Turning the page on fees - We need yield back!

[Samupaha]

This is an academic question, to help figure out some marketing questions

Why use smart coins at all? Should the community be encouraging the use of UIA coins? Yield was the reason to buy and hold them in bitshares 1.0 (it didn't make sense to short them in that case, though)

Smartcoins are great invention but you have some good points here. Maybe we should try to get as much UIAs to the exchange first, and after we have more users and better overall liquidity, we'll move to emphasizing smartcoins.

Smartcoins seem to be quite difficult task when we have only few users. Or maybe the whole concept still needs some tweaking to get the incentives right?

[maqifrnswa]

This is an academic question, to help figure out some marketing questions

Why use smart coins at all? Should the community be encouraging the use of UIA coins? Yield was the reason to buy and hold them in bitshares 1.0 (it didn't make sense to short them in that case, though)

1) Exchanges are good for exchanging -- I put in one crypto, trade it for another, and withdraw that other crypto.
BitShares smartcoins can't do that. I can buy something with the value of 1 the underlying thing, paid in BTS. In the end, it's BTS in and BTS out. You still need another exchange to do a real trade.
BitShares UIAs can directly be exchanged (openbtc, trade.btc, etc.)

2) Since 1 exchange crypto can be withdrawn for a real crypto, it is pegged.
BitShares smartcoins are only valued to be worth at least 1 underlying asset.
BitShares UIA coins get you real crypto out.

3) Exchanges allow instant settlement. My account has 1 BTC on the exchange, I can instantly withdraw 1 BTC to my own BTC wallet.
If I own 1 BitShares smartcoin BTC, I had to pay a premium to get it,then  pay slippage to sell or wait a day and lose my premium to settle. I then have to use another exchange to convert BTS to my BTC wallet.
BitShares UIA BTC can be withdrawn to my own BTC wallet instantly.

4) Exchanges cannot be used for arbitrary crowdfounding (think local pizza store). BitShares UIA can.

[karnal]

I think it is extremely important that we get lending functional. I see there being to solutions to borrowing assets. If you want to borrow an asset you can put up the 2X collateral and short it into existance or you can put half the collateral and pay a fee to the lender that puts up the other half of the collateral. I would be a hybrid of the current model and the previous model. It will also be important that the lending feature can be done for any asset.

Agreed. I wish I could park my money in bitusd right now and get a return like we use to.

Who wouldn't! But was it not concluded that such a model was ultimately not sustainable?

[tonyk]

So lately we've been discussing fees a lot. I feel most of the arguments were already said, it's up to people to decide what's best for BitShares.

What I would like to be discussed here is yield/interest. That was - I believe - the key feature that got so much people into BitShares at the beggining. The opportunity of earning free money. Will anyone resist that? What do people do when the markets are just to messed up for them to go in at that point? They get on the ''sidelines'', watch and wait.

What if people could just earn money without having to trade while having their money safe? I'm pretty sure a lot of people would be interest in that. Think the whales that could park their wealth on BitShares earning interest.

I always felt that was the key feature BitShares provided along with stable cryptocurrencies, however with time, we lost it and forgot about it. This post inspired me to start this discussion.

A lot of people don't get it. WIthout interest, without dividends, without yield, Bitshares 2.0 will not be as feature complete as 1.0. We took a step backwards here. Large holders will hold until they find a better opportunity, and there will be plenty going into the future so I don't see these prices in Bitshares holding up unless you keep the whales interested.

Whales chase yield, dividends, interest, and Bitshares at this time offers none of that. The economics of Bitshares 2.0 are wrong and it wont be fixed by fiddling around with the fees. The argument made to switch from Proof of Work to Proof of Stake was no dilution and we still ended up with dilution (the worst part of Proof of Work). The argument was that Bitshares would be profitable, the argument was that burning fees would be promoted and that there would be 5% interest, dividends.

I mean, people could even hate BitShares from the bottom of their hearts but the opportunity of making money while sitting on the sidelines, dont you think they would eventually come? People don't resist 'free money'.

What could we do to have this back? I guess we can't take interest from the fees we generate otherwise the referral program would go to waste, specially since people want to get them lower... Is the bond market really only the opportunity we will ever get to make this again? This is just the biggest marketing tool BItShares could ever have...

I don't recall why it went away.  We got to the point of creating Infographics and talk about Savings/Checking accounts....and we were actually getting "yield" then it went away and I don't recall why.  Was it used to pay developers?

Cause it  was based on a wrong assumption. In particular that the shorts will provide an interest in all economic conditions. When it is obvious that they will do it only in one of the 3 possible market directions (namely uptrend).

This btw does not prevent other projects to put enormous effort and time while  repeating the same mistake [MKR for example].

[GaltReport]

So lately we've been discussing fees a lot. I feel most of the arguments were already said, it's up to people to decide what's best for BitShares.

What I would like to be discussed here is yield/interest. That was - I believe - the key feature that got so much people into BitShares at the beggining. The opportunity of earning free money. Will anyone resist that? What do people do when the markets are just to messed up for them to go in at that point? They get on the ''sidelines'', watch and wait.

What if people could just earn money without having to trade while having their money safe? I'm pretty sure a lot of people would be interest in that. Think the whales that could park their wealth on BitShares earning interest.

I always felt that was the key feature BitShares provided along with stable cryptocurrencies, however with time, we lost it and forgot about it. This post inspired me to start this discussion.

A lot of people don't get it. WIthout interest, without dividends, without yield, Bitshares 2.0 will not be as feature complete as 1.0. We took a step backwards here. Large holders will hold until they find a better opportunity, and there will be plenty going into the future so I don't see these prices in Bitshares holding up unless you keep the whales interested.

Whales chase yield, dividends, interest, and Bitshares at this time offers none of that. The economics of Bitshares 2.0 are wrong and it wont be fixed by fiddling around with the fees. The argument made to switch from Proof of Work to Proof of Stake was no dilution and we still ended up with dilution (the worst part of Proof of Work). The argument was that Bitshares would be profitable, the argument was that burning fees would be promoted and that there would be 5% interest, dividends.

I mean, people could even hate BitShares from the bottom of their hearts but the opportunity of making money while sitting on the sidelines, dont you think they would eventually come? People don't resist 'free money'.

What could we do to have this back? I guess we can't take interest from the fees we generate otherwise the referral program would go to waste, specially since people want to get them lower... Is the bond market really only the opportunity we will ever get to make this again? This is just the biggest marketing tool BItShares could ever have...

I don't recall why it went away.  We got to the point of creating Infographics and talk about Savings/Checking accounts....and we were actually getting "yield" then it went away and I don't recall why.  Was it used to pay developers?

[topcandle]

The bond market will not be as secure as you may think. You can't compare it to yields

Why is that?

[jakub]

2, Nowadays the fee looks like high, because the value of the BTS is low. If a BTS was $2, none thought that the fee was high.

This is a perfect example of an investor's perspective being constantly confused with a user's perspective.

[wallace]

yes, it need to be back, but not now.

[Akado]

The bond market will not be as secure as you may think. You can't compare it to yields

That's why we're discussing it  If im not mistaken I've asked on the first post if people know or have thought about another way to receive interest/yield than bond markets.

On a side note, that's the point of bond markets I guess. It isn't something 100% guaranteed, that's why people will might only offer loans with higher returns. Then the market will decide what people deem as a loan worth the risk

[mike623317]

I think you are correct, this would be huge. One of the things that started me down this road was interest on bitassets.I mean, where else could you get interest on gold and silver?

I believe there are a lot of people out there who want to use crypto to save to avoid the zero/negative interest rate policy of banks but who are not interested in being day traders. Just savers.

[fav]

The bond market will not be as secure as you may think. You can't compare it to yields

[Akado]

This is just the biggest marketing tool BItShares could ever have...

Agreed. Yield or referral fees; either one would drive massive business toward BitShares.

Think about the exchanges. They could announce a % of their cold wallets is going for this and earn their costumers with a % of yield per month. This would be huge.

A bitcoin exchange giving interest on bitcoin, everyone would go nuts. and it would be a transparent process since people can audit the exchange on our blockchain.

@ccedk - If you do this, I might quit my job and put all my money on ads ;-)

did not really follow here, so pls mention in email or pm what is the idea here, an we will discuss in our end.

I believe he meant spending money on ads to advertise OpenLedger/CCEDK.

What I meant is, users that lend are paid interest. If we develop a lending system we would have this working. As for the exchange giving interest, well, every exchange has a cold wallet right? Use a tiny portion of it according to the risk, to pay interest to users. This would probably have to be done with profits?

For example, CCEDK would collect 100,000 BTS daily in interest from all the loans made. Part of that would be given to their users as interest. "Free money". No one resists it. Biggest advertising tool BitShares or any exchange could ever have. You could actually claim you're paying interest in Bitcoin in a transparent and auditable way. No one could ever argue against that.

Also, you wouldn't even be able to use your costumers money to earn interest for yourself or run a fractional reserve because guess what? Your costumers own their private keys.

Minor correction: you wouldn't be able to pay it daily because of the fees. Maybe monthly. Still, that's a good incentive for people to keep their money more time at CCEDK/OpenLedger.

So we would have a bond market where people could park their money, bringing new users - yes, that something that would attract new users, not lower fees - and our exchanges would all be able to offer interest on deposits (at least on the IOUs they issued on chain). It might take a while so we get more liquidity and you can be sure you can lend bigger amounts of money, but still. Imagine out of nowhere 8 exchanges or whatever the ones who meanwhile joined, all offering interest in a transparent way. It would be the new trend! Other exchanges couldn't keep up unless they used a bond market of the sort which doesnt exist or unless they run a fractional reserve meaning its just a matter of time until they loose clients. Alternatively they can either join our bond market or decide to run on top of bitshares.

[openledger]

This is just the biggest marketing tool BItShares could ever have...

Agreed. Yield or referral fees; either one would drive massive business toward BitShares.

Think about the exchanges. They could announce a % of their cold wallets is going for this and earn their costumers with a % of yield per month. This would be huge.

A bitcoin exchange giving interest on bitcoin, everyone would go nuts. and it would be a transparent process since people can audit the exchange on our blockchain.

@ccedk - If you do this, I might quit my job and put all my money on ads ;-)

did not really follow here, so pls mention in email or pm what is the idea here, an we will discuss in our end.

[Helikopterben]

I think it is extremely important that we get lending functional. I see there being to solutions to borrowing assets. If you want to borrow an asset you can put up the 2X collateral and short it into existance or you can put half the collateral and pay a fee to the lender that puts up the other half of the collateral. I would be a hybrid of the current model and the previous model. It will also be important that the lending feature can be done for any asset.

Agreed. I wish I could park my money in bitusd right now and get a return like we use to.

I don't think it would be realistic to get a return on usd or any other asset for that matter in the bitshares ecosystem.  In fact, the opposite should occur.  Bts lenders (bitasset creators) should be paid interest.  If you don't think charging users to store their wealth in bitassets will work, take a look at the GLD example below. 

Bts is the underlying reserve currency (or backbone currency) of the bitshares ecosystem and bts holders can be thought of as depositors.  In legacy banking, depositors earn a (generally small) return on their money as the bank uses that money to lend out in the form of mortgage loans, credit cards, car loans, ect.  Bitshares is very similar but more efficient in the fact that lending occurs P2P and the system remains solvent through automatic collateral maintenance.  Bts lenders are providing a service to the network by creating bitassets and they should be compensated for doing so.  USD holders, gold holder, oil holders, ect are borrowers.  They borrow bts in exchange for the privilege of securely storing their wealth in assets that track the value of external assets such as gold and silver.  These borrowers should pay interest for this priveledge at market rates.  The tricky part would be trading these assets and using them as currency while maintaining collateralization.

Lets look at a legacy example.  The GLD ETF is an exchange traded fund that tracks the value of gold.  For all intents and purposes, the gld etf is a digital form of gold but much less secure than bitgold because of its centralized custodian model and it is much less efficient and much less censorship resistant than bitgold because of all the constraints of fiat currency.  Still, investors pay for the privilege of this digital gold storage as evidenced by the 0.39% annual expense ratio all while currently having $25.42 billion under management.  http://finance.yahoo.com/q/pr?s=GLD+Profile  UNG is an ETF that (supposedly) tracks the value of natural gas but it is even more inefficient because it uses front-month futures contracts to track the value of natural gas which is subject to loss of value due to contango during periods of market volatility.  Natural gas would be very difficult to store using the custodian model.  UNG has an expense ratio of 1.14% with $500 million in assets under management.  Obviously people are willing to pay to store their wealth and trade in these types of derivatives which, IMO are inferior to bitassets.

[donkeypong]

How about we use the available money to support referral fees. Give that 6 months where we all recruit like hell, run ads, etc. And then after six months, we look at slimming down those referral fees, putting it back into the system for yield?