The damage re: inflation has already been done. There is no turning back, we simply have to implement inflation because that is the only way to have the bitshares superDAC be competitive in the long run. Remember that shares will only ever be issued to fund endevours that are long term profitable and result in a net gain for the shareholders. This will only be positive unless you dont trust the developers and delegates. The only negative coming from implementing inflation is the selloff we are seeing right now, which means the damage has already been done.

No, it's plain to see that the selloff is not just due to the possibility of inflation. This selloff is about bigger issues with the current proposal and perhaps, to some degree, a loss in faith in leadership due to the fact that they are even entertaining such a proposal.

There's nothing wrong with large demand for short-selling per se. That just reflects optimism about the near-term value of BTSX. (I don't believe that the demand is in any way due to the belief that BitUSD could be going to zero, not with I3's open commitment to helping the peg to hold.) In a liquid market, huge short selling should simply translate into faster price appreciation--just like large options or futures trades lead to price discovery in equities. So why did the price of BTSX go down despite large short sales? I think there were confounding events--wallet bugs, natural correction after the run-up to launch--that made some people believe that short-selling would not lead to BTSX price appreciation. Also, up to now the market rules may have been a bit too favorable and not punitive enough to short-selling. Why not make a conservative change, like increasing collateral requirements or increasing the margin call penalty, and see then if the market can achieve a good peg on its own?

It's clear that achieving a stable peg would help immensely in increasing confidence and growing the network. We all agree that getting there sooner is better than getting there later. But, to really condition traders' expectations and build confidence for long-term success, we need to prove that the peg can work without a heavy-handed restriction based on price feeds. Market participants need a chance to condition their beliefs and learn. Disallowing short sales below the median feed price would not give them this opportunity. Furthermore, such a stop-gap measure is not really a long-term solution. Even if such a measure enforced the peg for now, it would really be a crutch that would become harder and harder to remove over time. If the crutch seemed to work for now, it would prevent true price discovery, much like the blunt short-sale prohibitions for traditional equities that proved to be ill-advised. When the network size is much bigger in the future, it could be very difficult to remove the crutch without causing widespread concern about the robustness of the peg, simply because the market would not have learned on its own to achieve a viable peg. What if the crutch were dispensed at some point and the peg began to fail again? Confidence could be shattered. I believe it would be a mistake to try to bypass the steady learning and conditioning process that needs to take place for long-term robustness of the peg.

So, I say let the market work mostly on its own for a little while longer, when the costs of failure are relatively low. See if things get better. Fix bugs in the client, make it easy for more people to get on the network and participate in the internal market. Make one or two simple, conservative changes to the market rules that don't rely on price feeds. E.g., just increasing collateral requirements from 2x to 3x, decreasing the margin call price, and/or increasing the margin call penalty to 10% may be enough to restore balance between shorts and longs. If the peg can start to hold better with minimal changes, that would be a home run and far superior than using a heavy-handed approach such as restricting short sales below a median price feed.

Well, perhaps I'll end up being one of the lone dissenting voices on this, but it seems to me that it might be worthwhile to think twice about exclusive reliance on 3).

I really worry that 3) could be a significant drag on the value of BTSX and on buy-in into the network. It all goes back to the question of how BTSX holders and investors would feel about potentially open-ended debasement. In a real, live network with 3), how often would short positions get blown out, and how much dilution would need to occur to withstand multiple disruptions over time?

What if there is not just one BitAsset, but several correlated BitAssets, e.g., BitBTC, BitGold, BitCNY, etc., which could potentially increase rapidly in value and cause blown shorts? Would all of these need to be supported by BTSX holders under something like 3), and would that compound the potential problems?

I suspect not many people here have a good idea about how often and how large the triggering disruptions would be--I certainly don't. There seem to be significant unknowns here. But I feel pretty sure about one thing: in general, significant uncertainty + potentially large, open-ended future dilution = anathema to buy-and-hold investors.

BM et al. deserve props for thinking proactively about this issue, and I hate to complain, but I really do hope a better, more investor-friendly solution comes along. What about some mixture of (1), (2), and/or (3)? Are these three really the only alternatives?

A google doc sounds good. If someone can create it, that would be great. Believe it or not, creating Google docs currently lies beyond my domain of expertise...

Quote from: Empirical1 on August 09, 2014, 11:03:01 am

Wait I've figured it out ... 

The centralised Internet controls .com .org .net , & if we start .p2p,  there's a risk they use .p2p too. But it's not a problem because all they really control is a ' .  '

But you know what's much cooler than a  '.'? A '!' , and they don't control the '!'

So what about, instead of .TLD's, BitShares DNS takes control of  !TLD's?

BitShares!org, Apple!Com, Party!p2p

Now that is an interesting idea. Although one of the nice things about ".com" is that you can pronounce it "dot com". There's not an easy pronunciation of "!com". I've heard ! pronounced as "bang" but I think it would be a stretch to get people to say it that way.  How about "#com"? Could be pronounced "pound" or "hashtag".

Ampersand, perhaps? @ = "at", easy to pronounce

0.0000556

amatob

Coming Soon...
http://cassyo.cc/labs/btsx/index.php

Overall, looks pretty good.

One minor comment: In the "About" section, the first paragraph of text ends with "BitSharesX makes this possible using the same blockchain technology that powers Bitcoin...."

Instead of describing it as "the same blockchain technology that powers Bitcoin, maybe it's better to describe it as a more advanced/evolved version of the Bitcoin technology. A reader should learn right away about the key advantages of BitShares, whether they are speed, efficiency, decentralization, or security.

I have another idea of how to handle it... We can make a DAC that honors PTS/AGS 50/50 with no dilution, then a new DAC or version of this DAC is quickly proposed that allows dilution.  A delegate is created (or other stake voting mechanism) and announce that in 2 months there will be a snapshot and every stake/share that is approving this delegate at snapshot time will be honored in the new chain with dilution.  All others not approving can honor themselves in a separate chain without dilution.

My first impression is that this would be viewed as a coercive mechanism. It would certainly be divisive.

Regarding dilution, I do see that it might have some advantages over a one-time share allocation. Some people here argue that dilution could be good for fast-growing DACs with very uncertain future funding needs. But for these cases, a pre-arranged schedule of dilution (which is probably the only one that most shareholders would ever find palatable) doesn't seem to offer much additional flexibility anyways.

So, really, what can a pre-set schedule of dilution accomplish that a pre-allocation can't? It may be that dilution can be useful because it provides a "vesting" feature--not all of the funds are made available upfront, so there is less danger that a developer can walk away with 30% of the DAC. I think that is a valid point. However, pre-scheduled dilution has its own drawbacks. It is like paying someone in the hopes/expectations that they will do what's good for the network. I can see that there might be a lot of inefficient spending in such a system. At least with a pre-allocation, an honest group of developers or delegates can take a bounty-like approach where they can make sure they don't get much less than they paid for.

One thing that would make me a bit uncomfortable as a PTS/AGS investor is that the dilution rates that have been discussed here seem quite high to the point of disenfranchising early investors. For example, many investors probably bought into AGS, PTS thinking they would get a 35/35 allocation in some of the first round of DACs. By changing to a 35/35 allocation with dilution, they now are effectively getting 15-20%. Perhaps that will eventually go to 10%. Where is the original 30% pre-allocation to non-investors going to go? If high rates of dilution are being considered, then perhaps there should be fewer (or no) shares pre-allocated. So, maybe it's a question of magnitude. If the benefits from dilution greatly exceed the amount of value transferred, then that would be great. But, as some here have argued, the true benefits (above and beyond pre-allocation or additional fundraising) have yet to be proven.

The pro-dilution folks seem to ignore (or at least downplay in importance) that dilution can give a negative perception to shareholders. And that is perhaps the chief disadvantage of dilution. It makes the optics look bad and, rightly or wrongly, is easily misperceived by shareholders. The only way to get maximal acceptance and investor interest is to make sure everything is clear, transparent, and palatable to shareholders from the start. Perceptions are really important. There should be nothing to suggest that someone in power can game the system to extract or misuse wealth. I believe that misperceptions are one of the things that crippled Ripple early on. Many criticized Ripple heavily and labeled it a scam on account of the fact that they retained about 95% of the supply upfront, even though they promised to distribute 50% or so to grow the network. (Of course, Ripple was also closed-source initially, but most of the criticisms seemed to center around the initial and planned share distribution.) Rightly or wrongly, investors balked at what was perceived to be a grossly unfair system. A concern I have is that if shareholders in a DAC feel wronged and get sufficiently PO'ed, scrutiny and intervention by a regulator could become more likely, which is something that probably few people here want...

Whatever solution is chosen, I hope that developers always remember that every DAC is different and that public perceptions do matter--they matter a great deal. Let's learn from the experience of Ripple and others. Simply put, the optics have to look good from the start, otherwise a DAC will have a hard time gaining widespread acceptance and investor interest.