BitShares Forum
Main => General Discussion => Topic started by: tonyk on October 04, 2014, 01:07:03 am
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If the theory in the OP of this thread https://bitsharestalk.org/index.php?topic=9603.0
holds true, And I believe it does.
A company called UsersUnlimited II , creates a user issued asset called ‘New user worth’
-This asset is actually a fund that distributes some of its gains to the ‘‘How much is a new user worth?” described in the link above
-‘New user worth’ actually shorts bitUSD using significant part (starting at close to 2/3) of all proceeds received through the sale (issuance) of its shares. With the rest 1/3 it buys bitUSD and uses those bitUSD to fund the cash-back bonuses (costumer acquisition bonuses) of the ‘How much is a new user worth?”
-If the theory that 1 dollar spent on costumer acquisition bonuses in the ‘How much is a new user worth?” is near the numbers expected, the climb in the price of BTSX and the consequent gains from the short position will allow the fund to make the distribution/donations to the ‘How much is a new user worth’ and when this marketing campaign is over to actually return more BTSX to the ‘New user worth’ shareholders (to say nothing that those BTSX will be worth many times more than when initially invested).
Thoughts ….on my Perpetuum mobile?
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I stay out of these market discussions because it isn't my thing but that sounds pretty genius to me. There has to be some variant after tweaking it etc. Need to find a trusted person to run it, etc.
Edit - How would you do price discovery ?
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This is the future agree. Just like most people have a blog. Most people could have a crypto.
Getting a student loan could mean a contract in which someone buys your shares up. But then takes a chunk of your income.
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The problem is you need a lot of money to get something like that off the ground. It would be hard to imagine enough people believing in it enough to fund the asset at the level required.
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I stay out of these market discussions because it isn't my thing but that sounds pretty genius to me. There has to be some variant after tweaking it etc. Need to find a trusted person to run it, etc.
Edit - How would you do price discovery ?
DacsUsersUnlimited II sounds trustworthy enough to me. :)
The problem is you need a lot of money to get something like that off the ground. It would be hard to imagine enough people believing in it enough to fund the asset at the level required.
Let's try and see if we can get 1-5% of total BTSX supply initially. I find this aim doable... if not we can threaten them with the alternative :) ... 'dilution'
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I stay out of these market discussions because it isn't my thing but that sounds pretty genius to me. There has to be some variant after tweaking it etc. Need to find a trusted person to run it, etc.
Edit - How would you do price discovery ?
DacsUsersUnlimited II sounds trustworthy enough to me. :)
The problem is you need a lot of money to get something like that off the ground. It would be hard to imagine enough people believing in it enough to fund the asset at the level required.
Let's try and see if we can get 1-5% of total BTSX supply initially. I find this aim doable... if not we can threaten them with the alternative :) ... 'dilution'
Any estimate of how much btsx the fund would need to be viable?
Would funds be returned if minimums are not met (within a reasonable time - say 1 month)?
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Edit - How would you do price discovery ?
I do not know what exactly do you mean but let me add to the OP idea.
Shares of the fund are prices in bitUSD. New ones are issued @ 'Current value'
'Current value' is = bitUSD holdings + #BTSX in position of the fund / current feed price - D
*D is expected donation in the next n days (n=30 days for example).
This formula is grossly underestimating the true future value of the fund, most of the time.
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How about this slight improvement. The new customer is give a choice - $100/$200 right now or $125/$250 in the growth fund ‘New user worth’
Any estimate of how much btsx the fund would need to be viable?
Would funds be returned if minimums are not met (within a reasonable time - say 1 month)?
I believe 5% initially (5%of the total BTSX supply will be great). Even with 1% worth trying, IMHO.
We should give the idea a chance for about 9mo before declaring it not working, imo.
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Here is the plan for action:
- BM, Agent86, arhag, drltc, plus anybody else qualified/willing work out/smooth the inner working of the fund.
- UsersUnlimited II announces that they will be the one staying behind it (are being the issuer).
- However is in charge of the AGS fund (Dan, Stan... whoever) announces that they will contribute 5% of the AGS to the fund/buy the first shares.
- We announce how the fund works and that in order to be successful the fund will need to start with at least 5% of the total BTSX supply, so everybody is 'encouraged' to donate at least 3% of his/her BTS holdings.
- svk includes a new field to the blockexplorer - "Biggest/All non participating Accounts"
- If it does not go smoothly (i.e. the 5% is not reached) - tonyk comes and explains in not so kind words how unwise the non participation is.
- If the point above does not work for,let say 7 days... BM comes and says that due to low participation we will have to go to plan B, and dilute everybody's share 20%.
-If the force threats above do not work... we really go to plan B and do what we have promised.... 'dilution' far exceeding the recommended donation %....
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The problem is the free-riders etc. "Group trap" is I believe what I've seen it called. You're relying on a few active people to make a sub-optimal bet to help everyone else. They could just make the bet otherwise. Sigh. I'd be willing to give to such a thing, but I really don't have that much BTSX and I know of all the people who won't invest either.
This is what it all goes back to.. and why inflation is actually more fair. I remember these arguments now :(
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The problem is the free-riders etc. "Group trap" is I believe what I've seen it called. You're relying on a few active people to make a sub-optimal bet to help everyone else. They could just make the bet otherwise. Sigh. I'd be willing to give to such a thing, but I really don't have that much BTSX and I know of all the people who won't invest either.
This is what it all goes back to.. and why inflation is actually more fair. I remember these arguments now :(
Actually the beauty of my decision is that the participants in the fund actually benefit more than the free riders!!!
Free riders just get their free BTSX appreciation. Participants in the fund get 80% more*
*1.assuming free riders just hold BTSX during that period and do not go short bitUSD
2. Assuming 10x return on this marketing effort (i.e. 1$ spent during this campaign results in 10x BTSX market cap increase....which believe it or not is on the conservative side)
PS
Yee, I do believe I am either an idiot or a genius or maybe both... But definitely nothing in between :)
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Edit: Gamey already pointed this out above. But I'll explain in more detail.
The fund in your proposal gets no advantage in the BitUSD short compared to anyone else who wants to short BitUSD. It is not economically rational for people donating to the "new user fund" to let the middleman short on their behalf (and take a 33% cut to pay for a marketing program) when they can just cut out the middleman and short BitUSD themselves. Of course there are other reasons why someone would put money into the "new user fund" rather than shorting themselves: to provide the revenue for the marketing program that will grow the value of BTSX. But then they can just avoid the unnecessary complication and donate the 33% portion directly to the fund paying for the marketing program, and keep the rest of the money and short BitUSD themselves. But then that is where the free rider problem comes in, they are donating to the marketing fund but the benefits of the increasing USD price of BTSX is spread to everyone (BTSX holders and more so BitUSD shorts) even if they didn't donate to the fund. The only way to solve this group trap is to force all BTSX holders to pay for the fund (through inflation or at the very least lower potential deflation) because they are the ones who are necessarily going to benefit from the marketing program (the marketing program is designed to increase the value of BTSX).
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Edit: Gamey already pointed this out above. But I'll explain in more detail.
The fund in your proposal gets no advantage in the BitUSD short compared to anyone else who wants to short BitUSD. It is not economically rational for people donating to the "new user fund" to let the middleman short on their behalf (and take a 33% cut to pay for a marketing program) when they can just cut out the middleman and short BitUSD themselves. Of course there are other reasons why someone would put money into the "new user fund" rather than shorting themselves: to provide the revenue for the marketing program that will grow the value of BTSX. But then they can just avoid the unnecessary complication and donate the 33% portion directly to the fund paying for the marketing program, and keep the rest of the money and short BitUSD themselves. But then that is where the free rider problem comes in, they are donating to the marketing fund but the benefits of the increasing USD price of BTSX is spread to everyone (BTSX holders and more so BitUSD shorts) even if they didn't donate to the fund. The only way to solve this group trap is to force all BTSX holders to pay for the fund (through inflation or at the very least lower potential deflation) because they are the ones who are necessarily going to benefit from the marketing program (the marketing program is designed to increase the value of BTSX).
You are, incorrectly in my mind, assuming that everybody will do the rational thing and short bitUSD themselves. I do believe 70% of the people will sleep better if they have invested 10% of their money in the 'marketing fund' and left the 'experts' do the truly 'counter intuitive thing' of profiting from something when the price of said thing falls...
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i like the idea
i proposed something similar without the marketing fund https://bitsharestalk.org/index.php?topic=9603.msg125010#msg125010
maybe Bytemaster could sweeten the marketing fund with integrated referral program.
1. every account the fund or any user "aquires" you get a cut of the fees for the life time
2. the fund will be executed on the short wall first
maybe in the fund the multisig possibility with BTSX should be activated.
-so the fund could expect 2 sources of income - 1. win from the short position 2. a cut of the fees
- would be great to see it as the first asset on the BTSX exchange with a business model
p.s.
maybe the inactivity fees can flow in this fund
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the fund will need to start with at least 5% of the total BTSX supply, so everybody is 'encouraged' to donate at least 3% of his/her BTS holdings
So some portion of BTSX holders donates 3% and it averages out to 5% of the complete stack? Using this kind of math I am sure it should be no problem to acquire some funds.
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Next day bump.
Why this will not work posts, encouraged!
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You are, incorrectly in my mind, assuming that everybody will do the rational thing and short bitUSD themselves. I do believe 70% of the people will sleep better if they have invested 10% of their money in the 'marketing fund' and left the 'experts' do the truly 'counter intuitive thing' of profiting from something when the price of said thing falls...
Your "new user fund" is essentially a mutual/hedge fund. Investors in the "new user fund" would be paying people (through the cut the investment managers take, in this case 33%) to manage their money for them (shorting BitUSD appropriately) rather than having to do it themselves. Certainly it is appealing to give someone a small cut to grow your money on your behalf (keep in mind you do have to trust them, and in this cryptospace who knows if there is any legal repercussions for someone who just takes your money and runs, so it is also a huge risk). However, 33% is a huge cut. So here is the problem with your proposal. Someone could create a competing hedge fund and charge a much smaller fee. It is the same convenience for the investor (no need to manage shorts yourself) but they get a much larger payout than the investors of the "new user fund". The people managing this fund also profit more than the ones managing the "new user fund" because they get to free ride from the benefits (faster increase in BTSX value) paid for by the "new user fund" which they did not have to pay for.
Now maybe no one would divert their investments to the competing hedge fund because they don't trust it. The "new user fund" could be managed by a reputable organization like I3. Even then, I still question how much value this fund could raise. First of all, I feel like most BTSX holders have already maxed out how much of their money they want to put into this system (given inherent risks of catastrophic failure this DAC still faces) and so there will be very little new money coming in to feed into this fund despite any additional excitement it raises. Then, the people who believe in the purpose of this fund (the particular marketing strategy) are going to be a subset of the current BTSX holders. Finally, you have to take the subset of that group who are not willing to manage shorting themselves at much lower fees (or alternatively are altruistic enough to consider the 33% fee as a donation for a good cause). In short, I don't think this fund will raise enough money to cover the very large costs needed for a marketing proposal like the one bytemaster was describing.
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You are, incorrectly in my mind, assuming that everybody will do the rational thing and short bitUSD themselves. I do believe 70% of the people will sleep better if they have invested 10% of their money in the 'marketing fund' and left the 'experts' do the truly 'counter intuitive thing' of profiting from something when the price of said thing falls...
Your "new user fund" is essentially a mutual/hedge fund. Investors in the "new user fund" would be paying people (through the cut the investment managers take, in this case 33%) to manage their money for them (shorting BitUSD appropriately) rather than having to do it themselves. Certainly it is appealing to give someone a small cut to grow your money on your behalf (keep in mind you do have to trust them, and in this cryptospace who knows if there is any legal repercussions for someone who just takes your money and runs, so it is also a huge risk). However, 33% is a huge cut. So here is the problem with your proposal. Someone could create a competing hedge fund and charge a much smaller fee. It is the same convenience for the investor (no need to manage shorts yourself) but they get a much larger payout than the investors of the "new user fund". The people managing this fund also profit more than the ones managing the "new user fund" because they get to free ride from the benefits (faster increase in BTSX value) paid for by the "new user fund" which they did not have to pay for.
All true... well partaily as the 'original fund' managers are the ones with the best reputation (for a lack of better term)
Now maybe no one would divert their investments to the competing hedge fund because they don't trust it. The "new user fund" could be managed by a reputable organization like I3.
Not 'it could not be managed by them'. If you read my posts - 'The proposed original "User fund" is managed by them...'
Even then, I still question how much value this fund could raise. First of all, I feel like most BTSX holders have already maxed out how much of their money they want to put into this system (given inherent risks of catastrophic failure this DAC still faces) and so there will be very little new money coming in to feed into this fund despite any additional excitement it raises.
Actually no new money (BTSX) are needed. The participants in the fund just use 3-5% of their current BTSX to buy into the fund.
Then, the people who believe in the purpose of this fund (the particular marketing strategy) are going to be a subset of the current BTSX holders. Finally, you have to take the subset of that group who are not willing to manage shorting themselves at much lower fees (or alternatively are altruistic enough to consider the 33% fee as a donation for a good cause). In short, I don't think this fund will raise enough money to cover the very large costs needed for a marketing proposal like the one bytemaster was describing.
Sure, if it is a no-go ,after all stakeholders are informed about this 'no-dilution' proposal, we just go back to inflation...i.e. If the threat of inflation does not help, we just do the actual inflation/dilution
and then you ask me why I prefer to think without the world watching into my brain... I do not mind sharing my final idea/decision with the world, but picking on each and every step of my occasionally twisted logic??? no thanks...
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and then you ask me why I prefer to think without the world watching into my brain... I do not mind sharing my final idea/decision with the world, but picking on each and every step of my occasionally twisted logic??? no thanks...
Please don't take offense to my criticism. It is meant as constructive criticism that will hopefully spur improvement of all of our ideas.
Sure, if it is a no-go ,after all stakeholders are informed about this 'no-dilution' proposal, we just go back to inflation...i.e. If the threat of inflation does not help, we just do the actual inflation/dilution
Yeah, in that sense this may not be a bad idea, if I3 (really the only organization with enough trust from the community to pull this off) is willing to act as the "UsersUnlimited II" organization. Basically it would be crowdfunding where I3 raises the BTSX to pull off the marketing strategy. If they cannot raise enough capital, they can just return it back to the investors, and then we have proof to show BTSX holders that if we actually think funding this marketing strategy is important, then we need to dilute to raise the money to pull it off.
P.S. I don't actually agree with bytemaster's proposal even if BTSX holders were okay with dilution until they first address the top 3 bullet points in my post (https://bitsharestalk.org/index.php?topic=9603.msg125130#msg125130).
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and then you ask me why I prefer to think without the world watching into my brain... I do not mind sharing my final idea/decision with the world, but picking on each and every step of my occasionally twisted logic??? no thanks...
Please don't take offense to my criticism. It is meant as constructive criticism that will hopefully spur improvement of all of our ideas.
Sure, if it is a no-go ,after all stakeholders are informed about this 'no-dilution' proposal, we just go back to inflation...i.e. If the threat of inflation does not help, we just do the actual inflation/dilution
Yeah, in that sense this may not be a bad idea, if I3 (really the only organization with enough trust from the community to pull this off) is willing to act as the "UsersUnlimited II" organization. Basically it would be crowdfunding where I3 raises the BTSX to pull off the marketing strategy. If they cannot raise enough capital, they can just return it back to the investors, and then we have proof to show BTSX holders that if we actually think funding this marketing strategy is important, then we need to dilute to raise the money to pull it off.
P.S. I don't actually agree with bytemaster's proposal even if BTSX holders were okay with dilution until they first address the top 3 bullet points in my post (https://bitsharestalk.org/index.php?topic=9603.msg125130#msg125130).
1st I agree with your 3-4 bullet points (and I believe BM actually agrees as well).
2nd My 2 quotes are actually better understood in the reverse order.
and no, no offence taken by anything you have said, on the contrary I do need input as to why/how the proposal does not make sense!
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Weekend bump!
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The problem with this proposal is that the value in the acquisition fund has to come from somewhere. If you don't use a "fair" [1] method then you will face a free rider problem. All BTSX holders benefit from increased adoption; people who don't participate in the fund share in the benefit without sharing in the cost.
Of course we can't dilute BTSX because that would break promises made to BTSX investors.
I'm thinking it would be possible to dilute one or more new DAC's to fund development, marketing, user acquisition, etc. Dilution would be different from a premine, because you could allow investors to set the max dilution rate and thus "pull the plug" if funds are used unwisely. Or fix the situation when development funding is grossly under-capitalized or over-capitalized. I proposed exactly that in the "business delegates" thread, see here: https://bitsharestalk.org/index.php?topic=9452.msg123106#msg123106
Of course to attract people to those new DAC's they need to have some kind of value that BTSX does not offer. It could be because they're Music, DNS and whatnot. I also think there's a place for a DAC that receives new "cutting edge" features like atomic cross-chain trading or the like when they're first released. Then BTSX gets a backport after the tech is more proven.
[1] Fair methods will necessarily be dilutive -- either absolutely by printing new BTSX, or relatively by taking some portion of e.g. fee income that would otherwise be burned. The latter is still in essence dilutive in that it slows the rate of deflation.
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The problem with this proposal is that the value in the acquisition fund has to come from somewhere. If you don't use a "fair" [1] method then you will face a free rider problem. All BTSX holders benefit from increased adoption; people who don't participate in the fund share in the benefit without sharing in the cost.
I disagree. It is one of the best things in this proposal - free riders get to benefit from the appreciation in BTSX only (assuming that 70-80% will not take a short position in any bitAsset). The value for those investing in the fund will come from not only the increase in BTSX price but also from the short position taken (granted, reduced with amounts send to the 'new user acquisition' fund). But even after this outflow the investors in the fund will be better off than the pure BTSX holders,aka better off than 70-80% of all BTSX holders.
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This is just so crazy it might work.
Shorting is a concept that many have a hard time wrapping their head around so by paying a marketing fee they can have a managed fund shorted for them.
It works for the user because it return more profit then they would normally get. It works as a idea because it helps fill the cost void of new users.
Can someone enter and exit the fund whenever?
Would it maybe be a better idea to market it as a idiots shorting fund with some profit going towards marketing?
It is important to make it clear people will actually receive more btsx by doing this then by simply holding?
Who holds the fund is tricky because we don't actually have multi-sig yet
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Can someone enter and exit the fund whenever?
It is not a problem to be done... after let say 4-6 months, the fund can become open-end, as I suspect the people wanting to buy-in will be more than those that want to get out.
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This will not work because there is no real incentive to join other than altruism. People would rather just hold their BTSX. If we want to do any serious amount of funds, we need inflation. It's the only way. If we don't do it, we will lose to competitors that are willing to do what it takes to annex the global monetary system.
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This will not work because there is no real incentive to join other than altruism. People would rather just hold their BTSX. If we want to do any serious amount of funds, we need inflation. It's the only way. If we don't do it, we will lose to competitors that are willing to do what it takes to annex the global monetary system.
There is an incentive, and its not altruism.
It is not equivalent to hold your BTSX, nor to simply short bitUSD yourself. Neither of these give any resource to a proposed marketing effort. The incentive is to see the effort actually take place and have capitol behind it. Without which no one can expect to see a rise in BTSX value resultant to said effort.
I for one am wholly against any dilution/inflation. I believe all the capitol we need to produce any sort of marketing plan is already available and stealing value from current BTSX holders, no matter how well intentioned/thought out/un-failable you might think any plan may be, is inherently the wrong thing to do.
What needs to happen, is something similar to OP's proposal. Ideally where those interested and capable of putting up the funds can be rewarded in someway proportional to its success/effectiveness. Even if such an ideal cannot be reached, I would much sooner donate funds for such an effort before I supported stealing from an unwilling neighbor.
There are many ways to secure capitol investment, if we cannot obtain it for this effort it should not be done.
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This will not work because there is no real incentive to join other than altruism. People would rather just hold their BTSX. If we want to do any serious amount of funds, we need inflation. It's the only way. If we don't do it, we will lose to competitors that are willing to do what it takes to annex the global monetary system.
Can you support your statement, "If we want to do any serious amount of funds, we need inflation"?
Some people will want to join for profit, gains should be greater then if they just held their btsx alone but not as great if they just shorted themselves. Some people will want to join as a way to achieve the asset goals without inflation. For those 2 reasons I believe it will work. On top of that if this asset can pull it off and we don't need to inflate it will just provide less ground for competitors to stand on.
I am not a hardliner though saying I am 100% against inflation, I would just rather avoid it if possible. In fact If we can offer a alternative that will increase btsx bulls profit and make it so we don't have to adjust supply I can't understand why anyone would be against it.