bitSHARES - As True Shares and Not a Currency!

[tonyk]

That's my point.
1.75 value of what? Company shares. O.k. What proof can you show me that the company share is worth anything at all?
I'm not trying to poo poo the ideas here, they are all great. But this is one very big component that hasn't been discussed. Like I said, this is the whole foundation to the whole system. Until this one fact can be determined without a shadow of a doubt, then it's a moot point.

How that differs greatly from BTS?
Ohh wait, they also consider income the fees paid in BTS, to evaluate the worthiness of BTS, to back its bitAssets. One more level of self chaining, IMHO.

[emailtooaj]

I've read through this whole post, and unless I've missed or over read something;  I'm still not seeing how Bts value is derived in this situation.  Which is the foundation to the whole system.  Essentially your  putting the BTS genie back in the bottle and claiming it to be non transferable, thus it can only be accumulated via the sale of a bit asset, that's backed by BTS.
So in other words, by locking up bts in this way there is no external metric to value BTS.  Yes you can argue the fact that metric is derived from a bitUSD purchase from an external exchange, but how do I know (as an outsider) that if I buy this bitUSD I'm getting the correct value of BTS as backing collateral?
Here's another way to view this...
Let's say Google wants to create Googledollar, and the Google dollar is backed by it's companies share (let's say 20 shares to create its Google dollar).
Then one day a potential Google dollar buyer comes along...
"Hey, I'd like to purchase your Google dollar"...
Google says... "cool, that'll be $1USD for every Google dollar and each Google dollar is backed by 20 Google shares"
Buyer says... "ok, so your company shares are worth 5 cents each?"
Google... "yes they are"
Buyer... "ok, so where did you get that figure from?"
Google... "from the exchange"
Buyer..."hmm, ok. I've never seen your stock on the NYSE?"
Google.... "yes, you're correct. Our stock is only exchanged on our servers located upstairs and we don't allow or shares to be traded elsewhere."
Buyer... "ok, so how can you claim your company stock is worth 5 cents each if it's not being publicly traded, just because you says so due to activate on your internal servers?"

Do you see where I'm getting at?
Tbh, I've thought about this type of set up in the past (locking up BTS in the DeX) but it always boiled down to "what give BTS value?" to justify it as collateral.

So in some way, shape or form... BTS needs to be able to establish its own price, through out side forces, too be justified as collateral backing... Which this system relies on for any of its bit assets.

So if anyone could help me understand any missing  components that I'm not taking into consideration I'd appreciate it!

why does it have to be outside exchange to consider the price valid? Do you think trading on the dex the price is somehow manipulated, not real or what.

And money being backed by companies shares with minimum of 1.75 value beats the hell out of money backed by nothing... nothing other than government debt that is..

PS
 But do not trust me on that, wait for tbone to confirm first that this is not totally idiotic!!!

That's my point.
1.75 value of what? Company shares. O.k. What proof can you show me that the company share is worth anything at all?
I'm not trying to poo poo the ideas here, they are all great. But this is one very big component that hasn't been discussed. Like I said, this is the whole foundation to the whole system. Until this one fact can be determined without a shadow of a doubt, then it's a moot point.

[emailtooaj]

Imo, to consider a valid, established BTS price, yes there has to be some way to directly purchase BTS. Either through an exchange, fiat gateway or some other avenue.
With this proposed structure, that option is off the table.  Hence, giving BTS a indirect value instead of an actual value.
Which in turn undermines the collateral argument when it comes to bit assets.
I don't see the DeX as being manipulative towards BTS pricing, but we don't have the volume of users either to justify it as public for making the argument valid.

[tonyk]

I've read through this whole post, and unless I've missed or over read something;  I'm still not seeing how Bts value is derived in this situation.  Which is the foundation to the whole system.  Essentially your  putting the BTS genie back in the bottle and claiming it to be non transferable, thus it can only be accumulated via the sale of a bit asset, that's backed by BTS.
So in other words, by locking up bts in this way there is no external metric to value BTS.  Yes you can argue the fact that metric is derived from a bitUSD purchase from an external exchange, but how do I know (as an outsider) that if I buy this bitUSD I'm getting the correct value of BTS as backing collateral?
Here's another way to view this...
Let's say Google wants to create Googledollar, and the Google dollar is backed by it's companies share (let's say 20 shares to create its Google dollar).
Then one day a potential Google dollar buyer comes along...
"Hey, I'd like to purchase your Google dollar"...
Google says... "cool, that'll be $1USD for every Google dollar and each Google dollar is backed by 20 Google shares"
Buyer says... "ok, so your company shares are worth 5 cents each?"
Google... "yes they are"
Buyer... "ok, so where did you get that figure from?"
Google... "from the exchange"
Buyer..."hmm, ok. I've never seen your stock on the NYSE?"
Google.... "yes, you're correct. Our stock is only exchanged on our servers located upstairs and we don't allow or shares to be traded elsewhere."
Buyer... "ok, so how can you claim your company stock is worth 5 cents each if it's not being publicly traded, just because you says so due to activate on your internal servers?"

Do you see where I'm getting at?
Tbh, I've thought about this type of set up in the past (locking up BTS in the DeX) but it always boiled down to "what give BTS value?" to justify it as collateral.

So in some way, shape or form... BTS needs to be able to establish its own price, through out side forces, too be justified as collateral backing... Which this system relies on for any of its bit assets.

So if anyone could help me understand any missing  components that I'm not taking into consideration I'd appreciate it!

why does it have to be outside exchange for the price to be considered valid? Do you think trading on the dex the price is somehow manipulated, not real or what.

And money being backed by companies shares with minimum of 1.75 value beats the hell out of money backed by nothing... nothing other than government debt that is..

PS
 But do not trust me on that, wait for tbone to confirm first that this is not totally idiotic!!!

[emailtooaj]

I've read through this whole post, and unless I've missed or over read something;  I'm still not seeing how Bts value is derived in this situation.  Which is the foundation to the whole system.  Essentially your  putting the BTS genie back in the bottle and claiming it to be non transferable, thus it can only be accumulated via the sale of a bit asset, that's backed by BTS.
So in other words, by locking up bts in this way there is no external metric to value BTS.  Yes you can argue the fact that metric is derived from a bitUSD purchase from an external exchange, but how do I know (as an outsider) that if I buy this bitUSD I'm getting the correct value of BTS as backing collateral?
Here's another way to view this...
Let's say Google wants to create Googledollar, and the Google dollar is backed by it's companies share (let's say 20 shares to create its Google dollar).
Then one day a potential Google dollar buyer comes along...
"Hey, I'd like to purchase your Google dollar"...
Google says... "cool, that'll be $1USD for every Google dollar and each Google dollar is backed by 20 Google shares"
Buyer says... "ok, so your company shares are worth 5 cents each?"
Google... "yes they are"
Buyer... "ok, so where did you get that figure from?"
Google... "from the exchange"
Buyer..."hmm, ok. I've never seen your stock on the NYSE?"
Google.... "yes, you're correct. Our stock is only exchanged on our servers located upstairs and we don't allow or shares to be traded elsewhere."
Buyer... "ok, so how can you claim your company stock is worth 5 cents each if it's not being publicly traded, just because you says so due to activate on your internal servers?"

Do you see where I'm getting at?
Tbh, I've thought about this type of set up in the past (locking up BTS in the DeX) but it always boiled down to "what give BTS value?" to justify it as collateral.

So in some way, shape or form... BTS needs to be able to establish its own price, through out side forces, too be justified as collateral backing... Which this system relies on for any of its bit assets.

So if anyone could help me understand any missing  components that I'm not taking into consideration I'd appreciate it!

[tonyk]

interest-like dividend;  shareholders dividend; development fund; reserve fund; *X fund (reserved for something we might come up in the future)
Each of those 4 (the % going to them)  are adjustable by the comittie (or direct vote by stakeholders...one day)

Staring parameters(while dShares is young - we do not have much fees and we still have some dev,funds from the kick-starter)

interest-like dividend 1/5;  shareholders dividend 4/5; development fund 0%; reserve fund 0%; *X fund 0%

Consider witness pay please.

Actually they are first before anything else, [using newly issued shares]. I think their income should be there garanteed, regardless of profit.

[abit]

interest-like dividend;  shareholders dividend; development fund; reserve fund; *X fund (reserved for something we might come up in the future)
Each of those 4 (the % going to them)  are adjustable by the comittie (or direct vote by stakeholders...one day)

Staring parameters(while dShares is young - we do not have much fees and we still have some dev,funds from the kick-starter)

interest-like dividend 1/5;  shareholders dividend 4/5; development fund 0%; reserve fund 0%; *X fund 0%

Consider witness pay please.

[tonyk]

Here is how I see the dividend scheme working for dShares. I will put the general modifiable variables (adjustable for the current state of dShares stage in its life) and then I will state the start up parameters I find appropriate.


First and foremost - accumulated fees from current operations should be separate from not-yet issued shares.
Not-yet issued shares cap might be good if at any point dShares decide to again become a currency (like merge back with BTS or someone).

This discussion is mainly regarding "accumulated fees from current operation". Let's call it "accumulated fees fund" (AFF)

The AFF fund can be spend on:
interest-like dividend;  shareholders dividend; development fund; reserve fund; *X fund (reserved for something we might come up in the future)
Each of those 4 (the % going to them)  are adjustable by the comittie (or direct vote by stakeholders...one day)

Staring parameters(while dShares is young - we do not have much fees and we still have some dev,funds from the kick-starter)

interest-like dividend 1/5;  shareholders dividend 4/5; development fund 0%; reserve fund 0%; *X fund 0%

Effectively 4/5 are going towards dividend and 1/5 is going towards dividend - like interest


dividend - like interest:
The purpose of this is give incentives to co-op owners to provide/create the currency of the co-op. Effectively every co-op share holder will receive extra dividend if they create a amount of extra currency up to a predefined percentage of their shares (suggested 1/5 i.e. 20%)

Example:
One has 100 dShares:
-he will receive dividend on those 100 dShares (with the numbers above 4/5 of all income will be split to pay said dividend)
-if he shorts (up to) 20% worth of bitUSD of his stake into existence he will also receive a dividend on that (as if his stake was 20% bigger dividend wise) NB there is no need to sell those bitUSD [the believe is the fact of having them will make people spend them]
-if he indeed decides to do sell those bitUSD the proceeds of such sale will increase his dShares position so he will be receiving 50% bigger dividends compared to if he did nothing[ possition =(100 dshares + 25 dshares from sale) + max 1/5 (position)]

[tonyk]

As far as I can see, creation of bitBTS would be practical way of doing the transition smoothly. Exchanges could change their BTS stack to bitBTS, which their customers could transfer to themselves freely. Customers of exchanges wouldn't lose anything because they have already given up a possibility to vote by storing their BTS in the exchange. Value of their holdings would remain same, because bitBTS is naturally backed with 100 % of BTS and could be force settled anytime in the Bitshares blockchain. Tonyk, any thoughts on this?

If I understood correctly, force settlement feature won't exist in tonyk's new chain, since it's against the market rules.

Technically it should stay. For example, because of how prediction market are set to work now (i.e. the longs claiming their successful predictions.) Its applicability, usefulnesses and serving the main reason it was implemented is another story. Likely it should be disabled for BTS collateral.

[abit]

As far as I can see, creation of bitBTS would be practical way of doing the transition smoothly. Exchanges could change their BTS stack to bitBTS, which their customers could transfer to themselves freely. Customers of exchanges wouldn't lose anything because they have already given up a possibility to vote by storing their BTS in the exchange. Value of their holdings would remain same, because bitBTS is naturally backed with 100 % of BTS and could be force settled anytime in the Bitshares blockchain. Tonyk, any thoughts on this?

If I understood correctly, force settlement feature won't exist in tonyk's new chain, since it's against the market rules.

[tonyk]

I just want to point out that I agree with BM that dShares are indeed more heavy handed in most regards.

What I do not agree, is one sided analyses of pros and cons. He basically picked one of the issues this proposal tries to address, classified it as all it does...and went on to say what is his plan to do it much better. That is to say he refused to address, for example, BTS being left with outdated/inferior feed-backed assets, instead of market-based assets dShares offers. That consequences of this show their ugly head in many aspects of the current system (too many to list here, as well). Many of them are very hard to fix, if at all fixable.example - suggestion of running casper like bets in BTS on the price feed so one might eventually hopefully get a better feed. And to what end? Even with a perfect feed the force liquidation will remain vastly inferior and arbitrary; people will still sell bitAssets at what they deem a fair price (after considering all the factors and risks) no matter what the feed tells them.

dShares are also free (and more often than not) willing to borrow what is good and working from BTS. Being able to defacto earn credit to trade or transfer funds by having enough stake in the co-op is one such very appealing idea that I fully support for dShares. This makes the system free for 95% of the users, if they like it free. Liquidity is king is this week's BM's motto. And while I cannot stress how important is liquidity, I am not sure that just throwing money at the first algo (just cause it is easy to implement) is anywhere near the right approach.That is to say I am a fan of maker in how it tries to reward the market liquidity providers in sensible way, while the new approach seem to just through money proportional to just order size and min time on the books. Very exploitable and inefficient. (for BTS's sake I hope I am wrong. no official response on that yet).

[Shentist]

i would love to see this experiement, but to be clear - it is a experiement so if we want to do it, we should create a second
blockchain for it and they should compete against each other.

the outcome is not clear and the risk is so high, that we can destroy everything we worked so far.

[Samupaha]

So... Now that I finally have some time to think this more, I'd like to break the proposal to pieces and think if we want to or need to implement them all. All at once or maybe some parts first and others later?

BTS will be changed to be non-transferable

This is the best part of the proposal. I also think this is a no-brainer, we need to do this sooner or later. Reason is – as it has been stated already on this thread – that we need to get BTS out of other exchanges.

There is already at least one exchange voting: Yunbi. It's not very good for Bitshares because it's known that people at Yunbi are not interested in being part of development of Bitshares. Currently laomao is voting for zero worker proposals. So basically they are polluting the voting pool with their apathetic votes.

Also they don't have skin in the game, they aren't voting with their own money but with money of their customers. They are not going to suffer directly if they vote badly, so they don't even have sufficient incentive to vote well. On the other hand, exchanges might have an incentive to vote harmfully if they feel that Bitshares will steal all their customers.

Biggest problem is the transition from current system to non-transferableness of BTS. First and foremost we should make clear to everybody why this will be done so that there won't be any panic selling. All or at least most of the BTS owners should know that this will be coming and accept that.

As far as I can see, creation of bitBTS would be practical way of doing the transition smoothly. Exchanges could change their BTS stack to bitBTS, which their customers could transfer to themselves freely. Customers of exchanges wouldn't lose anything because they have already given up a possibility to vote by storing their BTS in the exchange. Value of their holdings would remain same, because bitBTS is naturally backed with 100 % of BTS and could be force settled anytime in the Bitshares blockchain. Tonyk, any thoughts on this?

Also it is true that demand for smartcoins is still quite low. What if we couldn't get enough demand for them? In that case bitBTS would be a necessarily to have so that we would have at least one asset that has demand in outside exchanges.

BTS owners will get dividend from proceeds of the DAC

Great idea and will incentivize owning BTS.

If we would like to implement this right now, it could be done independently with a worker proposal.

But one important thing is to discuss about the role of reserve pool. How much of the proceeds would go to shareholders and how much to reserve pool? We can't give everything for shareholders because it would drain the reserve pool in the long run.

There was also an idea of giving proceeds only for LTMs and AMs instead of all BTS owners, which I think is quite compelling.

Core token will be bitUSD

This is something that I'm not really sure about. Maybe a good thing, but it needs to be analyzed more thoroughly.

BTS will be used (mostly?) only to back bitUSD and other smartcoins will be backed with bitUSD

Would this be a forced feature or voluntary but preferred?

Is it already possible to create smartcoins with some other asset backing than BTS?

This would definitely create a huge demand for bitUSD. Obviously a good thing, but I'm not sure if we really need to do it.

If BTS is traded mainly against bitUSD, doesn't it reduce the liquidity of it? I would imagine that it would be a good thing to have several different active trading pairs for BTS to keep the pegs tighter.

Do traders have enough incentives to create other smartcoins? For example, if gold is gaining value against USD, will traders use bitUSD to create bitGOLD?

[Empirical1.2]

Liquidity is king.
Charging Fees hurts liquidity.
Providing Negative Fees will boost liquidity.

If you REALLY want to bootstrap liquidity on the DEX then we should consider eliminating all trading fees and subsidising liquidity like crazy.

Presumably people would just trade with themselves especially during the lowest activity/volume times?

I'd rather subsidize liquidity though than commit to paying a share of future fees which MAKER requires (MAKER locks us into a long term cost that may not solve the problem long term and also I presume commits us to charging fees on that asset in the future which will be paying for past services rendered.)

I'm also not sure the current construct where a BitAsset needs a BTS short to be created is ideal because how close shorts are willing to come to the peg has a lot to do with BTS medium to long term price expectations imo but if we kept the current construct, I'd probably look to subsidize shorts with high short term interest while BTS medium term price expectations were muted, though the current construct probably enables yield harvesting it would at least be halved by having to have a long position too.

Shorts also currently have the burden of forced settlement. If it isn't already at 99% or slightly lower, I'd adjust that to.

I don't think @bytemaster was necessarily referring to MAKER above.  He just said we should use "negative fees" to incentivize liquidity.  We should do that, assuming we can truly prevent people from trading with themselves.  But I agree with you, we should NOT reward liquidity providers with a share of FUTURE fees.  That is just way too open ended and would likely prevent us from having the flexibility to redirect liquidity incentives from one market to another as needed over time.

Yes I know he wasn't referring to MAKER.
I was saying even though I had concerns negative fees could be easily exploited, I preferred that approach of subsidizing liquidity/BitAssets in general as opposed to committing to a long term cost/approach like MAKER which could be bad for the reasons you mentioned.

[tbone]

Liquidity is king.
Charging Fees hurts liquidity.
Providing Negative Fees will boost liquidity.

If you REALLY want to bootstrap liquidity on the DEX then we should consider eliminating all trading fees and subsidising liquidity like crazy.

Presumably people would just trade with themselves especially during the lowest activity/volume times?

I'd rather subsidize liquidity though than commit to paying a share of future fees which MAKER requires (MAKER locks us into a long term cost that may not solve the problem long term and also I presume commits us to charging fees on that asset in the future which will be paying for past services rendered.)

I'm also not sure the current construct where a BitAsset needs a BTS short to be created is ideal because how close shorts are willing to come to the peg has a lot to do with BTS medium to long term price expectations imo but if we kept the current construct, I'd probably look to subsidize shorts with high short term interest while BTS medium term price expectations were muted, though the current construct probably enables yield harvesting it would at least be halved by having to have a long position too.

Shorts also currently have the burden of forced settlement. If it isn't already at 99% or slightly lower, I'd adjust that to.

I don't think @bytemaster was necessarily referring to MAKER above.  He just said we should use "negative fees" to incentivize liquidity.  We should do that, assuming we can truly prevent people from trading with themselves.  But I agree with you, we should NOT reward liquidity providers with a share of FUTURE fees.  That is just way too open ended and would likely prevent us from having the flexibility to redirect liquidity incentives from one market to another as needed over time.