BTS should pay yield to SmartCoin Shorters?

[BunkerChainLabs-DataSecurityNode]

Issue is yield harvesting:
https://bitshares.org/blog/2015/06/08/lessons-learned-from-bitshares-0.x/#socialized-yield-is-broken

Also.. reading over his post about the issue.. it looks like the other side to the equation to make a complete solution was to introduced the collateralized bond market.. which didn't happen.

This suggests the issues we face now in the bitasset markets are in part because we don't have everything in the system as was planned out when it was first developed. BM did mention something in the last hangout about having come up with a solution to the bond markets though.

[Empirical1.2]

The funds aren't locked up and can be freed at any time.

It's true that the funds aren't really locked up but they are removed from the exchanges and out of temporary circulation.

If there was a 0.2% trading fee, you would need to hold the position for a certain period to make the yield worthwhile, so there is some lock up incentive. 

A yield harvester would require twice the collateral, 100% on each side? And pay fees on long and short side? Thereby halving the effective yield and doubling the fees, thus incentivizing a much longer holding time to make it worthwhile. (I don't know if that's true, hence all the question marks.)

The problem is you never know if someone is really short

By that do you mean, we don't know if they have an equivalent long position that cancels it out? If so I think that's still a benefit as that requires more BTS which is also being taken off the centralized exchanges, out of temporary circulation and is helping add to the BitAsset CAP which is a big marketing positive too imo.

Edit: Also because of the forced settlement function, yield harvesters are at risk too, they would have to at least pay trading fees again to re-open their short position if forced settled or add more than 100% collateral which wouldn't receive yield. (If it was possible to only pay the first 100% of collateral.)

Admittedly there is a lot of things I don't understand about this, I'm just trying to think of solutions that would help create a tighter peg.

Edit2: If you implement MAKER instead, I think you may find that when the incentive runs out in a few years but the same market conditions persist, then shorts will again be reluctant to short close to the peg and we'll be in a situation where we can't use trading fees to incentivize shorts because they're going to pay Makers for past services rendered.

This is also cheaper because we only need to incentivize shorts when BTS short to medium term price expectations are neutral to negative.

[sittingduck]

The problem is you never know if someone is really short.  The funds aren't locked up and can be freed at any time. 

[Empirical1.2]

Issue is yield harvesting:
https://bitshares.org/blog/2015/06/08/lessons-learned-from-bitshares-0.x/#socialized-yield-is-broken

I agree yield is no longer necessary for the longs as this makes sense...

Attempting to boost the value of BitUSD with yield is counter productive once the new approach to BitAssets is internalized and shorts know they can be force settled at the price feed at any time. Under these rules BitUSD already has a floor and paying yield on BitUSD would only serve to raise BitUSD above the floor and break the peg.

However BM's latest blog post perhaps contradicts the socialized yield/yield harvesting argument...

 http://bytemaster.github.io/article/2016/01/04/The-Benefits-of-Proof-of-Work/

Conclusion
...Using dilution as high as 15% on short-term speculators to compensate long-term investors can be very helpful in both securing the network, building loyalty, and creating a profitable system.

In that BM is suggesting there is value in paying yield to people who remove their BTS from exchanges and lock them up for a certain period of time. (Even though no fees are received for this activity.)

So even if people are yield harvesting... Are they not removing their BTS from exchanges, locking them up and giving us the additional benefit of added Smartcoin CAP + the yield is partly or all covered by trading fees.

Also if the yield is only paid on the first 100% of collateral then they can't yield harvest too much and there is still a risk they are forced settled.

[xeroc]

Issue is yield harvesting:
https://bitshares.org/blog/2015/06/08/lessons-learned-from-bitshares-0.x/#socialized-yield-is-broken

[Empirical1.2]

In the beginning when BTSX was experiencing rapid growth, BTS bulls were willing to short far below the peg for long periods to get a leveraged BTS position.

Today we have the opposite problem. BTS has been flat/declining for an extended period and today shorts also have the added burden of forced settlement so they are charging a premium high above the peg.

BTS holders should offer Shorts Yield

- People shorting close to the peg are both removing that BTS from centralized exchanges and from available supply.
  (BM has explained why this is valuable http://bytemaster.github.io/article/2016/01/04/The-Benefits-of-Proof-of-Work/ )

- A tighter peg will incentivize longs. New Smartcoin demand creates demand for BTS. This increases the value of BTS shares. 

- Tightly pegged Smartcoins will attract more businesses to BTS than any other development or marketing initiative. 

- Uphold.com is the fastest growing money platform in the world on the back of their BTC to centralized BitAssets.
  BTS could be the fastest growing DAC in the world on the back of ours & leave competitors in the dust.

It might even be 'free'

Poloniex has $450 000 worth of BTS. They do $50 000 worth of BTS volume a day. They charge 0.2% trading fees. This equals $36 500 a year in trading fees. Ignoring other expenses Poloniex could pay BTS holders 8% per annum just from their trading fees and break even.

This means BTS may be able to offer general yield to shorts of up to 8% on their first 100% of collateral and break even on trading fees.

(When BTS is rising strongly there will be plenty of short demand so the committee can bring down the variable yield.  Therefore during times of low shorting demand like the now the yield could be made as high as 10-15%, with BTS still breaking even on trading fees over the course of the year.)

Thoughts?