Author Topic: Concerns over 1 year vesting period and a POSSIBLE SOLUTION  (Read 5476 times)

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Offline Method-X

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As long as the incentive structure generates revenue for the community piggy bank by only returning 99% of the future newbie's revenue to the independent marketer instead of 100%, then any "abuses" will generate cash for the community.

Do not return 100% or more  as incentives to the independent marketers or else we will suffer spam and/or profit loss.

 +5%

Offline mint chocolate chip

What happens when someone wants a refund? SOL?

Offline Method-X

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That is great news but it still doesnt solve the attack vector problem. It appears the vesting will only deter, but not completely prevent registrars from offering a certain % cashback. They can always issue a bond/UIA or more likely acquire off blockchain capital funds to finance their ability to offer at least some % cashback. What this means is that registrars who cannot afford to do this will have to look for other ways to provide an attractive value proposition in order to attract users and referrers.

I'll bet you a two-four this never becomes a problem in practice. Gentleman's promise. I've been running referral programs since 2008. We typically pay out every month (same as vesting) and I've not had any issues. I think in practice, anyone perceived as gaming the system will be universally shunned by the community and their product won't gain any visibility. The wallet that takes full advantage of referral revenue will have the most money to develop and market the best product.

I think the system as currently planned is a good starting point. Start conservative and tweak later.

I can understand your concerns but would suggest the opposite. Start off liberal and become conservative only IF problems emerge.
« Last Edit: June 09, 2015, 10:05:29 pm by Method-X »

Offline roadscape

By making the referal fees liquid you undo the attack defense.

which attack vector do the vesting balance prefent? I don't get it yet.

Someone can create a wallet and sign people up for free (auto refund registration fee). I'm not convinced this would be a problem in practice. I say go with no vesting and if it ends up being more than a purely theoretical problem, implement vesting.

It would definitely be a problem in practice because you wouldnt necessarily have to refund the full $80. Any amount refunded would give an edge over other registrars.  It might start out with "get $10 back" or "get $20 back" but eventually  competition would push it higher and higher until we have a situation like I describe above (two posts back.)

Yeah I can see that happening but why a year of vesting? One or two months should be enough to prevent this. It's more a psychological scare tactic to prevent this practice from manifesting. One year seems extremely arbitrary.

I think 60 days would be sufficient. Long enough that there is no potential draw for attracting customers. Nobody wants $20 or $50 or $80 back in two months. If its not instant, its not going to attract. There still will exist the potential for a registrar to front their own funds and offer some amount of instant cashback, but that could happen regardless of the vesting period.

Fortunately this is a blockchain parameter that can be tweaked by delegates / stakeholders without hardfork.    2 months, 1 year... what ever works.

That is great news but it still doesnt solve the attack vector problem. It appears the vesting will only deter, but not completely prevent registrars from offering a certain % cashback. They can always issue a bond/UIA or more likely acquire off blockchain capital funds to finance their ability to offer at least some % cashback. What this means is that registrars who cannot afford to do this will have to look for other ways to provide an attractive value proposition in order to attract users and referrers.

I don't think anything will solve this attack vector... we can only mitigate it. Unless we send 100% of the fee to the "reserve fund". That'll stop the abuse dead in its tracks :)

I think the system as currently planned is a good starting point. Start conservative and tweak later.
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Offline topcandle

By making the referal fees liquid you undo the attack defense.

which attack vector do the vesting balance prefent? I don't get it yet.

Someone can create a wallet and sign people up for free (auto refund registration fee). I'm not convinced this would be a problem in practice. I say go with no vesting and if it ends up being more than a purely theoretical problem, implement vesting.

It would definitely be a problem in practice because you wouldnt necessarily have to refund the full $80. Any amount refunded would give an edge over other registrars.  It might start out with "get $10 back" or "get $20 back" but eventually  competition would push it higher and higher until we have a situation like I describe above (two posts back.)

Yeah I can see that happening but why a year of vesting? One or two months should be enough to prevent this. It's more a psychological scare tactic to prevent this practice from manifesting. One year seems extremely arbitrary.

I think 60 days would be sufficient. Long enough that there is no potential draw for attracting customers. Nobody wants $20 or $50 or $80 back in two months. If its not instant, its not going to attract. There still will exist the potential for a registrar to front their own funds and offer some amount of instant cashback, but that could happen regardless of the vesting period.

Fortunately this is a blockchain parameter that can be tweaked by delegates / stakeholders without hardfork.    2 months, 1 year... what ever works.

That is great news but it still doesnt solve the attack vector problem. It appears the vesting will only deter, but not completely prevent registrars from offering a certain % cashback. They can always issue a bond/UIA or more likely acquire off blockchain capital funds to finance their ability to offer at least some % cashback. What this means is that registrars who cannot afford to do this will have to look for other ways to provide an attractive value proposition and attract users and referrers.

I'm downplaying this attack given the possible Fincen Sec blowback.  I think anyone doing this outside of the blockchain operations is putting themselves at risk of offering a bond securitty and legal attacks that come with it like Ripple did.  That's why I offered my suggestion as a direct deposit, as all operations were self-contained in bitshares.  Having a 2 month or even 3 month vesting period is actually good enough fix.  Maybe a direct deposit is not needed, since that would prob open up to a attack vector...
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Offline CryptoPrometheus

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By making the referal fees liquid you undo the attack defense.

which attack vector do the vesting balance prefent? I don't get it yet.

Someone can create a wallet and sign people up for free (auto refund registration fee). I'm not convinced this would be a problem in practice. I say go with no vesting and if it ends up being more than a purely theoretical problem, implement vesting.

It would definitely be a problem in practice because you wouldnt necessarily have to refund the full $80. Any amount refunded would give an edge over other registrars.  It might start out with "get $10 back" or "get $20 back" but eventually  competition would push it higher and higher until we have a situation like I describe above (two posts back.)

Yeah I can see that happening but why a year of vesting? One or two months should be enough to prevent this. It's more a psychological scare tactic to prevent this practice from manifesting. One year seems extremely arbitrary.

I think 60 days would be sufficient. Long enough that there is no potential draw for attracting customers. Nobody wants $20 or $50 or $80 back in two months. If its not instant, its not going to attract. There still will exist the potential for a registrar to front their own funds and offer some amount of instant cashback, but that could happen regardless of the vesting period.

Fortunately this is a blockchain parameter that can be tweaked by delegates / stakeholders without hardfork.    2 months, 1 year... what ever works.

That is great news but it still doesnt solve the attack vector problem. It appears the vesting will only deter, but not completely prevent registrars from offering a certain % cashback. They can always issue a bond/UIA or more likely acquire off blockchain capital funds to finance their ability to offer at least some % cashback. What this means is that registrars who cannot afford to do this will have to look for other ways to provide an attractive value proposition in order to attract users and referrers.
« Last Edit: June 09, 2015, 09:30:38 pm by CryptoPrometheus »
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Offline Method-X

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By making the referal fees liquid you undo the attack defense.

which attack vector do the vesting balance prefent? I don't get it yet.

Someone can create a wallet and sign people up for free (auto refund registration fee). I'm not convinced this would be a problem in practice. I say go with no vesting and if it ends up being more than a purely theoretical problem, implement vesting.

It would definitely be a problem in practice because you wouldnt necessarily have to refund the full $80. Any amount refunded would give an edge over other registrars.  It might start out with "get $10 back" or "get $20 back" but eventually  competition would push it higher and higher until we have a situation like I describe above (two posts back.)

Yeah I can see that happening but why a year of vesting? One or two months should be enough to prevent this. It's more a psychological scare tactic to prevent this practice from manifesting. One year seems extremely arbitrary.

I think 60 days would be sufficient. Long enough that there is no potential draw for attracting customers. Nobody wants $20 or $50 or $80 back in two months. If its not instant, its not going to attract. There still will exist the potential for a registrar to front their own funds and offer some amount of instant cashback, but that could happen regardless of the vesting period.

Agree. Also, something to consider is the fact that the most profitable wallet will have the most money to develop a superior user experience (thus attracting more users). A wallet that refunds fees won't have a business model and will have a much harder time attracting users. It's like iOS vs. FirefoxOS. Does anyone here use FirefoxOS? Why not?

I say start with 30 days vesting and threaten to fork vested funds from anyone who tries to game the system. The threat alone should be enough.

Offline bytemaster

By making the referal fees liquid you undo the attack defense.

which attack vector do the vesting balance prefent? I don't get it yet.

Someone can create a wallet and sign people up for free (auto refund registration fee). I'm not convinced this would be a problem in practice. I say go with no vesting and if it ends up being more than a purely theoretical problem, implement vesting.

It would definitely be a problem in practice because you wouldnt necessarily have to refund the full $80. Any amount refunded would give an edge over other registrars.  It might start out with "get $10 back" or "get $20 back" but eventually  competition would push it higher and higher until we have a situation like I describe above (two posts back.)

Yeah I can see that happening but why a year of vesting? One or two months should be enough to prevent this. It's more a psychological scare tactic to prevent this practice from manifesting. One year seems extremely arbitrary.

I think 60 days would be sufficient. Long enough that there is no potential draw for attracting customers. Nobody wants $20 or $50 or $80 back in two months. If its not instant, its not going to attract. There still will exist the potential for a registrar to front their own funds and offer some amount of instant cashback, but that could happen regardless of the vesting period.

Fortunately this is a blockchain parameter that can be tweaked by delegates / stakeholders without hardfork.    2 months, 1 year... what ever works.
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Offline CryptoPrometheus

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By making the referal fees liquid you undo the attack defense.

which attack vector do the vesting balance prefent? I don't get it yet.

Someone can create a wallet and sign people up for free (auto refund registration fee). I'm not convinced this would be a problem in practice. I say go with no vesting and if it ends up being more than a purely theoretical problem, implement vesting.

It would definitely be a problem in practice because you wouldnt necessarily have to refund the full $80. Any amount refunded would give an edge over other registrars.  It might start out with "get $10 back" or "get $20 back" but eventually  competition would push it higher and higher until we have a situation like I describe above (two posts back.)

Yeah I can see that happening but why a year of vesting? One or two months should be enough to prevent this. It's more a psychological scare tactic to prevent this practice from manifesting. One year seems extremely arbitrary.

I think 60 days would be sufficient. Long enough that there is no potential draw for attracting customers. Nobody wants $20 or $50 or $80 back in two months. If its not instant, its not going to attract. There still will exist the potential for a registrar to front their own funds and offer some amount of instant cashback, but that could happen regardless of the vesting period.
"Power and law are not synonymous. In fact, they are often in opposition and irreconcilable."
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Offline fav

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By making the referal fees liquid you undo the attack defense.

which attack vector do the vesting balance prefent? I don't get it yet.

Someone can create a wallet and sign people up for free (auto refund registration fee). I'm not convinced this would be a problem in practice. I say go with no vesting and if it ends up being more than a purely theoretical problem, implement vesting.

It would definitely be a problem in practice because you wouldnt necessarily have to refund the full $80. Any amount refunded would give an edge over other registrars.  It might start out with "get $10 back" or "get $20 back" but eventually  competition would push it higher and higher until we have a situation like I describe above (two posts back.)

Yeah I can see that happening but why a year of vesting? One or two months should be enough to prevent this. It's more a psychological scare tactic to prevent this practice from manifesting. One year seems extremely arbitrary.

I think the idea was to not make it look like a "get rich quick" scheme. but the attack points you guys described will be abused anyways I think.

Offline Method-X

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By making the referal fees liquid you undo the attack defense.

which attack vector do the vesting balance prefent? I don't get it yet.

Someone can create a wallet and sign people up for free (auto refund registration fee). I'm not convinced this would be a problem in practice. I say go with no vesting and if it ends up being more than a purely theoretical problem, implement vesting.

It would definitely be a problem in practice because you wouldnt necessarily have to refund the full $80. Any amount refunded would give an edge over other registrars.  It might start out with "get $10 back" or "get $20 back" but eventually  competition would push it higher and higher until we have a situation like I describe above (two posts back.)

Yeah I can see that happening but why a year of vesting? One or two months should be enough to prevent this. It's more a psychological scare tactic to prevent this practice from manifesting. One year seems extremely arbitrary.

Offline Shentist

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By making the referal fees liquid you undo the attack defense.

which attack vector do the vesting balance prefent? I don't get it yet.

Someone can create a wallet and sign people up for free (auto refund registration fee). I'm not convinced this would be a problem in practice. I say go with no vesting and if it ends up being more than a purely theoretical problem, implement vesting.

ah, the concern is that someone will payback everything at all to the registered people.

so, we are for "free" markets, but want to prefent this possibility? I don't understand. If someone wants to put his money and time to code this wallet, let him do it. If this happens the referral programm in this form is rejected from the market. We need to think again!

Vesting is never a good solution. Was not good with the merger and will not be good on the referral program!

Offline CryptoPrometheus

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By making the referal fees liquid you undo the attack defense.

which attack vector do the vesting balance prefent? I don't get it yet.

Someone can create a wallet and sign people up for free (auto refund registration fee). I'm not convinced this would be a problem in practice. I say go with no vesting and if it ends up being more than a purely theoretical problem, implement vesting.

It would definitely be a problem in practice because you wouldnt necessarily have to refund the full $80. Any amount refunded would give an edge over other registrars.  It might start out with "get $10 back" or "get $20 back" but eventually  competition would push it higher and higher until we have a situation like I describe above (two posts back.)
"Power and law are not synonymous. In fact, they are often in opposition and irreconcilable."
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Offline Method-X

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By making the referal fees liquid you undo the attack defense.

which attack vector do the vesting balance prefent? I don't get it yet.

Someone can create a wallet and sign people up for free (auto refund registration fee). I'm not convinced this would be a problem in practice. I say go with no vesting and if it ends up being more than a purely theoretical problem, implement vesting.

Edit: Why was a year chosen as the vesting period? Seems like we could start off with a LOT less than this. I'd say at most 6 months should be sufficient and in reality I'd say 2 months is enough to prevent an "attack".
« Last Edit: June 09, 2015, 08:39:46 pm by Method-X »

Offline CryptoPrometheus

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The 1 Year vesting period for referral fees strikes me as something that could be a dealbreaker for a lot of inquiring companies.  Its a very long time length to prove a business model that might not even work.  And for that one year, its wasted savings that is just sitting , while it could be reinvested elsewhere or put to work.  Most importantly, this long vesting period will hurt smaller, startup type firms who would want fees as quickly as possible to reinvest into their business.

Now I understand the need for the investing period to prevent attacks.  I'm just not convinced it will work out as expected because of this one-year vesting period.  Now for the solution:

Its certainly possible for these referral members to set up a UIA that will source money from the public.  They could offer at a 95% reduction.  So a normal user could pay 95 BTS and within one year get 100 BTS out of the referral member's pool.  Of course, the referral member would never offer more UIA than he has in his fee reserves.  Effectively it will function as a bond.

The one thing I think the dev team could do better to assist the transaction, is make that special reserve acct linked to the UIA.  So at the end of the vesting period, the vested BTS will go directly to the purchaser and not the referral member.  This would alleviate cpty concerns and bring more trust into the system as a whole.  Once then this referral system will really have one to boot! 

Any thoughts?

Jonathan (@DSN) and I were discussing a similar (more trustless option than the OP) idea last night. We were wondering if it would be technically possible to create/sell a bond using vested shares as collateral. The reason I didnt post the idea is because I thought of a rebuttal:

The reason for vesting (most) of the large fees associated with the referral program is because of the "attack" that exists where someone might choose to set up a registrar/hosted walet that immediately returns the $80 of the $100 fee to the account holder, thus undermining the whole referral program. If it was possible to sell bonds collateralized with vested shares, the potential for this "attack" still exists, it just might include a small fee margin.

For example, the registrar might advertise "Register your BTS account Here and we immediately refund $70 of the $100 fee". They could then turn around and create a bond with over 5% Guaranteed interest by using $75 of the vested BTS from the registration fee, and then keep the extra $5 as their margin. The above is just one example, but in fact this "attack" could be done with any combination of "cashback offered", fee taken and bond sold.
« Last Edit: June 09, 2015, 08:30:22 pm by CryptoPrometheus »
"Power and law are not synonymous. In fact, they are often in opposition and irreconcilable."
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