
We could always launch MPAs without dividends and see what happens. But from an investment point of view it would put anyone who buys bitAAPL at a financial disadvantage to people buying AAPL. But who knows what would happen. Only one way to find out...

[starspirit]

MPAs are like derivatives on the underlying asset. They are not required to distribute a dividend like the underlying asset does. However, their valuation would need to reflect the value of any dividends received, otherwise the MPA is a provably inferior investment to owning the underlying asset outright (*). This may not matter as much for low dividend growth stocks, but is significant for higher dividend stocks.

Even on a dividend discount model, the price only ever reflects the valuation of future dividends. At the exact point a stock goes ex-dividend, its price falls (in theory by the value of the dividend). Apple stock holders do not lose value, because they receive the actual dividend. bitAPPLE holders would lose value, if they received no distribution, and the price was defined as the stock price. They can be compensated for this if the price is defined as an accumulation price (i.e. with dividends reinvested), rather than the actual stock price.
As an aside, I would like exactly this sort of flexibility to exist in Smartcoins 2.0, which I have discussed previously.

[**** footnote on why the MPA would be inferior and either price below par, or if forced to par by settlement rules, lack demand.]

(*) If the Apple MPA only ever reflected the price of Apple stock, and never distributed dividends, any user could get paid the dividend stream for free without any price risk. They would do this as follows.

(i) Deposit $250 worth of BTS as collateral to self-create a long and short on bitAPPLE, and sell the bitAPPLE for $125. On this leg, you are short the APPLE price.
(ii) Use the proceeds of your bitAPPLE sale to buy an Apple share for $125. On this leg, you are long the APPLE price, plus long the dividend stream.

In theory the market would be willing to accept a much lower price on bitAPPLE.

[Bitcoinfan]

To me this discussion is groundless since there is a generally misunderstanding of how markets work.  There is no need at all to pay out dividends, since based on years of academic research, the stock price should already reflect that in its value.  Why else do you think a company has a stock price?  Because we're betting on the amount another seller will sell it for (eg. orginal bitshares molymorphic digital asset).  No.  its because shareholders have a stake of the profits from dividends.  Therefore the price reflects dividends.  This is the onereason why molymorphic digital assets did not work-- since there was no stake in profits, no causal relationship to the companies financial performance, the system was pegging based on inferences of what other people would buy or sell based on the agreement of name and what the asset possibly represents. 

The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.[1] In other words, it is used to value stocks based on the net present value of the future dividends. The equation most widely used is called the Gordon growth model. It is named after Myron J. Gordon of the University of Toronto, who originally published it along with Eli Shapiro in 1956 and made reference to it in 1959.[2][3] Their work borrowed heavily from the theoretical and mathematical ideas found in John Burr Williams 1938 book "The Theory of Investment Value."

https://en.wikipedia.org/wiki/Dividend_discount_model

Ya we know this.
But if you discounting future dividends you need to get those dividends.
If you dont get those dividends you cant discount it.
Its like saying you should value a goose that represents a gold-egg-laying-goose at the same value given to a gold-egg-laying-goose even if your goose doesnt lay any golden eggs.
I would personally pay more for a goose that lays golden eggs than for one that does not.

So MPA should trade at a discount to actual stock price.
MPA value = real world stock price - discounted future dividends

The issue is that when you use the perpetuity model for stock valuation you end up with a zero value for dividend paying stocks if you remove the dividends.
But then again, models are always a bit funny.

This is really complicating things.  From what I gather if a stock gives the same dividend rate in perpetuity, then the stock price will not change.  It will have greater than a zero value.  Remember the stock price is relative to other growth rates of stocks around the market.  So you could say paying out in dividend might make you richer in quantity, but does it make you richer in terms of overall market value?  Not really. 

Its possible we're talking pass each other.  But again I'd reiterate, you don't need to mess with giving out or pegging to include a dividend.  Once a stock dividend is announced, the stock price will reflect all information available about the dividend disbursements, including how much, when, and what it is discounted at.  Cause markets are efficient, it can be considered, at that point in time, the most probably event/ occurrence of the future. 

[cylonmaker2053]

yes, exactly...no need to complicate things, or to take actions that'd diverge the price of the pegged asset to the underlying.

Haha I think Bitshares has already complicated things in a beautiful way.
Its exhausting trying to explain Bitshares to people in finance.

[/quote]

yes, for sure we're adding a beautiful new chapter to the story of finance! i hope to be one of the first academics to document it

[cylonmaker2053]

To me this discussion is groundless since there is a generally misunderstanding of how markets work.  There is no need at all to pay out dividends, since based on years of academic research, the stock price should already reflect that in its value.  Why else do you think a company has a stock price?  Because we're betting on the amount another seller will sell it for (eg. orginal bitshares molymorphic digital asset).  No.  its because shareholders have a stake of the profits from dividends.  Therefore the price reflects dividends.  This is the onereason why molymorphic digital assets did not work-- since there was no stake in profits, no causal relationship to the companies financial performance, the system was pegging based on inferences of what other people would buy or sell based on the agreement of name and what the asset possibly represents. 

The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.[1] In other words, it is used to value stocks based on the net present value of the future dividends. The equation most widely used is called the Gordon growth model. It is named after Myron J. Gordon of the University of Toronto, who originally published it along with Eli Shapiro in 1956 and made reference to it in 1959.[2][3] Their work borrowed heavily from the theoretical and mathematical ideas found in John Burr Williams 1938 book "The Theory of Investment Value."

https://en.wikipedia.org/wiki/Dividend_discount_model

Ya we know this.
But if you discounting future dividends you need to get those dividends.
If you dont get those dividends you cant discount it.
Its like saying you should value a goose that represents a gold-egg-laying-goose at the same value given to a gold-egg-laying-goose even if your goose doesnt lay any golden eggs.
I would personally pay more for a goose that lays golden eggs than for one that does not.

So MPA should trade at a discount to actual stock price.
MPA value = real world stock price - discounted future dividends

The issue is that when you use the perpetuity model for stock valuation you end up with a zero value for dividend paying stocks if you remove the dividends.
But then again, models are always a bit funny.

lol yes i agree completely ...which is why my point is that we're not trying to replicate the economic characteristics of owning corporate equity, particularly bc we have no legal claims on ownership and firm profits...all we're doing is pegging a price to our synthetic asset.

models...yes, they are funny

[MrJeans]

As long as you are happy for bitAPPLE to represent a number of Apple shares that grows over time, you can always define the exposure as as accumulation index that assumes any dividends are reinvested. Price feeds would need to adjust accordingly. This would mean no dividends are required to be distributed.

that's also a good approach

Would make for complicated analysis for uploading feeds and investors would never be able to compare traditional price to Bitshares price.

How about the dividends is distributed by the network creating new tokens of that MPA equal to the amount of dividends needed in proportion to the market cap of the MPA. The new tokens would then be distributed proportionally.

This means everyone gets some dividends which they can trade for bitUSD. Share price stays same as traditional price.

Problem is the dividend tokens are not-collateralize   

Also, still want to know if it is possible to share drop some bitUSD (as dividends) on everyone who owns a certain UIA. Anyone know?

this is a good discussion, but we may be overcomplicating things. a bitAPPL could simply use the stock price feed and that's that...no fancy add-ons to mimic share ownership. we're creating pegged assets, not actual share ownership in corporate equity, so i don't see a need to go beyond simply pulling in the stock price feed and calling it a day.

I agree with what you say here. Personally I can't see a way of representing the dividends of normal stocks using MPA. Dividends are part of the profit from that company, and since we're only trying to peg an asset to its real market value, how could it be possible to distribute dividends? Where would that added value come from? And adding the cumulative value of the dividends to the stock price would only increase the difference between the feed and the MPA value, which will make it very difficult to evaluate in the future.

Unless someone comes up with a very clever way to create and distribute dividends using MPA, I don't see this as easily feasible.

yes, exactly...no need to complicate things, or to take actions that'd diverge the price of the pegged asset to the underlying.

Haha I think Bitshares has already complicated things in a beautiful way.
Its exhausting trying to explain Bitshares to people in finance.

[cylonmaker2053]

To me this discussion is groundless since there is a generally misunderstanding of how markets work.  There is no need at all to pay out dividends, since based on years of academic research, the stock price should already reflect that in its value.  Why else do you think a company has a stock price?  Because we're betting on the amount another seller will sell it for (eg. orginal bitshares molymorphic digital asset).  No.  its because shareholders have a stake of the profits from dividends.  Therefore the price reflects dividends.  This is the onereason why molymorphic digital assets did not work-- since there was no stake in profits, no causal relationship to the companies financial performance, the system was pegging based on inferences of what other people would buy or sell based on the agreement of name and what the asset possibly represents. 

The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.[1] In other words, it is used to value stocks based on the net present value of the future dividends. The equation most widely used is called the Gordon growth model. It is named after Myron J. Gordon of the University of Toronto, who originally published it along with Eli Shapiro in 1956 and made reference to it in 1959.[2][3] Their work borrowed heavily from the theoretical and mathematical ideas found in John Burr Williams 1938 book "The Theory of Investment Value."

https://en.wikipedia.org/wiki/Dividend_discount_model

yeah and going back to basic requirements....what are we trying to do with pegged assets? are we merely setting a price peg around which our synthetic assets oscillate, or are we trying to replicate the economic characteristics of owning corporate equity? of course, the answer is the former (at least for what we've been describing as market-pegged assets), so there's no need to complicate things further.

[MrJeans]

To me this discussion is groundless since there is a generally misunderstanding of how markets work.  There is no need at all to pay out dividends, since based on years of academic research, the stock price should already reflect that in its value.  Why else do you think a company has a stock price?  Because we're betting on the amount another seller will sell it for (eg. orginal bitshares molymorphic digital asset).  No.  its because shareholders have a stake of the profits from dividends.  Therefore the price reflects dividends.  This is the onereason why molymorphic digital assets did not work-- since there was no stake in profits, no causal relationship to the companies financial performance, the system was pegging based on inferences of what other people would buy or sell based on the agreement of name and what the asset possibly represents. 

The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.[1] In other words, it is used to value stocks based on the net present value of the future dividends. The equation most widely used is called the Gordon growth model. It is named after Myron J. Gordon of the University of Toronto, who originally published it along with Eli Shapiro in 1956 and made reference to it in 1959.[2][3] Their work borrowed heavily from the theoretical and mathematical ideas found in John Burr Williams 1938 book "The Theory of Investment Value."

https://en.wikipedia.org/wiki/Dividend_discount_model

Ya we know this.
But if you discounting future dividends you need to get those dividends.
If you dont get those dividends you cant discount it.
Its like saying you should value a goose that represents a gold-egg-laying-goose at the same value given to a gold-egg-laying-goose even if your goose doesnt lay any golden eggs.
I would personally pay more for a goose that lays golden eggs than for one that does not.

So MPA should trade at a discount to actual stock price.
MPA value = real world stock price - discounted future dividends

The issue is that when you use the perpetuity model for stock valuation you end up with a zero value for dividend paying stocks if you remove the dividends.
But then again, models are always a bit funny.

[Bitcoinfan]

To me this discussion is groundless since there is a generally misunderstanding of how markets work.  There is no need at all to pay out dividends, since based on years of academic research, the stock price should already reflect that in its value.  Why else do you think a company has a stock price?  Because we're betting on the amount another seller will sell it for (eg. orginal bitshares molymorphic digital asset).  No.  its because shareholders have a stake of the profits from dividends.  Therefore the price reflects dividends.  This is the onereason why molymorphic digital assets did not work-- since there was no stake in profits, no causal relationship to the companies financial performance, the system was pegging based on inferences of what other people would buy or sell based on the agreement of name and what the asset possibly represents. 

The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.[1] In other words, it is used to value stocks based on the net present value of the future dividends. The equation most widely used is called the Gordon growth model. It is named after Myron J. Gordon of the University of Toronto, who originally published it along with Eli Shapiro in 1956 and made reference to it in 1959.[2][3] Their work borrowed heavily from the theoretical and mathematical ideas found in John Burr Williams 1938 book "The Theory of Investment Value."

https://en.wikipedia.org/wiki/Dividend_discount_model

[cylonmaker2053]

As long as you are happy for bitAPPLE to represent a number of Apple shares that grows over time, you can always define the exposure as as accumulation index that assumes any dividends are reinvested. Price feeds would need to adjust accordingly. This would mean no dividends are required to be distributed.

that's also a good approach

Would make for complicated analysis for uploading feeds and investors would never be able to compare traditional price to Bitshares price.

How about the dividends is distributed by the network creating new tokens of that MPA equal to the amount of dividends needed in proportion to the market cap of the MPA. The new tokens would then be distributed proportionally.

This means everyone gets some dividends which they can trade for bitUSD. Share price stays same as traditional price.

Problem is the dividend tokens are not-collateralize   

Also, still want to know if it is possible to share drop some bitUSD (as dividends) on everyone who owns a certain UIA. Anyone know?

this is a good discussion, but we may be overcomplicating things. a bitAPPL could simply use the stock price feed and that's that...no fancy add-ons to mimic share ownership. we're creating pegged assets, not actual share ownership in corporate equity, so i don't see a need to go beyond simply pulling in the stock price feed and calling it a day.

I agree with what you say here. Personally I can't see a way of representing the dividends of normal stocks using MPA. Dividends are part of the profit from that company, and since we're only trying to peg an asset to its real market value, how could it be possible to distribute dividends? Where would that added value come from? And adding the cumulative value of the dividends to the stock price would only increase the difference between the feed and the MPA value, which will make it very difficult to evaluate in the future.

Unless someone comes up with a very clever way to create and distribute dividends using MPA, I don't see this as easily feasible.

yes, exactly...no need to complicate things, or to take actions that'd diverge the price of the pegged asset to the underlying.

[Chuckone]

As long as you are happy for bitAPPLE to represent a number of Apple shares that grows over time, you can always define the exposure as as accumulation index that assumes any dividends are reinvested. Price feeds would need to adjust accordingly. This would mean no dividends are required to be distributed.

that's also a good approach

Would make for complicated analysis for uploading feeds and investors would never be able to compare traditional price to Bitshares price.

How about the dividends is distributed by the network creating new tokens of that MPA equal to the amount of dividends needed in proportion to the market cap of the MPA. The new tokens would then be distributed proportionally.

This means everyone gets some dividends which they can trade for bitUSD. Share price stays same as traditional price.

Problem is the dividend tokens are not-collateralize   

Also, still want to know if it is possible to share drop some bitUSD (as dividends) on everyone who owns a certain UIA. Anyone know?

this is a good discussion, but we may be overcomplicating things. a bitAPPL could simply use the stock price feed and that's that...no fancy add-ons to mimic share ownership. we're creating pegged assets, but actual share ownership in corporate equity, so i don't see a need to go beyond simply pulling in the stock price feed and calling it a day.

I agree with what you say here. Personally I can't see a way of representing the dividends of normal stocks using MPA. Dividends are part of the profit from that company, and since we're only trying to peg an asset to its real market value, how could it be possible to distribute dividends? Where would that added value come from? And adding the cumulative value of the dividends to the stock price would only increase the difference between the feed and the MPA value, which will make it very difficult to evaluate in the future.

Unless someone comes up with a very clever way to create and distribute dividends using MPA, I don't see this as easily feasible. 

[cylonmaker2053]

As long as you are happy for bitAPPLE to represent a number of Apple shares that grows over time, you can always define the exposure as as accumulation index that assumes any dividends are reinvested. Price feeds would need to adjust accordingly. This would mean no dividends are required to be distributed.

that's also a good approach

Would make for complicated analysis for uploading feeds and investors would never be able to compare traditional price to Bitshares price.

How about the dividends is distributed by the network creating new tokens of that MPA equal to the amount of dividends needed in proportion to the market cap of the MPA. The new tokens would then be distributed proportionally.

This means everyone gets some dividends which they can trade for bitUSD. Share price stays same as traditional price.

Problem is the dividend tokens are not-collateralize   

Also, still want to know if it is possible to share drop some bitUSD (as dividends) on everyone who owns a certain UIA. Anyone know?

this is a good discussion, but we may be overcomplicating things. a bitAPPL could simply use the stock price feed and that's that...no fancy add-ons to mimic share ownership. we're creating pegged assets, not actual share ownership in corporate equity, so i don't see a need to go beyond simply pulling in the stock price feed and calling it a day.

[MrJeans]

As long as you are happy for bitAPPLE to represent a number of Apple shares that grows over time, you can always define the exposure as as accumulation index that assumes any dividends are reinvested. Price feeds would need to adjust accordingly. This would mean no dividends are required to be distributed.

that's also a good approach

Would make for complicated analysis for uploading feeds and investors would never be able to compare traditional price to Bitshares price.

How about the dividends is distributed by the network creating new tokens of that MPA equal to the amount of dividends needed in proportion to the market cap of the MPA. The new tokens would then be distributed proportionally.

This means everyone gets some dividends which they can trade for bitUSD. Share price stays same as traditional price.

Problem is the dividend tokens are not-collateralize   

Also, still want to know if it is possible to share drop some bitUSD (as dividends) on everyone who owns a certain UIA. Anyone know?

[fer87]

I think like you eagleeye   

[puppies]

Where would the revenue stream for dividends even come from?  An attempt to match dividends paid out by the real asset would open you up to potential losses.  I would focus instead on the benefits of the bitasset, such as no counterparty risk, almost instant transactions, and the ability to trade during off hours.  As an investor I would feel less confident if I thought that unsustainable promises had been made.

yeah divs could be reflected in price--if not paid out in bitassets then these instruments would be discounted accordingly--or there could be a cost built into the short mechanism akin to interest use today.

Well Apple makes its revenues from selling shiny things.  bitApple would have to make its revenue from fees.  Dividends could be paid from these fees, but at the cost of either increasing fees on users or decreasing profits for the administrator of the asset.  I don't think that attempting to match Apples dividends on a per share basis would be a good idea.  If there are to be dividends paid out they should be based upon the profitability of bitApple.  There is also no reason to limit these dividends to the same structure as the actual company.  The administrator of bitApple could pay out dividends on a weekly or monthly basis.  Depending upon fee structure and usage these dividends could even be greater than that paid out on actual Apple stock.

I'm thinking about bitAPPLE as a market pegged asset not a UIA

I am not 100% on the structure of MPA's in 2.0, and thats why I was talking about the administrator of the asset.  It really doesn't matter if that is an individual or the network as a whole though.  Unless you're suggesting dilution to pay for the dividends (which I would strongly oppose), the funds to pay the dividends would need to come from fees of some sort.  Paying dividends would necessitate reducing the profit of the network, increasing fees, or a combination of both.  I think paying dividends could be a very effective way of getting people to hold bitassets.  I hope to see lots of experiments to find the optimum level of profit for the network, and incentive to hold.  I don't think the network should take on the responsibility of matching the dividends paid out by a centralized company.  BTS holders should not be forced to pay bitAPPLE holders. 

[eagleeye]

Where would the revenue stream for dividends even come from?  An attempt to match dividends paid out by the real asset would open you up to potential losses.  I would focus instead on the benefits of the bitasset, such as no counterparty risk, almost instant transactions, and the ability to trade during off hours.  As an investor I would feel less confident if I thought that unsustainable promises had been made.

yeah divs could be reflected in price--if not paid out in bitassets then these instruments would be discounted accordingly--or there could be a cost built into the short mechanism akin to interest use today.

Well Apple makes its revenues from selling shiny things.  bitApple would have to make its revenue from fees.  Dividends could be paid from these fees, but at the cost of either increasing fees on users or decreasing profits for the administrator of the asset.  I don't think that attempting to match Apples dividends on a per share basis would be a good idea.  If there are to be dividends paid out they should be based upon the profitability of bitApple.  There is also no reason to limit these dividends to the same structure as the actual company.  The administrator of bitApple could pay out dividends on a weekly or monthly basis.  Depending upon fee structure and usage these dividends could even be greater than that paid out on actual Apple stock.

I'm thinking about bitAPPLE as a market pegged asset not a UIA

[puppies]

Where would the revenue stream for dividends even come from?  An attempt to match dividends paid out by the real asset would open you up to potential losses.  I would focus instead on the benefits of the bitasset, such as no counterparty risk, almost instant transactions, and the ability to trade during off hours.  As an investor I would feel less confident if I thought that unsustainable promises had been made.

yeah divs could be reflected in price--if not paid out in bitassets then these instruments would be discounted accordingly--or there could be a cost built into the short mechanism akin to interest use today.

Well Apple makes its revenues from selling shiny things.  bitApple would have to make its revenue from fees.  Dividends could be paid from these fees, but at the cost of either increasing fees on users or decreasing profits for the administrator of the asset.  I don't think that attempting to match Apples dividends on a per share basis would be a good idea.  If there are to be dividends paid out they should be based upon the profitability of bitApple.  There is also no reason to limit these dividends to the same structure as the actual company.  The administrator of bitApple could pay out dividends on a weekly or monthly basis.  Depending upon fee structure and usage these dividends could even be greater than that paid out on actual Apple stock.

[cylonmaker2053]

Where would the revenue stream for dividends even come from?  An attempt to match dividends paid out by the real asset would open you up to potential losses.  I would focus instead on the benefits of the bitasset, such as no counterparty risk, almost instant transactions, and the ability to trade during off hours.  As an investor I would feel less confident if I thought that unsustainable promises had been made.

yeah divs could be reflected in price--if not paid out in bitassets then these instruments would be discounted accordingly--or there could be a cost built into the short mechanism akin to interest use today.

[topcandle]

Where would the revenue stream for dividends even come from?  An attempt to match dividends paid out by the real asset would open you up to potential losses.  I would focus instead on the benefits of the bitasset, such as no counterparty risk, almost instant transactions, and the ability to trade during off hours.  As an investor I would feel less confident if I thought that unsustainable promises had been made.
[/quote

It should be reflected in price.  Meaning even though not paid out, the price has gone up on the market to account for this premium

[puppies]

Where would the revenue stream for dividends even come from?  An attempt to match dividends paid out by the real asset would open you up to potential losses.  I would focus instead on the benefits of the bitasset, such as no counterparty risk, almost instant transactions, and the ability to trade during off hours.  As an investor I would feel less confident if I thought that unsustainable promises had been made.

[fuzzy]

Step 1 add the indicies for the DOW/NASDAQ/etc. components
Step 2 add the individual high volume components (APPL, GOOG, FB,AMZN,etc)
Step 3 add lower liquidity components as markets demand

As always eagle. Good call.

[cylonmaker2053]

As long as you are happy for bitAPPLE to represent a number of Apple shares that grows over time, you can always define the exposure as as accumulation index that assumes any dividends are reinvested. Price feeds would need to adjust accordingly. This would mean no dividends are required to be distributed.

that's also a good approach

[cylonmaker2053]

Dividend feed?

surely possible and maybe worthwhile. i wonder if Bitshares had sufficient trading volume that a bitMSFT or whatever would see the shorting interest rate roughly equal the dividend rate? that'd be an interesting experiment. the nature of shorting assets into existence right now could feasibly mimic dividend yields without adding any additional features to the system, like a div feed.

I believe yield is to be taken out in 2.0. Maybe it should be made an optional feature to be included on a case by case bases

bitassets won't have the ability to earn interest in 2.0???

[starspirit]

As long as you are happy for bitAPPLE to represent a number of Apple shares that grows over time, you can always define the exposure as as accumulation index that assumes any dividends are reinvested. Price feeds would need to adjust accordingly. This would mean no dividends are required to be distributed.

[MrJeans]

Dividend feed?

surely possible and maybe worthwhile. i wonder if Bitshares had sufficient trading volume that a bitMSFT or whatever would see the shorting interest rate roughly equal the dividend rate? that'd be an interesting experiment. the nature of shorting assets into existence right now could feasibly mimic dividend yields without adding any additional features to the system, like a div feed.

I believe yield is to be taken out in 2.0. Maybe it should be made an optional feature to be included on a case by case bases

[cylonmaker2053]

Dividend feed?

surely possible and maybe worthwhile. i wonder if Bitshares had sufficient trading volume that a bitMSFT or whatever would see the shorting interest rate roughly equal the dividend rate? that'd be an interesting experiment. the nature of shorting assets into existence right now could feasibly mimic dividend yields without adding any additional features to the system, like a div feed.

[MrJeans]

Step 2 add the individual high volume components (APPL, GOOG, FB,AMZN,etc)

With BitShares 2.0 and privatized bit assets this will be a no-brainer that can make you a profit
But pssst .. don't tell anyone

I am sure there must be a way to pay dividends through privatized bit assets, right?
Send some bitUSD to every account in proportion to their ownership of the asset.

[jamesc]

Dividend feed?

[Erlich Bachman]

Correct just advertise the transaction cost, everything else being equal.

Right there, you just crushed the legacy business model.  Wait until some other smartchain can offer at least what BitShares can do, if you want to sweeten the deal any more.  Don't give away the milk for free unless they are too.

[monsterer]

To me it makes more sense to target non-dividend paying assets because otherwise you won't be able to claim equivalence when promoting them.

[xeroc]

Step 2 add the individual high volume components (APPL, GOOG, FB,AMZN,etc)

With BitShares 2.0 and privatized bit assets this will be a no-brainer that can make you a profit
But pssst .. don't tell anyone

[Erlich Bachman]

Step 1 add the indicies for the DOW/NASDAQ/etc. components
Step 2 add the individual high volume components (APPL, GOOG, FB,AMZN,etc)
Step 3 add lower liquidity components as markets demand

[eagleeye]

http://www.businessinsider.com/bnp-paribas-bitcoin-blockchain-securities-firms-redundant-2015-7?r=UK

I'm referring to Apple stock trading using MPA should we do a bounty?