Author Topic: A BitShares Constitution?  (Read 17400 times)

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Offline Ander

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I thought the maximum annual dilution is 8%? 

The way I calculate it, it is 6.3% right now.

50 bts per block * 6 blocks/min * 60 min/hour * 24 hour/day * 365 day/year = 157,680,000 shares per year.

.15768B / 2.5B = 6.3%



The thing that troubles some investors is that they dont want the code to be changed to increase this amount.  That is, they think "once you allow any dilution at all, you could allow UNLIMITED dilution".

This is the goal of the constitution, to make it very very hard for that to ever occur.


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Is the new question:  Should that be periodically lowered to stay below bitcoin as bitcoin is lowered via the block reward halving? 

To which I say, yes.

I also say yes.  I dont think our schedule needs to be the same halving per 4 years though.  A smoother decline would be preferable to a disruption at a certain date.

Quote
The code is the constitution.  Nothing more is needed.


I think the constitution is basically a promise to never make the code do certain things that we might not approve of (dilution), without massive community approval.

Its also a marketing document outlining the vision, so that people can understand what bitshares is trying to do.
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Offline oldman

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A constitution is meant to be social glue. It's in writing and is "official". Eventually people start to almost worship it like a holy book; so I see merit in having our own. As mentioned previously, the first rule should be that changing the constitution requires a 75% supermajority, otherwise inflation is fixed. You get the best of both worlds this way: investor confidence and the ability to tackle both known unknowns and unknown unknowns.

Agree whole-heartedly.

Cap inflation and require a 75% majority to change it.

Huge boost to investor confidence, including my own.

A written and public constitution with a few simple and hard rules would be a novelty in the crypto space and may garner substantial publicity.

I would highly recommend modelling the language of the constitution on the Declaration of Independence.

Life, Liberty and the Pursuit of happiness.

Man would that resonate... freedom rising from the ashes of a corrupt and crushing system.

The 75% super-majority is also an excellent mechanism for establishing the ground rules while providing a robust mechanism for altering them.

The code is the constitution.  Nothing more is needed.

Very true...

Perhaps what is needs is a plain-English summary of the main philosophies the code realizes and the basic framework of rules that will require a super-majority to alter.

I still like the DOI tie-in.

Perhaps a Declaration of Economic Independence?
« Last Edit: October 31, 2014, 09:56:14 pm by OldMan »

Offline matt608

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I thought the maximum annual dilution is 8%? 

Is the new question:  Should that be hard-coded to be periodically lowered to stay below bitcoin as bitcoin is lowered via the block reward halving? 

To which I say, yes.

As for a more broad constitution, its a fascinating idea but any more change is just going to shake out everyone who disagrees.  No more big changes.  The Company Analogy is fine, a constitution implies motive beyond shareholder profit, which is another form of dilution, its a dilution of motivation.  Each individual shareholder will have motive beynond profit, e.g. if a delegate wanted to launch a branch of bitshares that was a weapons manufacturer, I would vote against them due to wanting nothing to do with the weapons industry.  I don't need a constitution to tell me what to do.  Isn't that the point of bitshares? 

The code is the constitution.  Nothing more is needed.
« Last Edit: October 31, 2014, 09:52:55 pm by matt608 »

Offline suwoder

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we should Do a  job at present,stop (fu**ing)talk about dilute bitshares and inflation etc.


Offline bytemaster


Having the ability to change the dilution rate with some established process that is deemed "hard but not impossible" is what is needed.

I agree.

I think that modifying a constituiton is "hard but not impossible". 

It should be hard enough that people have confidence that it should probably not happen, except in an extreme emergency where everyone agrees it must happen.

Extreme emergency or extreme opportunity.... I think we can put this kind of thing up to a vote that requires 75% stakeholder approval and allows stakeholder to buy/sell their approval would do the trick.
The essential problem with dilution is that it is a coercive tax, and the antithesis of voluntary action, especially for smaller stakeholders. I would prefer a constitution built around freedom.

I disagree about it being a coercive tax for the simple reason that you can use BitGold to trade and save in and never have anything taken from anyone combined with the following:

One person has $100 and contributes it to create a company and owns 100%.
A second person has $100 and contributes it to build a company... how much does each person get as far as ownership rights?  50/50...     You went from 1 share to 2 shares.  Assuming the money was kept in the company the value of each share would be $100.  Thus no wealth transfer, no tax, no threat of violence.   




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Offline Method-X

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A constitution is meant to be social glue. It's in writing and is "official". Eventually people start to almost worship it like a holy book; so I see merit in having our own. As mentioned previously, the first rule should be that changing the constitution requires a 75% supermajority, otherwise inflation is fixed. You get the best of both worlds this way: investor confidence and the ability to tackle both known unknowns and unknown unknowns.

Offline starspirit

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Having the ability to change the dilution rate with some established process that is deemed "hard but not impossible" is what is needed.

I agree.

I think that modifying a constituiton is "hard but not impossible". 

It should be hard enough that people have confidence that it should probably not happen, except in an extreme emergency where everyone agrees it must happen.

Extreme emergency or extreme opportunity.... I think we can put this kind of thing up to a vote that requires 75% stakeholder approval and allows stakeholder to buy/sell their approval would do the trick.
The essential problem with dilution is that it is a coercive tax, and the antithesis of voluntary action, especially for smaller stakeholders. I would prefer a constitution built around freedom.

Offline CoinHoarder

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Having the ability to change the dilution rate with some established process that is deemed "hard but not impossible" is what is needed.

I agree.

I think that modifying a constituiton is "hard but not impossible". 

It should be hard enough that people have confidence that it should probably not happen, except in an extreme emergency where everyone agrees it must happen.

Extreme emergency or extreme opportunity.... I think we can put this kind of thing up to a vote that requires 75% stakeholder approval and allows stakeholder to buy/sell their approval would do the trick.

This sounds wonderful.

+5% to making a Bitshares' constitution, but I think it should be extended beyond simply dilution. This is actually similar to what I proposed at the end of my last post, except again I believe it should be extended to cover more than dilution.

It should also cover the philosophy or "game plan" of the Bitshares project, including long term goals and incentive structure of Bitshares AGS/PTS ectera. Changing incentive structures and the main "game plan" of Bitshares on the fly provides uncertainty to investors and thus is reflected in the market.

TL;DR: Too much change too fast.. dilution and playing with the incentives of those that have previously invested in AGS and PTS is not cool.

Changing things on the fly does not work with cryptocurrencies, as people like to know what they are investing in, the long term goals of the project, and that those goals won't constantly change on a whim. By changing so many things so drastically and quickly, I am sure we have lost some big stake holders that are now uncertain of Bitshares' future and the success of some of the recent changes. For instance, dilution is a word that carries a very negative connotation in the cryptocurrency community. Also, you guys are playing with the incentives of AGS/PTS/BTS on the fly and that is not cool.. it provides uncertainty to investors and scares people away and the market is reflecting that. I am sure there will be some big PTS holders that show up over the next few weeks that don't follow Bitshares day-to-day. They will be irate when they realize that a final snapshot was taken and that their PTS holdings are now worthless. People "in the know" will come out OK as they can still sell their PTS for Bitcoins at a reasonable exchange rate, but the people that are not will not come out as good as the others.

I think combining DACs was a good move, but when you start playing with the incentives of AGS/PTS/BTS and the incentive structure of DACs themselves (dilution) on the fly, that is not cool. So, although I agree with the main philosophy of the merger, I believe the way it has been carried out was sub optimal. I suggest the Bitshares community take a long hard look in the mirror at this point in time. Write Bitshares' goals and the vision of the project, and then etch that vision in stone. Only change economic incentives of a cryptocurrency when absolutely necessary (preferably never) to the success of the project.
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Offline Ander

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Extreme emergency or extreme opportunity.... I think we can put this kind of thing up to a vote that requires 75% stakeholder approval and allows stakeholder to buy/sell their approval would do the trick.

Requiring 75% approval to change sounds great to me. 

Investors would have confidence that greater dilution could only happen with mass approval.
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Offline bytemaster


Having the ability to change the dilution rate with some established process that is deemed "hard but not impossible" is what is needed.

I agree.

I think that modifying a constituiton is "hard but not impossible". 

It should be hard enough that people have confidence that it should probably not happen, except in an extreme emergency where everyone agrees it must happen.

Extreme emergency or extreme opportunity.... I think we can put this kind of thing up to a vote that requires 75% stakeholder approval and allows stakeholder to buy/sell their approval would do the trick.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Ander

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Having the ability to change the dilution rate with some established process that is deemed "hard but not impossible" is what is needed.

I agree.

I think that modifying a constituiton is "hard but not impossible". 

It should be hard enough that people have confidence that it should probably not happen, except in an extreme emergency where everyone agrees it must happen.
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Offline Stan

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Interesting idea. I can see both sides of this discussion.

a) Fixed dilution limits future unknowns.
b) Fixed dilution gives investors peace of mind.

I can't decide.

 +5% :P

Easy peasy: 

Nothing can happen very fast. 
If you don't like how the future is unfolding,
sell at that time.

Never try to over constrain the future.
If it were even possible
You are just as likely to prevent yourself from doing something right.

 :)
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Offline bytemaster

Interesting idea. I can see both sides of this discussion.

a) Fixed dilution limits future unknowns.
b) Fixed dilution gives investors peace of mind.

I can't decide.

 +5% :P

+5%  for me too...   hard to decide, limits potential major moves which is good and bad.

Enshrining a maximum dilution rate into the code is really doing nothing more than placing a spending limit on government.   This spending limit is fundamentally tied to the markets ability to absorb the new shares. 

All "Democracies" suffer from the potential of shareholder abuse of power and desire to have unlimited spending ability.   Do we trust the shareholders to make good judgements?  Do we know enough know to bind them for ever?  By what process can we change the rule?

On the other hand who will trust a constitution after our recent moves?  We have already proven the ability to turn on a dime and issue new BTS as necessary.   In the free market there are no rules except survival of the fittest and most flexible.

Having the ability to change the dilution rate with some established process that is deemed "hard but not impossible" is what is needed.
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Offline Ander

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We should probably write our declaration of independence as well.

This seems a bit silly to me, and could attract attention from government/regulators that we dont want.


What we need is a document outlining a schedule for fixed dilution, that we all agreed to and is hard to change.  Plus a mission/vision statement for what bitshares is about and what our goal is.
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We should probably write our declaration of independence as well.