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To me this discussion is groundless since there is a generally misunderstanding of how markets work. There is no need at all to pay out dividends, since based on years of academic research, the stock price should already reflect that in its value. Why else do you think a company has a stock price? Because we're betting on the amount another seller will sell it for (eg. orginal bitshares molymorphic digital asset). No. its because shareholders have a stake of the profits from dividends. Therefore the price reflects dividends. This is the onereason why molymorphic digital assets did not work-- since there was no stake in profits, no causal relationship to the companies financial performance, the system was pegging based on inferences of what other people would buy or sell based on the agreement of name and what the asset possibly represents.Ya we know this.
The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.[1] In other words, it is used to value stocks based on the net present value of the future dividends. The equation most widely used is called the Gordon growth model. It is named after Myron J. Gordon of the University of Toronto, who originally published it along with Eli Shapiro in 1956 and made reference to it in 1959.[2][3] Their work borrowed heavily from the theoretical and mathematical ideas found in John Burr Williams 1938 book "The Theory of Investment Value."
https://en.wikipedia.org/wiki/Dividend_discount_model
But if you discounting future dividends you need to get those dividends.
If you dont get those dividends you cant discount it.
Its like saying you should value a goose that represents a gold-egg-laying-goose at the same value given to a gold-egg-laying-goose even if your goose doesnt lay any golden eggs.
I would personally pay more for a goose that lays golden eggs than for one that does not.
So MPA should trade at a discount to actual stock price.
MPA value = real world stock price - discounted future dividends
The issue is that when you use the perpetuity model for stock valuation you end up with a zero value for dividend paying stocks if you remove the dividends.
But then again, models are always a bit funny.
How did bitshares ever let Roger Ver sweep down and poach this project?
The answer to that is easy: Bitcoin maximalism.
The real question is why aren't we able to convince Augur to use our platform rather than the much slower Ethereum (plus we already have BitUSD working while they are still working on eDollar).
prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
No-order book prediction markets can work only if the underlying asset is an IOU. That IOU in turn is only stable if it is a representation of another IOU. It needs to be a recursive system in time rather than a self-referential system. I can only think of one way how to do that on a blockchain.
No Truthcoin bets are not IOU's.... Its no different than having one market ask: what is the Bitcoin Price in Usd at the End of September, and who will win the first Monday Night Football game. The crossroad of answers between these two is the winning bet.
Yes, we looked into doing these kinds of prediction markets. I think it will work so long as the initial collateral is sufficient to handle the change in price over the period of the bet.
There are disadvantages (you need to "sync" with usd price close time) but it's not nearly as bad as you're implying
I still haven't wrapped my head around the details of how combinatorial prediction markets compensate for the betting asset's price volatility (despite reading Paul's papers), but it still seems clear to me that it is the inferior solution compared to betting with stablecoins directly. For one, collateral levels backing BitUSD can continuously be updated over long periods of time as the collateral asset price drops significantly over this time. I am not sure how this would work in a combinatorial prediciton market, but I would imagine there should be some lower bound for how low the price could drop from the initial price at the start of the PM before the peg would break. Second, there can be considerable delay from the date at which the USD price is reported and the time the payments are actually settled. For example, in Augur it seems this delay is 2 months. Obviously the reporters cannot report a USD price that has not yet happened, so that means the earliest access the winners will have to the collateral asset is 2 months after the fair settlement price was determined. In those 2 months the price of the collateral asset could have dropped even more relative to USD. Also, they would be forced to dump it in exchange for USD as soon as possible after settlement to no longer be exposed to the price changes of the collateral asset, whereas with BitUSD the holders can take their time to incrementally trade fractions of their BitUSD holdings into USD (via the collateral asset if necessary), assuming they even want to bother when they already have the option of just holding it as BitUSD, without needing to worry as much about slippage in the market.
prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
No-order book prediction markets can work only if the underlying asset is an IOU. That IOU in turn is only stable if it is a representation of another IOU. It needs to be a recursive system in time rather than a self-referential system. I can only think of one way how to do that on a blockchain.
prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
1. Get rid of "short orders" entirely
2. Allow users to borrow any amount of BitUSD by locking up collateral.
3. Margin call the positions like always
4. Users can adjust their debt and collateral at any time provided the ratio between the two is sufficient.
To "short" you would first borrow the BitUSD and then place a standard limit order.
This would greatly simplify all market operations and history and result in fewer potential bugs.
I wanted to run the concept by everyone before committing to the approach.
1. How would then longs be collateralized? Who's providing the upside gains if shorts are no longer doing that? How will Smartcoins come into existence then?
3. Why reintroduce margin positions again? Will this margin call be separate from a forced settlement, so they are only applied to shorts and not to long positions?
When you borrow you put up the collateral and the end result is that you are "short" and "long" at the same time.
Then you place a limit order and sell on the market.
The peg works like always. Margin calls are unchanged.
1. Get rid of "short orders" entirely
2. Allow users to borrow any amount of BitUSD by locking up collateral.
3. Margin call the positions like always
4. Users can adjust their debt and collateral at any time provided the ratio between the two is sufficient.
To "short" you would first borrow the BitUSD and then place a standard limit order.
This would greatly simplify all market operations and history and result in fewer potential bugs.
I wanted to run the concept by everyone before committing to the approach.
This post makes total sense now that Ripple fines have come out.... and I believe the devs are already working on the implementation!
