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Topics - starspirit

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76
A number of potential DAC ideas, such as insurance, lending, and voting seem to require at least some knowledge of participants' real-life presence, rather than be limited to information on their online persona. For example, insurance may ultimately require verifiable information like proof of age, proof of condition, proof of residence, proof of claim etc, even though BMs original concept attempts to limit the need for this. Similarly lending may need proof of real identity to ensure bad borrowers don't keep popping up with a new and clean online presence, and voting may need proof of identity and residence.

So for DACs to expand into all of the traditional areas of the economy, I feel we will eventually need new tools to deal with real-life information, without breaching privacy or anonymity when it is unnecessary.

As one example, I feel any form of insurance would require advance specification of who or what is the subject of the insurance being undertaken. Otherwise fraud will prevail if this can be determined by the insured after the fact. However, this information could be placed into a lockbox that is only opened when the claim needs to be verified.

The border between online and real-life may be a limit on the range of possible DACS, unless the two can be efficiently integrated with new sets of tools.

77
There are certainly times when dilution makes sense, but there are also times it does not. But it is always coercive, especially for the many smaller stakeholders whose vote counts for less than larger stakeholders. (Note the method of voting is fair, just not the consequence of this type of vote).

If one thinks of BTS as a share of the accumulated capital within the bitshares ecosystem, then it makes sense that if there is some sort of capital infusion into the ecosystem, such as the merger of another network, that dilution ensures everyone maintains a fair share of the new capital base. In such a case, I think dilution is warranted. That is similar to a situation under the gold standard where new notes are produced in the economy in exchange for new participants adding gold to the capital base, and destroyed when part of the capital base is redeemed.

However, even in the case of a capital infusion, where the value of that new capital may be evaluated differently by different stakeholders, a fixed dilution voted by stakeholders will be coercive upon all other stakeholders, and not voluntary. As a result for some people it will be a gift, for others theft. Might a theoretical alternative be for everybody in the system to publicly state the amount they are willing to dilute their own stake by, which is transparent in their community reputation going forward? A practical mechanism would be required to ensure nobody is diluted by more than this percentage. (I know this is practically difficult, but in principle).

Then we have the situation where people do work within the system, but for the benefit of the community at large rather than specific stakeholders (the latter is accommodated by simple payments). Rather than force everyone in the system to pay for this work whether they want to or not, what if we had a voluntary system where:

- delegates put up a proposal for value add
- donors can voluntarily contribute to the cause, proving funding and salary to the delegate to accomplish the goal
- if the delegate's production adds real value to the system, anybody within the system can donate to the delegate
- the delegate will reward their donors for their support from the contributions they receive
- reputations for donating, contributing etc affect how everyone is regarded in the system, keeping them fair and honest

In a way, each delegate is then like a mini-DAC. And this does not have to be restricted to delegates, but actually could be anybody (or any group of people?) in the system. It avoids dilution and coercion.

If we think of bitshares as a country, by allowing coercive dilution for these many circumstances we have set a precedent for the replication of traditional government structures (and a burgeoning "public sector") that coercively taxes the people. Whether that's voted upon is not the issue - one should not be able to vote to take wealth from other people. I would rather see if we can create an economy of voluntary human action.

BM and others - what do you think?

Edit 4 Nov 14: I improperly framed this discussion with misuse of the word coercive in the subject header, which is not true because there is no threat of violence. My mistake. But dilution is still involuntarily imposed on all individual participants whether they agree its to their benefit or not. My key point was to consider whether there are voluntary alternatives that could be considered instead of blanket dilution, at least in some situations. My view has evolved somewhat to the point that in principle voluntarism is better, but in practice its better to keep it simple but effective for now. When the system grows there will be better was of doing things as long as we don't lose sight of basic principles like the rights of individuals to choose what is best for them.

78
My understanding is that BTS, bitAssets, VOTES etc will now need to all operate on a single block chain, is that correct? If so, this would seem to limit the number of internal DACs that BTS could manage in future. Is it technically possible for BTS to operate internal DACs on multiple block chains? What's stopping this? I'm not a techie, just wondering about scalability of current approach.

79
There is an underlying assumption I see often that BTS market cap must always expand with bitUSD market cap, because demand for bitUSD forces up demand for BTS, the collateral. And further for the pool of all bitAssets. But is this logically true? I found this complex to think through, so would genuinely not be surprised if I were wrong. But my conclusion is that the statement is not necessarily true - one does not necessarily drive the other.

First we need to recognise that at least from a valuation perspective, there is no reason why BTS should by necessity demand a higher valuation as a direct consequence of bitUSD growth. If all BTS ever earned as income from providing the platform were some small transaction fee for bitUSD usage (which in theory could be close to zero), its fair valuation should relate to that income, not the market cap of bitUSD.

Now let's think about the market dynamic.

1) Imagine somebody demands a huge amount of bitUSD today, but that overall market expectations for BTS valuation are unchanged. This party goes to an exchange and buys bitUSD with their fiat USD, driving the price above 1 fiat USD.
2) Seeing this favourable price, some arbitragers buy bitUSD with their BTS, sell it at the exchange for the higher fiat USD price, buy back their original BTS with fiat USD, and pocket a profit. This leads to an equalisation of the bitUSD premium on the exchanges and on the BTS/bitUSD exchange, but has had no net effect on BTS demand.
3) Now seeing this favourable BTS/bitUSD price another set of arbitragers that are current holders of BTS are able to come in and create new supply in bitUSD through shorts. The arbitrage is to short bitUSD (making them longer BTS), and to sell BTS on the exchanges, which maintains their overall exposure to BTS. Again there has been no net effect on BTS demand. But importantly BTS has moved from the hands of the arbitragers into the collateral pool to support the larger supply of bitUSD.

The end result of this sequence is that there has been no change in the net demand for BTS, but that there has been a movement of BTS into the collateral pool.

If demand were ongoing, and BTS value were unchanged, this sequence could be repeated until all the BTS sat in the collateral pool. The only condition is that the market cap of BTS needs to remain more than 3x the market cap of bitUSD, otherwise its likely that forced covering of the shorts due to under-collateralisation would begin to unwind the supply and so release BTS collateral from the pool again (which incidentally, on its own still has no net effect on BTS demand).

The logical conclusion I draw, if this is correct (???),  is that the market cap of BTS bears no direct relation to the market cap of bitUSD, except that the market cap of bitUSD bumps against a ceiling as it approaches 1/3 the market cap of BTS. The only economic relationship that can drive growth for BTS is whether BTS derives greater value of transaction and other platform fees from the larger supply of bitUSD.

Can anybody see the flaw if there is one?

[Edit 12 Nov 2014: After having reviewed the discussion and thought some more on it, I now interpret the result like this. For the market cap of bitAssets to grow up to the ceiling, it does not require BTS market cap to rise at all. The growth can be facilitated completely by arbitragers without increasing their net demand for BTS, if the market is stubborn in the valuation it places upon BTS. However, the result still allows the potential for the market to increase its evaluation of BTS if bitAsset markets grow, which in all likelihood it will do if enough people follow the meme that "bitAsset growth justifies higher valuations of BTS". But this is not a given, and if BTS valuation were constrained by other issues, even strong demand for bitUSD could not be fulfilled beyond the ceiling.

As a minor technical point, I also now believe that in step 3 of the sequence above, these players are not strictly implementing a risk-free arbitrage (in actual fact, there is no risk-free arbitrage for shorts). Instead they are speculating that the premium of the bitUSD price over the peg will fall, which is not guaranteed if demand remains consistently strong. This does not alter the argument or conclusions above, it only affects their incentive to participate in meeting the demand.]



 

80
When a short is covered, either voluntarily or forcibly, the system hits the market and buys the quantity of shorted bitAsset with BTS from the collateral pool, and the remaining BTS held in collateral from the original shorting transaction gets released to the short. I'm wondering what exactly happens in the forced-covering scenario where the BTS originally placed into the collateral pool by the long and the short is no longer enough to buy back the quantity of bitAsset shorted. Does the full quantity of bitAsset still get cancelled? And where does the extra BTS required get drawn from? Thanks.

81
Technical Support / Small suggestion for client
« on: October 28, 2014, 10:27:13 pm »
It's only small, but it would be easier to read through the order queues in the market if all the quantities were right-hand aligned instead of left-hand aligned, so that place values lined up.

82
General Discussion / What is BTS mission?
« on: October 24, 2014, 01:29:27 am »
This is a confusing period, but also a chance for the new BTS to clarify plans for future success. As the restructure completes and the discussion moves on, I would like to see some focused discussion around the keys to future growth. The story is complicated I think because there are multiple DAC concepts being brought under one umbrella. For example:

What is the overriding mission of BTS?
What is the core product or product set and its leap in user experience?
What is the most immediate market of users?
What metrics of growth are key to look at?
What is going to make the biggest difference to growth in the next 3 and 12 months?

Is this too traditional a way to think of things?

83
Technical Support / How do I download latest release 0.4.21 to MAC?
« on: October 23, 2014, 01:54:08 am »
Looking here at v0.4.21,
https://github.com/dacsunlimited/bitsharesx/releases

I'm used to seeing a green button with a .dmg download, which I download and then copy straight to applications. All I can see with this release are buttons for the zipped source code, which I'm not sure what to do with.

thanks

84
The idea of a DAC is to be profitable and not burn value like bitcoin. Dilution must be regarded as an expense, and if it exceeds income, the DAC cannot be considered profitable, though that is arguable. Dilution is not always bad, but it is easily corrupted. While it can begin with good intentions and reasonable calculations and promote high growth at early stages, the access to 'free money' for a time can often lead to more and more whimsical decisions aided by a stock price that becomes more speculative on the back of each growth story, till it collapses. Thats not an inevitability but it is a danger.

If possible i think paying expenses from income is a better discipline. So i wonder if the following can be considered that might help avoid the need for dilution.

1) the DAC earns income from transaction fees. Can delegates apply this to core team development?

2) if more funding than this is required short term until DAC income builds, can a fund be raised for this purpose, with investors in that fund receiving a higher proportion of future DAC income for until a reasonable rate of return on those funds have been achieved. Such a fund would be akin to a non recourse loan.

These approaches would not lead to an unprofitable DAC.

In the end if dilution is necessary there should be strong rules upon it to limit the extent of capital consumption and uphold the integrity of all future decisions regarding it.

85
I am now a fan of the 30 day expiry on shorts because I believe that it will dramatically improve confidence for buyers and traders that they can get in and out without a large haircut when selling, with flow-on effects to overall market liquidity and marketability of BitUSD. I think it was right to grandfather existing positions, because nobody likes the rules changed on existing positions. But my question is what do shorts with these positions actually lose by voluntarily rolling them over to the new expiry regime?

If BTSX rises substantially, their collateral position will increase in value, and to maintain leverage it would actually be beneficial at that stage to roll anyway.
If BTSX falls substantially, the shorts can only be retained to the point where there is a forced margin call.
In the interim, instead of sitting and waiting for a year for the grandfathering to roll off (an eternity in the competitive crypto landscape), if the shorts were rolled this might increase liquidity and the peg in BitUSD, increasing the value of BTSX to their gain.

Maybe such voluntary rolls are happening, I'm not sure how to check. But if there are shorts reluctant to do this, I'm just curious to know what your reasons might be.

This is just an open question, not a criticism by any means, because it is not for me to question subjective rationality.


86
Lets call it BankUSD. One perceived advantage of BankUSD to the mass market is that it would be backed by the banks themselves (compared to BitUSD which backs it with a less widely known share). Most people who have USD sitting in the financial system are already exposed to that counter-party risk, and in the absence of bank insolvencies would likely not care if the crypto-USD exposed them to the same risk. As a result,  it would be a moot point whether the banks actually hold fiat USD reserves to back it, though presumably they would do this at least to some degree as USD already sit on their balance sheets. Would it have an edge on BitUSD? Or does regulation in that industry prevent it from somehow from going this path?

How would BitUSD fare in comparison?

87
General Discussion / Are forms of collateral other than BTSX possible?
« on: October 17, 2014, 08:22:16 am »
Technically it might be that BitAssets need to be backed by BTSX, I'm not sure. What else, if anything, is within the realms of practical possibility?
e.g. Can BTC be used to back BitBTC?

88
This idea has been mentioned in a number of previous posts. The idea is that as an alternative to entering a buy/sell/short order as a price, it could be entered as a price relative to the feed. The advantages in being able to do this could be that orders do not need to keep getting monitored and shifted around as BTSX moves around, which also incurs new fees, and it might be easier for market-makers to set a spread relative to the feed price. Maybe the idea has been superseded by a better approach to solve these problems, or maybe the technical difficulties are the problem? In any case, I was wondering what the status is.

89
In the Nubits thread, member Chronos points out the difference in current buy-side liquidity between Nubits and BitUSD, here:
https://bitsharestalk.org/index.php?topic=9057.285;topicseen

Any discussion on Nubits v BitUSD can stay in that thread - my interest in this post is liquidity in BitUSD. I know there's been talk in other threads about running market-making bots, and I'm thinking about trying it myself at some point, but they do not appear to be very active based on current spreads and liquidity. What are currently the biggest barriers to current and would-be market-makers?

90
My chart profile looks odd and completely disagrees with the analogous profile I can see at BitsharesBlocks.com.
What appears to be happening is this:

- At the time of writing, on the sell side, there is an order to sell 103148 BitUSD for 2791 BTSX (wrong way around), at an indicated price of 36.9495. The figures for BitUSD and BTSX seem to be inverted. So it is incorrectly treating this as a big BitUSD sell wall.

I'm not sure where else this might be happening, but glancing through other orders in the queue looks OK.





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