BitShares Forum
Main => General Discussion => Topic started by: liondani on September 28, 2015, 06:48:31 pm
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Prepare to see ethereum price go to the bottom the next months like it did with bts after dilution was announced!
"Another action that may be taken is, when Ethereum switches to proof of stake, keeping 50% of the old issuance rate active for a year and directing the issuance into some kind of mechanism, perhaps a simple voting scheme or perhaps something more complex incorporating delegated voting, decision markets and potentially other revealed-preference tricks from game theory, in order to pay developers. In any case, our original promise that the issuance rate will not exceed 26.00% per year, and the goal that the eventual final issuance will be much lower (likely 0-3% per year) with proof of stake, will both be kept. We highly welcome community input on whether and how to go down this path; if there is large opposition we will not do this, though the community should understand that NOT doing this comes with a risk of greater reliance on the for-profit ethereum ecosystem."
https://blog.ethereum.org/2015/09/28/the-evolution-of-ethereum/
PS Tip of the day/weeks/months to come: margin sell ETH, margin buy BTS ;)
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Prepare to see ethereum price go to the bottom the next months like it did with bts after dilution was announced!
"Another action that may be taken is, when Ethereum switches to proof of stake, keeping 50% of the old issuance rate active for a year and directing the issuance into some kind of mechanism, perhaps a simple voting scheme or perhaps something more complex incorporating delegated voting, decision markets and potentially other revealed-preference tricks from game theory, in order to pay developers. In any case, our original promise that the issuance rate will not exceed 26.00% per year, and the goal that the eventual final issuance will be much lower (likely 0-3% per year) with proof of stake, will both be kept. We highly welcome community input on whether and how to go down this path; if there is large opposition we will not do this, though the community should understand that NOT doing this comes with a risk of greater reliance on the for-profit ethereum ecosystem."
https://blog.ethereum.org/2015/09/28/the-evolution-of-ethereum/
PS Tip of the day/weeks/months to come: margin sell ETH, margin buy BTS ;)
+5% ETH will crash
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They're not just copying our dilution, but DPOS. Watch the price jump as their actions are considered revolutionary and cool by the market.
It's not what you do, but how you do it - marketing
https://bitcointalk.org/index.php?topic=1195487.msg12546317#msg12546317
Do they have any monetization plan?
"Another action that may be taken is, when Ethereum switches to proof of stake, keeping 50% of the old issuance rate active for a year and directing the issuance into some kind of mechanism, perhaps a simple voting scheme or perhaps something more complex incorporating delegated voting, decision markets and potentially other revealed-preference tricks from game theory, in order to pay developers."
Actually, then that would be a DPOS or Delegated POS.
Vitalik announces DPOS dilution...
and the crowd goes wild!!
https://www.reddit.com/r/ethereum/comments/3mpq6b/new_ethereum_blog_post_from_vitalik_buterin_the/
The title of that thread you linked to is:
Vitalik writes Dear John letter to the Ethereum community...
Is that really how everyone else interprets it?
It sounds like ethereum is about to go poof.
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That's actually awesome news if you can buy bellow IPO price! However like bitcoinsatan mentioned, you don't know how people will react, even though I'm more inclined to see a dump as soon as few people start to spread the word "dilution" around.
As long as Vitalik acknowledges DPOS it's already a victory for us. It means it's adopting our system that got so criticized in the past by other people who might be Ethereum followes. It might even give us more credibility since Ethereum has a fan base bigger than ours. So as long as we get good in the picture and we can make a few articles off of it I'm all fine.
Just get an article "How Ethereum adopted BitShares' DPOS" out and I'm good with it.
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I think wanting dilution is nothing wrong .
Excuting it disregard of the community and market's reaction would be .
The key is whether he can go through with it in days . And I think we all know the answer to that . He can not even if he wants to .
So , I don't know why you guys are all this excited .....
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They say
In any case, our original promise that the issuance rate will not exceed 26.00% per year, and the goal that the eventual final issuance will be much lower (likely 0-3% per year) with proof of stake, will both be kept.
I don't follow ETH that much but if the possibility that ETH could be diluted at varying rates up to 26% per year has been there from the start, the blowback won't be nearly as bad as for BTSX which was perceived as being a no dilution crypto-currency by the majority of the market at the time.
Where they will definitely struggle though is that there is a significant time gap between when you pay for development and when that development starts generating significant income or bringing in new users to offset the cost.
So if they do start pushing the high end of the 26% dilution rate their price will suffer especially if ETH demand drops a lot during the interim waiting period like BTS's did.
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" In any case, our original promise that the issuance rate will not exceed 26.00% per year, and the goal that the eventual final issuance will be much lower (likely 0-3% per year) with proof of stake, will both be kept "
So , the dilution rate would still the same and wound't dilute "more" . The only difference here is where the diluted funds would be directed .
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Ethereum is going to go through what we went through for the past year. Lucky for them they can look at exactly what happened to BTS and know exactly what is coming for ETH. It will go exactly the same. We were so nice as to give them a sneak preview ahead of time, now they should know that they can just dump now and buy later.
When the price is half or less of the IPO price it will be buy time. 12-15 cents per ETH or so.
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This is just V's opinion and an enumeration of OPTIONS.
26% inflation from miners represents $1M per month in net SELL pressure on ETH. Imagine what the BTS price would be if we were paying miners anything close to that!!
News that they are switching from paying miners to paying developers would be seen as a POSITIVE by the market for Ethereum. BitShares went from NO inflation to 2% inflation and all hell broke lose. Even with vesting balances BTS inflation is only 10% and falling.
All this proves is that our THINKING is still over 1 year ahead of ethereum. This time next year they will be discussing the need to completely re architect their system because it is constrained by performance and the fees are so high that people are switching to other platforms (such as ours :) )
1 year ago our financial situation looked something like theirs:
1000 BTC in the, a couple hundred thousand USD, and 80M BTS worth $0.03 each and 3 million in capital losses. In dollar terms, our war-chest was a similar size a year ago to what theirs is today. Then BTS fell in value (along with BTC) and what we thought was a 1+ year runway (or infinite with delegate pay) ran out in just 6 months while we were forced to sell BTS at the low just to pay taxes.
They will probably make the same mistake we did in over-estimating our financial runway. We assumed that BTS prices would stay near 50M and that delegate pay would be sufficient. What happens to their runway when ETH falls to 25M. What happens to their developers when their burn rate is cut to $50,000 per month or less? They probably aren't even factoring in the tax consequences of directing future mining rewards to the foundation.
Ethereum is a great project with a great following that shouldn't be underestimated. I really hope they can learn from our mistakes rather than repeat them. Astute traders can probably learn from this pattern and predict where they will be in 6 months.
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News that they are switching from paying miners to paying developers would be seen as a POSITIVE by the market for Ethereum.
It wont. The market was planning on 0% inflation proof of stake coming in a year. You could look forward to that conversion date as the end of the inflation. Now they have to expect the current mining phase to be followed by future inflation as well even after proof of stake. The change is for the inflation to last longer, which the market hates.
All this proves is that our THINKING is still over 1 year ahead of ethereum. This time next year they will be discussing the need to completely re architect their system because it is constrained by performance and the fees are so high that people are switching to other platforms (such as ours :) )
Yes!
1 year ago our financial situation looked something like theirs:
Yes!
Ethereum is a great project with a great following that shouldn't be underestimated. I really hope they can learn from our mistakes rather than repeat them. Astute traders can probably learn from this pattern and predict where they will be in 6 months.
Its great, but I hope they repeat our mistakes. I want to buy the absurdly cheap ETH later.
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Same movie, different characters. That's actually nice for whoever paid attention to BTS this year and learned from it. Imagine knowing what would have happened to BTS in the past year? If Ethereum plays out like BitShares did, we will be having dejavus for a year and profit the most. If. Depends on how they handle the situation.
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"Finances
Let us start off by providing an overview of the Foundation’s financial situation. Its current holdings are roughly:
200,000 CHF
1,800 BTC
2,700,000 ETH
Plus a 490,000 CHF legal fund that will be reserved to cover possible legal defense (it’s like insurance). The foundation’s monthly expenditures are currently ~410,000 CHF and starting Oct 1 are projected to fall to 340,000 CHF; a mid-term goal has been placed of 200,000 – 250,000 CHF as a good target that allows us to deliver on our remaining, but important responsibilities. Assuming that we get there in three months and that ether and bitcoin prices stay the same (heh), we have enough to last until roughly Jun 2016 at the 340,000 rate, and perhaps up to Sep-Dec 2016 given planned transitions; by that point, the intent is for the foundation to secure alternative revenue sources."
My reading of their situation is that, since a very large part of the Foundation's assets are in ETH (2,700,000) and since they are burning through funds at a rate of between 340,000CHF and 410,000CHF a MONTH:
If the market cap/valuation of ETH continues to drop, they are in deep deep trouble.
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Wait until the ETH devs are forced do dump their ETH to pay expenses just like the BTS devs were doing a while back. See what happens to the price then.
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My reading of their situation is that, since a very large part of the Foundation's assets are in ETH (2,700,000) and since they are burning through funds at a rate of between 340,000CHF and 410,000CHF a MONTH:
If the market cap/valuation of ETH continues to drop, they are in deep deep trouble.
Do I understand it correctly: Ethereum has a 26% inflation due to POW and on top of that ETH 2.7 mln from the Foundation's assets will be dumped on the market in the next 8-10 months?
These two factors combined would make the inflation equal almost 30%. That's huge.
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"Finances
Let us start off by providing an overview of the Foundation’s financial situation. Its current holdings are roughly:
200,000 CHF
1,800 BTC
2,700,000 ETH
Plus a 490,000 CHF legal fund that will be reserved to cover possible legal defense (it’s like insurance). The foundation’s monthly expenditures are currently ~410,000 CHF and starting Oct 1 are projected to fall to 340,000 CHF; a mid-term goal has been placed of 200,000 – 250,000 CHF as a good target that allows us to deliver on our remaining, but important responsibilities. Assuming that we get there in three months and that ether and bitcoin prices stay the same (heh), we have enough to last until roughly Jun 2016 at the 340,000 rate, and perhaps up to Sep-Dec 2016 given planned transitions; by that point, the intent is for the foundation to secure alternative revenue sources."
My reading of their situation is that, since a very large part of the Foundation's assets are in ETH (2,700,000) and since they are burning through funds at a rate of between 340,000CHF and 410,000CHF a MONTH:
If the market cap/valuation of ETH continues to drop, they are in deep deep trouble.
It will become a self-fulfilling prophesy. Selling ETH to pay expenses will only cause ETH to fall which will in turn cut their ability to spend (forcing them to sell more ETH to maintain their burn rate).
Their ability to spend depends upon them dumping over $11,000 per day on the market in addition to the $23,000 per day from miners. Every day that ETH doesn't raise over $30,000 in net new investment the price will fall.
This represents a very large percentage of daily trading volume (on normal days).
This news will also cause a selloff as investors in ETH want to know where future funding to sustain long-term growth will come from. It won't be long until all ETH can afford is to maintain their network let alone improve it.
The reality is that despite their amazing programability, implementing a DPOS style layer on top of ETH will be extremely expensive, time consuming, and ultimately a performance nightmare. Voting is the single biggest bottleneck for BTS and
graphene. Either voting requires sending your ETH to a special contract or most ETH will be unable to participate in the voting like how collateral in 0.9.x is unable to vote.
Next they will realize that direct democracy is too slow and not responsive to lazy developers and need to implement proxy voting.
So it seems fairly clear to me that either ETH must implement voting on dilution or their direct funding of new development will mostly stop within 6 months. It is also fairly clear to me that simply developing a voting solution and integrating it into consensus will take the majority of those 6 months (if they do anything as comprehensive as BTS).
This past year has taught us how to run lean, to focus on profit, and to trim the fat. We are now stronger for it and on a sustainable growth path.
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Wait until the ETH devs are forced do dump their ETH to pay expenses just like the BTS devs were doing a while back. See what happens to the price then.
I wonder if the ETH devs would work for less than premium market wages? Would they sell their ETH while taking reduced pay? Will the sell it simply to pay taxes?
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maybe we can grab some talented eth devs in the future with a worker contract
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When Vitalik and team form a company to do consulting work to pay their bills, I wonder who will be the Ethereum equivalent of newmine and make a giant post about how it means they don't support Ethereum anymore.
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Didn't they get 50M from China still? Can't that help them? It's a lot of money.
“how did your China trip go?”), which includes (i) an agreement to purchase 416K ETH, which has already concluded, (ii) an upcoming conference in October, (iii) a non-profit blockchain research institute, and (iv) a $50m blockchain venture-capital fund, all with emphasis on Ethereum development.
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Ethereum has no tax obligations. The ether sale funds were raised tax free in Switzerland. The ethereum organization has a ruling from the Swiss Government.
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Didn't they get 50M from China still? Can't that help them? It's a lot of money.
“how did your China trip go?”), which includes (i) an agreement to purchase 416K ETH, which has already concluded, (ii) an upcoming conference in October, (iii) a non-profit blockchain research institute, and (iv) a $50m blockchain venture-capital fund, all with emphasis on Ethereum development.
Vitalik's post said "if the community don't want to rely on for-profit funds to pay the developers" , that's the whole conversation was based .
Meaning if the community want the developers either be paid from a non-profit , or be paid from the blockchain , then the direction of the dilution schedule should change .
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Wait until the ETH devs are forced do dump their ETH to pay expenses just like the BTS devs were doing a while back. See what happens to the price then.
I wonder if the ETH devs would work for less than premium market wages? Would they sell their ETH while taking reduced pay? Will the sell it simply to pay taxes?
My understanding is that some of them would work for companies or organizations so that they can get paid while still developing Ethereum and related stuff .
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Others may have problems, but we （BTS）are not perfect.
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Others may have problems, but we are not perfect.
wuyanren sb
...Just get up, was scolded, in the heart very happy
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This is just V's opinion and an enumeration of OPTIONS.
26% inflation from miners represents $1M per month in net SELL pressure on ETH. Imagine what the BTS price would be if we were paying miners anything close to that!!
News that they are switching from paying miners to paying developers would be seen as a POSITIVE by the market for Ethereum. BitShares went from NO inflation to 2% inflation and all hell broke lose. Even with vesting balances BTS inflation is only 10% and falling.
All this proves is that our THINKING is still over 1 year ahead of ethereum. This time next year they will be discussing the need to completely re architect their system because it is constrained by performance and the fees are so high that people are switching to other platforms (such as ours :) )
1 year ago our financial situation looked something like theirs:
1000 BTC in the, a couple hundred thousand USD, and 80M BTS worth $0.03 each and 3 million in capital losses. In dollar terms, our war-chest was a similar size a year ago to what theirs is today. Then BTS fell in value (along with BTC) and what we thought was a 1+ year runway (or infinite with delegate pay) ran out in just 6 months while we were forced to sell BTS at the low just to pay taxes.
They will probably make the same mistake we did in over-estimating our financial runway. We assumed that BTS prices would stay near 50M and that delegate pay would be sufficient. What happens to their runway when ETH falls to 25M. What happens to their developers when their burn rate is cut to $50,000 per month or less? They probably aren't even factoring in the tax consequences of directing future mining rewards to the foundation.
Ethereum is a great project with a great following that shouldn't be underestimated. I really hope they can learn from our mistakes rather than repeat them. Astute traders can probably learn from this pattern and predict where they will be in 6 months.
While bad news often crashes the price , good news don't always have an impact on the price especially some of the "good news" are considered as "needed condition" to begin with .
The news of stop developing would hurt the price , but the news of keep developing won't pump the price since the expectation of keep developing was already factored in the speculative market . Just like In the stock market , when you buy Apple stock , you automatically assumed Apple would continue their business , you wouldn't give them extra credit for doing what they're supposed to do or confirming it .
Staying in business is a required condition in the market after high ratio of speculative valuation , not extra good news . That's why BitShares didn't get credit for being able to keep developing with dilution as a competitive edge .
The market gave high valuation for the expectation of generating the result someday , but not the process of generating that result .
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Hopefully cooler heads will prevail, and the project will be forked like BTSX should have been.