Quote from: kani on April 11, 2017, 11:35:19 am

Benefits over transaction fee distribution:
1. Market Fees produce bitAsset of choice -- no need to convert BTS to bitAsset for dividend payment.
2. Does not violate LTM agreement
3. Does not mess with referral expectations

"Your share in the Decentralized Exchange"

Producing revenue from market activity is a natural income source for an exchange.  Sharing it with Bitshares users makes sense to me.

We already produce revenue from market activity via transaction fees without the need for additional market fees.

I've numbered your points for easier referencing:
1. You can pay transaction fees in assets other than BTS, so we can already immediately distribute bitUSD to bitUSD holders instead of converting it from bitUSD -> BTS prior to redistribution. Unless this is an automated process right now? The committee in charge of the fees assigned to the reserve pool could provide additional information here.
2. The agreement was that the membership you purchased was to exist for a lifetime, not that the benefits were permanent for the lifetime of your account. These benefits should be subject to change, given sufficient network consensus.
3. The referral system being allocated 80% of transaction fees was unfair to begin with, there was an expected replacement income stream for asset holders in the form of a bond market which never materialized. It's time for asset holders to have a slice of the pie allocated to them. Referrals don't keep users around, dividends do.

Thank you for the thoughtful reply.

In regards to #1 response:

Yes, that is theoretically true.  But the number of transactions which are paid in bitAssets is very small.  Which means it is not terribly useful source of revenue for a bitAsset dividend.

Quote from: kani on April 11, 2017, 11:35:19 am

Benefits over transaction fee distribution:
* Market Fees produce bitAsset of choice -- no need to convert BTS to bitAsset for dividend payment.
* Does not violate LTM agreement
* Does not mess with referral expectations

"Your share in the Decentralized Exchange"

In my opinion suggested model doesn't affect LTM members at all. Lets see:
LTM member pays fee in advance (LTM mebership fee) and gets 80% cash back, on every fee they pay to the network.. It is simple bulk discount.
Proposed change ONLY affects non LTM users which pay same fee as anyone else. They doesn't get any cash back only.
Their fee goes 20% to the network and 80% to referrer and registrant coalition.

Proposed change increases network cut from 20% to 50% decreases referrer coalition cut from 80% to 20% and introduces new beneficiaries like bitAsset interests (20%) and LTM members interests(10%).

Non LTM users can decide whenever they like to pay LTM membership fee and get 80% cash back on their fees. As I understand current model, such action breaks referrers dill and network keeps all of membership fee. Am I right?

Ah, but the suggested model does affect LTM members in a non-obvious way.  If the LTM has self-registered sub-accounts with the expectation that the registering account gets 80% back in vesting from those accounts, then the proposal increases fees for that user.

If you put $10 from one of your pockets to another one, how much do you owe at the end?

You can technically borrow whatever on DEX, but until you give away or sell whatever you borrowed, you are not in short position and you debt is zero. By allowing yield harvesting you are not going to increase liquidity.

Bob borrows $10 from Alice.  Then Bob gives the $10 to Frank.  It changes nothing.  Frank doesn't owe Alice $10, Bob does.

You are confused here.  The problem is that people can short to themselves by just setting up another account.  What does that accomplish that is worth paying for?  This is a widely understood issue that people have dubbed "yield harvesting".

No, I'm not confused here.  The blockchain tracks collateral-to-debt ratio.  This is not a problem if dividend is sent only to those with current debt and not holders.  If dividend was to shorters and holders then yes, I see the problem.

Anyway, I'm shelving the idea in favor of the simpler "market fee revenue to holders" I outlined above.

Quote from: kani on April 11, 2017, 01:51:06 am

Quote from: yvv on April 11, 2017, 01:47:54 am

Quote

And I honestly don't see why it can't be paid only to shorters (collateralized positions, only those who have current debt).  The 'yield-harvesting' "problem" mentioned above would not seem to apply if dividends are paid only to those with current debt.

The 'yield-harvesting' "problem" mentioned above does seem to apply, because there is no way to know who actually have current debt and who shorted to themselves.

Can you explain this?  It is my understanding that the blockchain retains a collateral-to-debt ratio per account and is enforced at a blockchain protocol level -- so this (debt portion) is the metric I'd choose.  How could someone short to themselves?

Someone can borrow bitUSD and send it to his other account. He is not in debt in this case and he shorts nothing on the market, but he is eligible for receiving yield. And you can't tell if someone is a legit shorter or a yield harvester just by looking at account debt, because you don't know who owns which account.

Um, no.  You can't erase your debt just by sending bitUSD to another account.  The debt remains on the original account.  The second account now holds bitUSD with no debt.  This argument makes no sense.

This is all dandy, but misleading.  The claim that this proposal does not raise user fees is absolutely FALSE!

A LTM account pays 20% to network, and gets 80% back in vesting.  And anyone who has self-registered sub-accounts, is the same -- 20% to network and 80% back to the registering account.  Don't mess with this -- any changes represent a major breach of trust to anybody who paid the $80-$150 to become a Life Time Member.

Do it with market fees.  Then there is no worry about how to convert to a chosen bitAsset, and is market driven -- more volume creates more revenue.

And I honestly don't see why it can't be paid only to shorters (collateralized positions, only those who have current debt).  The 'yield-harvesting' "problem" mentioned above would not seem to apply if dividends are paid only to those with current debt.  (And consider the VERY POSITIVE price effect this would have on BTS.  Many more will short bitAssets to chase the dividend payment and locking up that BTS for bitAsset of choice.  More BTS locked up means upward pressure on BTS price)

EDIT: And another reason market fees are better than transaction fees is that is does not change the rules 'retroactively'.  Anybody who doesn't like new market fees can choose not to trade in that market.  Whereas changes which lessen LTM benefits are forced on those who thought they got something different.  Also consider openledger who graciously faucets new user accounts.  They do so with the understanding that they get a cut of the user's transaction fees via registration (and referral, if not otherwise filled) percentages.  I think it's a bad idea to change this now.

I know there are plenty voicing opinions in this thread, but I'd like to take a moment to share mine.

First and foremost, I do not agree with any actions that add strain to the reserve pool (without a very strong argument for long term benefit).  Witness pay has just increased and more active workers are draining the pool faster than increased activity can keep up.  Long term goal should be a sustainable pool which balances pay with fees.

Second.  There should be no change to LTM fee percentages (small changes to non-LTM is fine with me).  Many have chosen LTM knowing the cost-benefit of 80% fees returned.  Don't mess with this.

Third.  We must explore motivations and desired outcomes for any suggested changes.  What problem are we trying to solve?  What impact does this have on the long-term health of the Bitshares ecosystem?

In my opinion, the two things which would help Bitshares the most is:

• increased supply of bitAssets
• usable liquidity

The reason being that more active and usable markets will attract new traders to the DEX.  Rewarding those who simply hold assets does not improve the DEX.

I come back, then, to the idea suggested a little while ago: Reward those who have bitAsset debt (collateralized position) with (new) market fees from same bitAsset markets.  Only those with debt collect dividends (from the market-produced trading fees -- aka "market fee") at a pro-rata basis.  Simply holding a bitAsset does not yield dividends.

What does this do?

• encourages more to short, increasing supply
• encourages riskier shorts closer to MCR to get most bitAsset for the BTS (which then results in more forced settlement activity)
• encourages those who do short to actively make markets to increase usable liquidity, which in turn provides volume and increases dividend from market fees

If the idea is adopted, I'd like to see it applied (as a test case) to a less-active bitAsset first before moving on to the big ones.

Thanks for reading!

Hey guys,

Popping back in to bump the original idea for this thread: Pay dividends to those who collateralize a SmartCoin by raking a small market fee from DEX activity in that SmartCoin.

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I like that other ideas have been presented here, but I do not think they are the right ones.

• Zero fees for orders which sit inside spread is not enticing enough.  The fees are too low for that to matter — if you can make an extra 0.2 BTS by placing orders further in orderbook, is of no benefit.
• Blockchain selling Smartcoins.  Too big of a change with significant risk to Market-Pegged mechanics.  Borrowing SmartCoins with collateral is not without risk, and is best handled by market actors.  The blockchain cannot assume this risk.

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The original idea presented here is a comparatively small change which incentives the right behavior:

• Creation of additional SmartCoins
• Higher returns for higher market activity

For a trustless solution this would require a change to blockchain protocol, as dividends should be automatic and made by the blockchain.

The biggest concern I have about this approach is that it will encourage shorters to chase minimum MCR to get the most SmartCoin for their BTS.  Can others comment on the impact of this?  Is this good or bad?

Remember the tagline:
“Your share in the Decentralized Exchange”

This idea brings that statement closer to reality.  For it rewards those who collateralize BTS for SmartCoins with proceeds generated by DEX activity.

But yeah, you may be right...  I might not have a full grasp on the complete picture.  Which is why I'm not going push the idea too much longer.

While I do think there is some merit here, perhaps someone else has something better.  Bottom line is that with all the talk of taking fees for other purposes, I really think it's best to use any new fees to improve markets.

(EDIT: And what better way to improve a market than by taking fees FROM that market FOR that market)