almost true ... trading assets involves paying fees in both .. the bitAsset (ie bitUSD) and BTSX... the btsx part goes to the delegates


(first time use in a post)

This doesn't conflict with anything I said. The issue is that BTSX fees are only involved in trade involving multiple assets. If existing bitUSD is transferred between different users as payment, no BTSX fees accumulate. The traders subsidize the payment system users, and if those user bases grow disproportionately (as they should with one subsidizing the other) we have problems.

I still think it's a mistake to give asset transaction fees as interest instead of allocating them through the delegates.  The sooner we have solid rules that are obviously sustainable, the sooner people will be comfortable building business on the network.  It's possible that BTSX transactions will have high enough volume to compensate for asset transactions, but if the goal is Visa level volumes in bitUSD, and shorts only pay one time BTSX fees to create bitUSD, it's plausible that relatively stable asset markets with high transaction volume could become millstones around the delegate's necks, and that creates uncertainty and deters serious commitment.  This also runs the risk of inflating BTSX fees to the point where only high volume transactions are cost effective, stratifying a class system for investors.  Even if these concerns are unrealized, subsidizing asset holders from BTSX holders adds unnecessary economic complication and uncertainty, and hard codes a marketing agenda that I think would be better left at the fluid discretion of delegates and investors.

Conceptually, I think the ideal is that transaction fees should pay for the real costs of transactions, and shorts should pay longs a variable amount depending on the current demand to short.  Is there any disagreement on this?

I'm trying to figure out ways to implement these concepts more cleanly, but wanted to see how much consensus there is that they should be pursued.

Assuming the founders, devs, and corporation are the same people, the current allocation means that as long as that group retains levels of public support rivaling the United States Congress, they'll effectively have full control of the network.  If the "decentralized network" core is intended to be more than a marketing gimmick, I'd allocate more Notes to either the pre-sale or to PTS/AGS.  As long as PeerTracks is doing its job well and has public support, elected delegates should pass most of the profits on to them anyway, without having to rely on appointed delegates.

Quote from: tonyk on September 09, 2014, 06:13:31 am

Quote from: hughmanwho on September 09, 2014, 05:48:11 am

Also, how does shorting work?

I thought you a market expert... predictions... 'Do not say I did not warned you?'

Shorting works this way in my view - "You take a scissors, and you threaten to shorten your own tong whenever you are ready to say something stupid"  ... that's shorting regarding talking.

Regarding pants, you just take the above mentioned  scissors and you cut them to the desired length...

I know what shorting is.. sorry wasn't specific enough.  How does shorting work in BTSX?

When you put up collateral what happens if the price rises so high that the collateral would be eaten away.. do you lose the collateral and the item you shorted?  And do you have to borrow it from someone to short or is all BTSX shorting basically naked shorting by means of creating assets out of thin air?

And no, there's no naked shorting.  Shorts are initially backed with 200% BTSX collateral, and are called if the ratio drops to 150%.

Quote from: Troglodactyl on September 09, 2014, 06:28:47 pm

If my understanding is correct, paying fees other than short fees out as interest should break the peg.  In an uncertain market in which demand due assets matches demand to short, the peg should work. If everyone wants to short, that breaks the peg, which is why we had to use the price feeds.  Allowing the shorts to pay the longs interest should recreate the balanced/uncertain market in which the peg works, but providing additional interest from other fees to asset holders would then break the peg again by increasing demand for assets.

The question is whether demand for bit assets is greater than the demand to short.   Considering demand for BitAssets increases demand for BTSX 2x... short demand should be in very high supply.  The game theory on the peg still holds.   Also, it doesn't matter *as much* if it breaks the peg to the upside (because a BitUSD will remain >= $1) which means people can accept it at face value with confidence.

I guess since the short fees are still floating they would just decrease to account for the subsidies to long positions.  Effectively both longs and shorts would then be subsidised by the delegates who are expected to process their transactions for free.  The hope being that this would pay for itself in marketing value. Is this correct?

Quote from: Troglodactyl on September 08, 2014, 04:22:12 am

Quote from: eagleeye on September 08, 2014, 03:02:38 am

Why cant they just make it like a Gmail or Facebook account so we can have multiple logins.

Because then you would have to trust a company like Google or Facebook with full control over your account.  The actual essence of these accounts is stored on your computer, so you have to move it if you want the account moved.  No one besides you has your account, so you can't get it back from them if you lose it.

When I mean "like" I dont mean use it.  I mean instead of just 'Password'  have

Login
Password
Retrieve Account

In the bitsharesx platform.

They could do that and have the entire account deterministically generated from the name and password, but people would undoubtedly pick insecure passwords and get their funds stolen.  As a default, the way it is now is much safer for users who may not understand all the risks.

Quote from: kisa0145 on September 06, 2014, 04:49:48 pm

Now when everyone gets excited about bitAssets paying interest, I would like to point out to macro-economical perspective---

Why is that bank deposit used to pay nominal interest throughout the most of the recent history?
- well, this is primarily because banks were lending money, received from savers, to businesses, property buyers etc. at somewhat higher interest rates than they paid out to the savers on deposits.

And why were most businesses and property buyers were able to pay those higher interest rates?
- well, that's primarily because there was some positive real growth in the economy, meaning nominal growth rates exceeded inflation rate, and corporate profits and household income growth exceeded the higher interest rate which was due to the banking sector. E.g. fiat USD from savings were put into productive use by extending credit for investment within the economy.

So, here my questions:
- how would credit business work with regards to BitsharesX?
- how can bitUSD be lent out to businesses or property buyers?
- how would credit risk in such system be managed?

I will try to formulate more thoughts on the topic in the near future.

I am not sure if I am understanding your question properly, but let me attempt to answer anyway. First of all, BitShares X does not have any lending functionality as it is typically understood (meaning requiring trust in how the lent money will be used to eventually pay back the debt). I hope a future DAC will enable that functionality (I have some thoughts on that subject here).

It is true in a sense, however, that just like a bank, BitShares X is taking deposits (BTSX bids) and is making use of them to hopefully earn profits (in this case from shorting BitAssets, and the profits mostly go to the people doing the shorting not the DAC itself), and perhaps with this new interest proposal will now be sharing some of those profits with the depositors (BitAsset holders) by giving them "interest".

I do like how you are focusing on where the actual growth is coming from. So where is the growth coming from in the case of BitShares X that allows for such high (expected) interest rates? The answer is that it comes from the expected increase in value of BTSX. As more people adopt the system, meaning transfer their wealth outside the blockchain into BitAssets, this should drive the market cap of BTSX up. Shorts and BTSX holders get to benefit from that price increase. Since shorts can get higher returns than just holding BTSX, there is an incentive to short if you are a BTSX bull rather than just holding. But there is competition for shorting (there is after all limited BitAsset demand). So shorts are forced to share some of their expected profits with the BitAsset holders to incentivize them to allow the shorts to happen in the first place, just like banks need to incentivize depositors with interest to allow the deposits to happen in the first place. As long as on average BTSX value keeps growing at high rates, a high interest rate on BitAssets can also be sustained. Eventually, sometime in the future, when BitShares X is saturated (meaning there aren't any new people with wealth left to convince to adopt this system), BTSX growth should settle down and thus BitAsset interest rates will be forced to go down. I think some non-zero interest rate should still be possible then because the DAC is still able to earn revenue from transaction fees and market fees from operating the decentralized exchange.

I think it's important to preserve the distinction between asset interest, shorting profit, and BTSX share value appreciation and deflation.  The default position for participants is holding BTSX, and profiting as adoption increases demand, and destroyed fees deflate the supply.  As these things happen, the BTSX shares you hold increase in value.

Shorting and longing assets is a distinct sub-business.  The shorters are leveraging to amplify their gains betting on BTSX increases, but doing so requires finding asset holders who are willing to miss out on potential BTSX gains in exchange for stability and interest payments.  The asset holders have to bet that the shorters are over enthusiastic about BTSX appreciation.

The actual value growth is all from adoption and usage of the entire platform, and that's the baseline for shorting and asset holding.  Relative to that baseline, at any given moment it will be profitable to go short or long, but not both.  Either the shorts profit at the expense of the longs, or the longs profit at the expense of the shorts.  The interest rate should be such that the market is approximately evenly split on which is expected to be the more profitable position.

I don't think normal transaction fees and revenue should ever be used for asset interest, because that erodes the baseline.  Interest should be exclusively payed by those taking short positions.