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Main => General Discussion => Topic started by: bytemaster on October 30, 2014, 09:17:41 pm

Title: Delegate Pay Rate Change
Post by: bytemaster on October 30, 2014, 09:17:41 pm
It is our intention to reset all existing delegate accounts to 3% pay rate upon the upgrade to delegates paid with dilution.  3% will be 1.5 BTS per block which is about what delegates get paid on average right now.   Fees will be burned, so the end result of this change will be no dilution for any current delegates.

New delegates seeking a dilution-paid position should start their campaigns after Nov. 5th (the next hard fork).


Title: Re: Delegate Pay Rate Change
Post by: roadscape on October 30, 2014, 09:59:19 pm
Interesting.. fees deflate, and pay inflates.

Transaction volume will no longer influence delegate pay.
Could this at all affect the incentive for which transactions are included in a block?

For example, couldn't a delegate process 0 transactions and still get paid?
Would they just have to get voted out?
Title: Re: Delegate Pay Rate Change
Post by: xeroc on October 30, 2014, 10:03:37 pm
I like it!
Title: Re: Delegate Pay Rate Change
Post by: xeroc on October 30, 2014, 10:04:30 pm
Interesting.. fees deflate, and pay inflates.

Transaction volume will no longer influence delegate pay.
Could this at all affect the incentive for which transactions are included in a block?

For example, couldn't a delegate process 0 transactions and still get paid?
Would they just have to get voted out?
There job is to include transactions into blocks .. if they fail miserably .. they should be unapproved
Title: Re: Delegate Pay Rate Change
Post by: spartako on October 30, 2014, 10:05:04 pm
+3% ;)
Title: Re: Delegate Pay Rate Change
Post by: Ander on October 30, 2014, 10:14:02 pm
I'm trying to better understand how delegate pay works.


Delegates only get paid for the blocks that they create, correct?  (So each delegate gets their turn once per 101 blocks, and they get paid then?)

Therefore, a delegate running at 100% pay would get 50 BTS per time their turn came, which happens once every 101 blocks?



If this is true, then if ALL 101 delegate were elected with 100% pay, inflation would be around 8% a year (simlar to bitcoin).

If only a few delegates were elected with 100% pay, and the rest are elected with 3% pay, then inflation will be very very small?

Title: Re: Delegate Pay Rate Change
Post by: roadscape on October 30, 2014, 10:14:52 pm
There job is to include transactions into blocks .. if they fail miserably .. they should be unapproved

Ah.. if we had on average 1000 tx's per block it would be trivial to see who was underperforming. Makes sense.

I like the proposal. Feels fair!
Title: Re: Delegate Pay Rate Change
Post by: roadscape on October 30, 2014, 10:15:58 pm
If this is true, then if ALL 101 delegate were elected with 100% pay, inflation would be around 8% a year (simlar to bitcoin).

If only a few delegates were elected with 100% pay, and the rest are elected with 3% pay, then inflation will be very very small?

Yep
Title: Re: Delegate Pay Rate Change
Post by: xeroc on October 30, 2014, 10:16:26 pm
Missing some txs can happen due to network transport latency ... but it should be easuer then to identify those lazy delegates .. yhea
Title: Re: Delegate Pay Rate Change
Post by: Method-X on October 30, 2014, 10:17:20 pm
Excellent!
Title: Re: Delegate Pay Rate Change
Post by: Ander on October 30, 2014, 10:20:50 pm
It seems to me that even if we elect every member of the dev team as a 100% paid delegate, plus the marketing team as 100% paid delegate, plus MethodX for his reddit ad campaign, plus a few others, we are probably STILL only looking at a ~2% or so inflation per year.

Wow, that is quite low!

The dumpers have been SERIOUSLY overreacting to this change. 
Title: Re: Delegate Pay Rate Change
Post by: Method-X on October 30, 2014, 10:25:07 pm
It seems to me that even if we elect every member of the dev team as a 100% paid delegate, plus the marketing team as 100% paid delegate, plus MethodX for his reddit ad campaign, plus a few others, we are probably STILL only looking at a ~2% or so inflation per year.

Wow, that is quite low!

The dumpers have been SERIOUSLY overreacting to this change.

Indeed they have. 2% is a great place to start and it allows us to figure out what's most effective before "maxing" it out at 8%.
Title: Re: Delegate Pay Rate Change
Post by: xeroc on October 30, 2014, 10:25:08 pm
Lol .. yeah .. thats what we are trying to tell the the whole time .. WORST case 8% .. and only if stakeholders agree
Title: Re: Delegate Pay Rate Change
Post by: Ander on October 30, 2014, 10:30:02 pm
Lol .. yeah .. thats what we are trying to tell the the whole time .. WORST case 8% .. and only if stakeholders agree

Realistic case...probably 2% or less right now.

And yet, they reduced the BTS market cap by 50% because of this.  Markets are so irrational sometimes.


I'm very reassured by this. :)
I was expecting 8% inflation but now I'm expecting 2%. 
Title: Re: Delegate Pay Rate Change
Post by: liondani on October 30, 2014, 11:05:10 pm
what about instead of  +3% a  +5% pay rate (+marketing wise it's good to use our  +5% meme in that way)

3% means about 3850 BTSX a month  per delegate aka 3850*$0.018= $69 per month,
considering the cost to maintain a server (vps) for the delegate and a seenode + the time for
the updates etc. and our time helping in various ways the bitshares ecosystem...

it would be better in my opinion to lock it at  +5% and it remains still fair for all....
 +5%  means 2.5 btsx/ block
that means for a month about 6400 btsx per delegate aka 6400*$0.018= $115  per month  (about what we are get paid before a month or so)

I think we are worth at least that money!  :)

my 2 bts

PS Of course if everybody agrees with the initial proposal, I am ok too. You know better
Title: Re: Delegate Pay Rate Change
Post by: Ander on October 30, 2014, 11:09:56 pm
Voters choose the delegates, which means delegates are competing on price, relative to the value they are providing.

If voters want to elect you at a 5% pay rate, they will.  If they dont want to, they wont.  Its that simple!






Title: Re: Delegate Pay Rate Change
Post by: Ander on October 30, 2014, 11:45:31 pm
@Bytemaster:  I know you already know this, but please heavily test the new paid delegate system, prior to release on the 5th.  :)

We dont want version 2.0 of this thread on bitcointalk, with smug bitshares haters getting to tell everyone bitshares is a scam and devs are stealing from everone by 'accidentally' inflating: https://bitcointalk.org/index.php?topic=809378.0


Title: Re: Delegate Pay Rate Change
Post by: wackou on October 31, 2014, 10:44:20 am
Given that delegate pay rate cannot be increased, does this mean that delegates that want to have more than 3% pay rate after Nov 5th will have to create new delegates (with new names)?
Title: Re: Delegate Pay Rate Change
Post by: xeroc on October 31, 2014, 10:58:41 am
Given that delegate pay rate cannot be increased, does this mean that delegates that want to have more than 3% pay rate after Nov 5th will have to create new delegates (with new names)?
*confirmed*
Title: Re: Delegate Pay Rate Change
Post by: Helikopterben on October 31, 2014, 03:59:26 pm
So delegates will no longer get paid based on tx fees.  That makes no sense.  A good measure of value added by delegates is an increase in tx fees.  If the number of transactions go to 0, then delegates still get paid by diluting shareholders.  Sounds like government work to me.   

No wonder the price is crashing.  All I have heard over the past few weeks is dulution, dilution, dilution.  Shareholders don't like that.

A solid company eventually operates purely off of revenue and generates profits.  Those profits are distributed to shareholders in exchange for providing capital.  I realize that startups require initial rounds of investment and sometimes that occurs through dilution, which is fine.

My question is:  When does bitshares operate completely from revenue, with no more dilution and distribute profits to shareholders through the burn rate, which was the initial plan?
Title: Re: Delegate Pay Rate Change
Post by: xeroc on October 31, 2014, 04:22:15 pm
So delegates will no longer get paid based on tx fees.  That makes no sense.  A good measure of value added by delegates is an increase in tx fees.  If the number of transactions go to 0, then delegates still get paid by diluting shareholders.  Sounds like government work to me.   

No wonder the price is crashing.  All I have heard over the past few weeks is dulution, dilution, dilution.  Shareholders don't like that.

A solid company eventually operates purely off of revenue and generates profits.  Those profits are distributed to shareholders in exchange for providing capital.  I realize that startups require initial rounds of investment and sometimes that occurs through dilution, which is fine.
That's why tx fees are BURNED (read: dividends to shareholders) ... while the "dilution" is deterministic and determined by shareholders .. if they don't like dilution they will only vote in delegates with 0% pay .. then all tx fees will be destroyed and share supply will decrease over time ..
however, 0% pay delegates are not profitable (by definition) and as such no one will want to this .. so the payrate may be as high as the burned fees .. or less .. or more .. at the end of the day .. the majority of the shareholders decide .. period!

Quote
My question is:  When does bitshares operate completely from revenue, with no more dilution and distribute profits to shareholders through the burn rate, which was the initial plan?
if you are stakeholder, you have the say .. tx fees are burned (read: payed out as dividends) .. dilution is solely to pay the growth of the business!
Title: Re: Delegate Pay Rate Change
Post by: Helikopterben on October 31, 2014, 04:42:32 pm
So delegates will no longer get paid based on tx fees.  That makes no sense.  A good measure of value added by delegates is an increase in tx fees.  If the number of transactions go to 0, then delegates still get paid by diluting shareholders.  Sounds like government work to me.   

No wonder the price is crashing.  All I have heard over the past few weeks is dulution, dilution, dilution.  Shareholders don't like that.

A solid company eventually operates purely off of revenue and generates profits.  Those profits are distributed to shareholders in exchange for providing capital.  I realize that startups require initial rounds of investment and sometimes that occurs through dilution, which is fine.
That's why tx fees are BURNED (read: dividends to shareholders) ... while the "dilution" is deterministic and determined by shareholders .. if they don't like dilution they will only vote in delegates with 0% pay .. then all tx fees will be destroyed and share supply will decrease over time ..
however, 0% pay delegates are not profitable (by definition) and as such no one will want to this .. so the payrate may be as high as the burned fees .. or less .. or more .. at the end of the day .. the majority of the shareholders decide .. period!

Quote
My question is:  When does bitshares operate completely from revenue, with no more dilution and distribute profits to shareholders through the burn rate, which was the initial plan?
if you are stakeholder, you have the say .. tx fees are burned (read: payed out as dividends) .. dilution is solely to pay the growth of the business!

Ok that makes sense.  Shareholders will likely vote in delegates that make less than the burn rate when bitshares becomes a mature company.  In the early stages shareholders may vote in delegates that make more than the burn rate if those delegates fund future growth.  Thanks for the clarification.
Title: Re: Delegate Pay Rate Change
Post by: theoretical on October 31, 2014, 04:43:34 pm
Given that delegate pay rate cannot be increased, does this mean that delegates that want to have more than 3% pay rate after Nov 5th will have to create new delegates (with new names)?

Excellent question.  I think I'll let @bytemaster answer this one.
Title: Re: Delegate Pay Rate Change
Post by: liondani on October 31, 2014, 05:13:30 pm
Given that delegate pay rate cannot be increased, does this mean that delegates that want to have more than 3% pay rate after Nov 5th will have to create new delegates (with new names)?

Excellent question.  I think I'll let @bytemaster answer this one.

what about the option implemented to vote with our stake the payrate of the delegates?
Title: Re: Delegate Pay Rate Change
Post by: maqifrnswa on October 31, 2014, 05:17:46 pm
Given that delegate pay rate cannot be increased, does this mean that delegates that want to have more than 3% pay rate after Nov 5th will have to create new delegates (with new names)?

if new names need to be created and campaigned, people may end up running many delegates (if they get voted in before the old ones are voted out) or people will end up with zero delegates (if they get voted out assuming the new one will get voted in but never does). I still think delegates should be allowed to set dynamic payrates, and voters are given the choice of whether or not to trust a delegate to be responsible.
Title: Re: Delegate Pay Rate Change
Post by: bytemaster on October 31, 2014, 05:45:16 pm
Given that delegate pay rate cannot be increased, does this mean that delegates that want to have more than 3% pay rate after Nov 5th will have to create new delegates (with new names)?

Excellent question.  I think I'll let @bytemaster answer this one.

Yes... because pay is something people want to "set and forget" we want all spending increases explicitly approved.... we don't want a bunch of people campaigning on 1% and then jumping to 100% once they are in. 
Title: Re: Delegate Pay Rate Change
Post by: Ander on October 31, 2014, 05:47:51 pm
Yes... because pay is something people want to "set and forget" we want all spending increases explicitly approved.... we don't want a bunch of people campaigning on 1% and then jumping to 100% once they are in.

I agree.


Step 1: Set up a 0% pay delegate with the campaign to reduce inflation.
Step 2: Get elected because people want no pay delegates, and get a safe amount of votes.
Step 3: Change your pay rate to 100%.

Rake in the profits until enough people can be notified and vote you out.

Then repeat with another anonymous name.


We have to avoid this, and that means that delegates cannot increase their pay rate without voter approval.


Title: Re: Delegate Pay Rate Change
Post by: arhag on October 31, 2014, 06:18:36 pm
In my opinion we should get rid of the pay rate and instead have a per round BitUSD salary for each delegate. Instead of a pay rate column, users would see the proposed salary of the delegate in BitUSD/week. The delegate could lower this amount but not raise it, similar to pay rate.

The DAC would use the 1 hour moving average price from the BitUSD/BTS exchange at the time of the last block of the previous round to convert the per block BitUSD number into a per block BTS number that is paid out to the delegates in the current round. If the sum total of all BTS to be paid in a given round to all delegates exceeds the hard coded dilution cap, all of the BTS payments in that round should be scaled down appropriately to satisfy the limit.

The benefit of this method is that delegates do not have to constantly lower their pay rate as BTS price increases and create a new delegate with a higher pay rate that they have to hope gets voted in when BTS price decreases in order to maintain the same salary value that stakeholders think is fair (since stakeholders are likely to value delegate contributions in terms of a price stable currency like USD rather than a volatile asset like BTS). The current system puts an obligation on the stakeholders to essentially maintain the fair pay value of delegates by constantly voting them in and out. The system I propose considerably reduces the demands put on stakeholders.
Title: Re: Delegate Pay Rate Change
Post by: bytemaster on October 31, 2014, 06:47:10 pm
I think for the most part delegates can be trusted to provably burn any surplus pay and thus manually do what you want to add a lot of complexity to the protocol to do manually.

A trusted delegate campaigns for something like 2x what they need and promises to burn anything over $x USD worth of pay.  They can then have a predictable pay rate and prove their trustworthiness by doing regular burning of any surpluses. 

Title: Re: Delegate Pay Rate Change
Post by: arhag on October 31, 2014, 11:34:47 pm
I think for the most part delegates can be trusted to provably burn any surplus pay and thus manually do what you want to add a lot of complexity to the protocol to do manually.

A trusted delegate campaigns for something like 2x what they need and promises to burn anything over $x USD worth of pay.  They can then have a predictable pay rate and prove their trustworthiness by doing regular burning of any surpluses.

Well then they would need to have some standard way of publicly burning BTS, and I would really want to see something like bitsharesblocks.com track this and estimate the USD value of the net funds each delegate is keeping so that stakeholders have an easy way of keeping track of whether the delegates are keeping their promise. Otherwise you are making the voters job much harder, and we already know how apathetic voters already are.

Also, the other benefit of the method I proposed is that one person can earn more than the maximum 1562224 BTS per year (about $26,000 at the current market cap) without needing to take over multiple delegate spots (which is good for decentralization). The only requirement is that the total income of all 101 delegates valued in BTS is less than 5050 BTS per every 16.8 minutes. So again using current market cap, this means that we could have 76 regular delegates getting paid $1000 per year to run the machines as well as 25 delegates getting paid $102,000 per year. Under the current proposed system, achieving this would require each of the 25 people getting paid six-figure salaries to have 4 delegates (for a total of 100 delegates) leaving only 1 delegate to get paid the low $1000 per year. So you centralize the power from 101 unique individuals running the DPOS consensus (in my proposed system) to just 26 individuals (in the current proposed system).

I'm sorry that every other post of mine is just putting more work on your already full plates. But I have reduced this proposal down from my ideal original complicated system to the simplest possible system (and I am pretty sure the code changes are very minimal) that I can come up with that still achieves the desired effect of letting voters set the salaries of business delegates in USD without compromising DPOS decentralization too much. I think this is highly beneficial to have especially as we are becoming more dependent on delegates to fund the development of BitShares rather than I3.

Title: Re: Delegate Pay Rate Change
Post by: maqifrnswa on October 31, 2014, 11:41:41 pm
I think for the most part delegates can be trusted to provably burn any surplus pay and thus manually do what you want to add a lot of complexity to the protocol to do manually.

A trusted delegate campaigns for something like 2x what they need and promises to burn anything over $x USD worth of pay.  They can then have a predictable pay rate and prove their trustworthiness by doing regular burning of any surpluses.

that solves my main problem with not allowing delegates to raise their pay.
Yes... because pay is something people want to "set and forget" we want all spending increases explicitly approved.... we don't want a bunch of people campaigning on 1% and then jumping to 100% once they are in.

I agree.


Step 1: Set up a 0% pay delegate with the campaign to reduce inflation.
Step 2: Get elected because people want no pay delegates, and get a safe amount of votes.
Step 3: Change your pay rate to 100%.

Rake in the profits until enough people can be notified and vote you out.

Then repeat with another anonymous name.


We have to avoid this, and that means that delegates cannot increase their pay rate without voter approval.




Why not place a 2 week waiting period before announced pay rates are increased? That should solve this concern and allow the free market to work.
Title: Re: Delegate Pay Rate Change
Post by: xeroc on November 01, 2014, 11:01:15 am
Thinking about the Turing completeness .. if it will be implemented as planned in Ethereum having addresses that run a certain app ..
delegates could code their own (review-able) scriptapp that taikes their payrate in BTSX as input and has a hardcoded salary in USD ... such that the script can go to the market, exchange BTX for USD and burn the rest accordingly ... this matched perfectly with the current plans to have a separate payout address for delegates as discussed somewhere in github