After posting
this thread, I have come up with some ideas that should help address problems associated with inflation and voter turnout. I will review three inflation models:
Majority Approval (the current proposed inflation implementation),
Singular Patrons (opposite end of the spectrum), and
Momentum Approval (my proposed implementation). I will also propose something called
Voter Rebates, which fits into the Momentum Approval model.
(NOTE: Stan has said to stop using the word 'inflation' when referring to how we pay hired delegates. I'm using it anyway, but please know that I am not thinking in terms of 'currency inflation'. You can replace it with 'capital infusion', 'dilution', 'pay rate', or whatever you want. Inflation is just the most clear word to use in the context of this proposal.)I. MAJORITY APPROVAL">50% of total stake needs to be for supporting an Inflation Delegate."It is going to be extremely difficult to achieve >50% voter turnout, even with I3 voting with their large stakes. What this means is that we're going to have to lower the threshold to <50% for inflation to kick in, and this would give major stakeholders a large disproportional voting advantage. On the other hand, if we refuse to lower the threshold within this inflation scheme, then we will have slow or halted capital infusion.
The binary nature of this implementation makes it simple, but not very intelligent.
II. SINGULAR PATRONS"All the stake (and only the stake) that votes for an Inflation Delegate pay that delegate."There are two equivalent ways to do this:
1. Transfer stake from those who voted for the inflationPATRONS: Stake lowered (transfer a percentage of their stake to delegate)
NONPATRONS: No change
DELEGATE: Stake raised (receive a percentage of every Patrons' stake)
TOTAL SUPPLY: No change
2. Add stake to those who did not vote for itPATRONS: No change
NONPATRONS: Stake raised (inflation amount spread out over all Nonpatrons)
DELEGATE: Stake raised (inflation amount added singularly to delegate)
TOTAL SUPPLY: Increased (Nonpatron inflation amount + delegate inflation amount)
Pros and Cons for Singular Patrons when compared to Majority Approval:
PROS:
- Each shareholder is in full control of their stake.
- Large stakeholders do not hold disproportional advantage.
- Risk of failure of delegate rides solely on those who voted for them.
- Higher diversification of funds casts a larger net when acquiring talent/capital
- Minimum approval does not inhibit anyone from being funded. If one stakeholder wants to fund a project/individual/group, they can.
CONS:
- Low voter turnout results in low capital infusion rate (which is still actually better than
no capital infusion with Majority Approval in this situation).
- In the event of high voter turnout (>50%), this method doesn't have as much 'firepower' as Majority Approval.
- Diversification of funding may be too extreme; we may end up doing many things badly rather than a few things well.
- Free rider problem exists; there may be incentive to not vote, thus creating a 'tragedy of the commons'
IIIa. MOMENTUM APPROVAL"As approval rate for an Inflation Delegate approaches 50%, the Inflation Delegate's inflation approaches their desired rate."To gain the benefits of both the original Majority Approval scheme and the Singular Patrons scheme, we can blend them together.
This can be achieved through the following equation,
where
= Percentage of stake approving Inflation Delegate (Patrons)
= Percentage of stake not approving Inflation Delegate (Nonpatrons)
= Delegate's desired inflation
= Total Delegate Inflation
All approving stakes automatically give the delegate his total desired inflation,
. All stake not approving give the delegate a partial amount of their desired inflation,
, which starts at 0 and accelerates towards the full amount as approval approaches 50%. Their sum is the effective inflation pay rate
for the delegate.
After approval rate is >50%, it is equivalent to Majority Approval.
Here is a graph comparing the three different methods:
Here is a graph showing the percentage of the delegate's max inflation that Nonpatrons pay as approval increases:
As you can see, even at 5% Approval (approximate amount of I3's stake), there are negligible effects on the rest of the stakeholders.
Some numerical examples:
1. Delegate has approval from
.05 of stakeholders
Delegate is asking for
10% max inflation
Patrons give
10% of their stake
Nonpatrons give
0.019% of their stake
Delegate gets
0.5095% inflation
2. Delegate has approval from
.12 of stakeholders
Delegate is asking for
10% max inflation
Patrons give
10% of their stake
Nonpatrons give
0.243302% of their stake
Delegate gets
1.32165% inflation
3. Delegate has approval from
.25 of stakeholders
Delegate is asking for
10% max inflation
Patrons give 10% of their stake
Nonpatrons give
1.875% of their stake
Delegate gets
3.4375% inflation
4. Delegate has approval from
.33 of stakeholders
Delegate is asking for
10% max inflation
Patrons give
10% of their stake
Nonpatrons give
3.85245% of their stake
Delegate gets
5.22622% inflation
5. Delegate has approval from
.45 of stakeholders
Delegate is asking for
10% max inflation
Patrons give
10% of their stake
Nonpatrons give
8.019% of their stake
Delegate gets
8.5095% inflation
IIIb. VOTER REBATESConsider this redistribution implementation for Momentum Approval:
Increase supply, distribute to Nonpatrons and DelegatePATRONS: No change in number of shares
NONPATRONS: Number of shares increased ( stake + (stake *
*
) )
DELEGATE: Number of shares increased ( stake + (supply *
) )
TOTAL SUPPLY: Increased ( supply + (supply *
) )
(NOTE: Just to be clear, even though Nonpatrons get their number of shares increased, since the total supply is increasing, their percentage of total is still lower.)
Voting incentive #1In order for Nonpatrons to receive their stake increase, they must vote 2 delegates for every 1 delegate they are getting an increase for (with a maximum of 101). Let's call this stake increase the Voter Rebate.
Voting incentive #2If the stakeholder doesn't vote for 2x Delegates and/or redeem the Voter Rebate in 90 days, then the it expires and automatically goes to its corresponding Delegate.
What this means is that if you don't support a delegate to be payed, you have to come up with at least two alternatives within 3 months, or you will end up giving up your extra shares to the Delegate. Since you're voting for twice as many as you're receiving for, and voting for delegates may mean becoming a Patron for those delegates, this puts pressure on stakeholders to constantly invest money toward growth, as well as incentivize Delegates to put up bids for election. Additionally, the two delegates you vote for create more incentive for others to redeem their Voter Rebate, thus creating a viral effect.
You can always redeem your Voter Rebate from as many as 1/2 of the number of Delegates you are currently voting for, prioritizing the largest rebates first, within a rolling 90-day period.
What if a lazy BTS holder doesn't want to vote? They will be giving up part of their voting power, being less of a drag on capital infusion. Since this demographic's percentage stake would drop the fastest out of everyone, they would also be less and less of a burden over time. Meanwhile, price appreciation is still likely, making this a viable option for many speculative investors who are not interested in becoming involved in company politics.
--
In summary:
- Majority Approval model is simple but unintelligent, which makes it inefficient at balancing capital infusion, stakeholder consensus, and stakeholder apathy.
- Singular Patron model solves certain problems, but overall, since it has no way to leverage the whole company's stake, it is too weak to give the company the competitive advantage that it needs to survive.
- Momentum approval model brings Majority Approval and Singular Patron model together to get the best of both worlds.
- Voter Rebates involve all stakes in the voting process (whether they vote or not), incentivizes stakeholders to participate, and holds shareholders accountable for the success of the company.
Tell me what you think, suggestions / improvements / modifications, or pointing out flaws in my logic or math are strongly encouraged!
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