Is Diluting BTS 2.5% for +5% BitAsset Yield very low cost to Shareholders?

[tbone]

$10 a day liquidity??

@CoinHoarder I was reading an old thread of yours where nagalim commented on how NuBits achieves liquidity.
https://bitsharestalk.org/index.php/topic,20804.msg269419.html#msg269419

From what I gather, once there is a lot of BitUSD that can be directed to liquidity operations, (which there will be if we implement dilution for yield and end up creating a lot of BitUSD through yield harvesting) then we might be able to achieve thousands of dollars of liquidity for <$10 in incentives a day?

The end result is that we can get large amounts of funds (thousands of $$) by only rewarding a small, continual payout (single digit $/day).  The providers take on all default and volatility risks and get rewarded for it.  Everybody's happy, we make a contract, and the whole system becomes reliable and dependable for customers.

Except we won't even have the risk of bter/polo exchange default like they do as it will all be on the internal exchange

I'd suggest we start with something like $1/day until we get a real handle on the price feed. 

Doesn't really sound plausible that NuBits level liquidity could be achieved so cheaply once the BitUSD funds are available, really interested to learn more.

For every nubit they print out of thin air in order to pay their liquidity providers (or whatever they are calling them) they demand 0.5 bitUSD, can you guys understand that? Those funds(bitUSD) will be used WHEN their ponzi starts to collapse, they need real money(bitUSD) to back SOME of their monopoly money.

So far they have grabbed 500 btc as "profits" from nubits hodlers but their nushares buy support is only 23 btc(most of those btc's are "profits" and not real support), every week their "profits"(and also the real money backing nubits) are becoming lower and lower https://discuss.nubits.com/t/nsr-buyback-21-week-of-february-15-2016/3530, obviously there are not enought suckers out there and their ponzi starts to collapse. They will either have to reduce their "profits" to almost zero and stay in a fractional reserve state or keep grabbing more money as profits and colapse.

We can probably steal some of their ideas but please stay away from those crooks.

I'm not advocating taking them up on their offer in that thread (The silly 0.5 BitUSD thing) or endorsing the way NuBits are created, (which I agree sucks) but I am interested in the cost to maintain their buy and sell walls you see on the exchanges.

It appears to me their liquidity pools offer NuBits owners circa 0.2% a day to send their NuBits to the liquidity pools and create the buy and sell walls you see in the tight range around the peg.  That particular method appears to be cheaper & possibly more effective than the liquidity proposal described here which would cost BTS circa $1000 per day https://bitsharestalk.org/index.php/topic,21544.0.html

So our BitUSD would be fully backed and created properly via the idea in this thread - Diluting BTS for BitAsset Yield - (All you have to do to avoid dilution is yield harvest BitUSD) Then we will have millions in fully collateralized BitUSD yield harvesting. Then for the same level of incentive, 0.2% a day we could entice some of that BitUSD into liquidity/market making operations and create cost effective buy and sell walls around our peg. 

As I say I will wait to hear from others if that is actually the case, but that is the part of the approach that interests me.

I would love to participate in such a liquidity pool for ~.2%/day return.  How variable would that be, and what are the risks, though?  Also, how do you see other BitAssets fitting into this whole creation-by-yield-harvesting scenario, especially BitCNY?  Could we do the same exact thing for BitCNY and the others?  Also, some have suggested perhaps having BitCNY and other BitAssets trade only against BitUSD.  Is that even possible in your scenario where BitAssets are created via yield harvesting?  And would it even be necessary to have other BitAssets trade only against BitUSD if the BitUSD liquidity pool you've described works as planned?

I would love to participate in such a liquidity pool for ~.2%/day return.  How variable would that be, and what are the risks, though?

A risk is that the market making operation could lose money in trending markets depending on the spread.  https://nupool.net/index.php/Risks_&_Chances

Hedging: Traders might be able to successfully hedge against you. This means that people speculate on the BTC BTS price movement and buy NBT BitUSD from you at a low price and sell them back to you when the price is high (or vice versa). Said behaviour might result in losses for the liquidity provider.

A risk is that you could lose money if the BTS price goes down, but I'd be assuming most people participating would be long term bullish on BTS. http://nulagoon.com/lqpools.html

It would be interesting to hear from someone who has participated in the NuBits pools to find out how variable/risky that rate of return is and if there other elements to be considered. I have no experience in market making so I would be looking to BM, experienced market makers and others to evaluate the merits of this approach.

Also, how do you see other BitAssets fitting into this whole creation-by-yield-harvesting scenario, especially BitCNY?  Could we do the same exact thing for BitCNY and the others?  Also, some have suggested perhaps having BitCNY and other BitAssets trade only against BitUSD.  Is that even possible in your scenario where BitAssets are created via yield harvesting?  And would it even be necessary to have other BitAssets trade only against BitUSD if the BitUSD liquidity pool you've described works as planned?

I imagine shareholders could apply dilution for yield to a single BitAsset or multiple BitAssets (incl. BitCNY) with pretty much the same outcome. (You just mitigate the dilution on your BTS stake by yield harvesting.) However there may be value in just bootstrapping 1 BitAsset to start. You could have everything trading against BitUSD in this approach which could help liquidity and bootstrapping the key Smartcoin, though I don't think it would be necessary.

But yeah I would be pretty excited  if I believed we'd implement dilution for yield, because we'd become crypto USD market leader by CAP and number of users virtually overnight for a fairly neutral cost, with a kick ass decentralized exchange and be able to advertise yield. If we could have strong buy and sell walls for a fairly low cost too, (The other $1000 a day proposal seems pretty high to me) by applying the same market making techniques that work for Nubits, once we have most BTS shareholders sitting on yield harvesting USD looking for something to do with it, we'd have liquidity too. Then it's on like Donkey Kong.

We could start with a 2% yield for just 1% dilution, correct?  Seems like it would make good sense to do this.  Question is, what would the development costs be?  I assume the cost to add yield would be fairly low, whereas implementing the liquidity pool would probably be more costly.  Can you see any reason why we shouldn't start with the yield and then add the liquidity pool when it's ready, or do you feel they should be launched concurrently?  Really wish @bytemaster would chime in on all of this.  Considering that @kenCode's mobile wallet and POS system are nearing completion, it's critical right now to incentivize BitAsset creation.

[Empirical1.2]

$10 a day liquidity??

@CoinHoarder I was reading an old thread of yours where nagalim commented on how NuBits achieves liquidity.
https://bitsharestalk.org/index.php/topic,20804.msg269419.html#msg269419

From what I gather, once there is a lot of BitUSD that can be directed to liquidity operations, (which there will be if we implement dilution for yield and end up creating a lot of BitUSD through yield harvesting) then we might be able to achieve thousands of dollars of liquidity for <$10 in incentives a day?

The end result is that we can get large amounts of funds (thousands of $$) by only rewarding a small, continual payout (single digit $/day).  The providers take on all default and volatility risks and get rewarded for it.  Everybody's happy, we make a contract, and the whole system becomes reliable and dependable for customers.

Except we won't even have the risk of bter/polo exchange default like they do as it will all be on the internal exchange

I'd suggest we start with something like $1/day until we get a real handle on the price feed. 

Doesn't really sound plausible that NuBits level liquidity could be achieved so cheaply once the BitUSD funds are available, really interested to learn more.

For every nubit they print out of thin air in order to pay their liquidity providers (or whatever they are calling them) they demand 0.5 bitUSD, can you guys understand that? Those funds(bitUSD) will be used WHEN their ponzi starts to collapse, they need real money(bitUSD) to back SOME of their monopoly money.

So far they have grabbed 500 btc as "profits" from nubits hodlers but their nushares buy support is only 23 btc(most of those btc's are "profits" and not real support), every week their "profits"(and also the real money backing nubits) are becoming lower and lower https://discuss.nubits.com/t/nsr-buyback-21-week-of-february-15-2016/3530, obviously there are not enought suckers out there and their ponzi starts to collapse. They will either have to reduce their "profits" to almost zero and stay in a fractional reserve state or keep grabbing more money as profits and colapse.

We can probably steal some of their ideas but please stay away from those crooks.

I'm not advocating taking them up on their offer in that thread (The silly 0.5 BitUSD thing) or endorsing the way NuBits are created, (which I agree sucks) but I am interested in the cost to maintain their buy and sell walls you see on the exchanges.

It appears to me their liquidity pools offer NuBits owners circa 0.2% a day to send their NuBits to the liquidity pools and create the buy and sell walls you see in the tight range around the peg.  That particular method appears to be cheaper & possibly more effective than the liquidity proposal described here which would cost BTS circa $1000 per day https://bitsharestalk.org/index.php/topic,21544.0.html

So our BitUSD would be fully backed and created properly via the idea in this thread - Diluting BTS for BitAsset Yield - (All you have to do to avoid dilution is yield harvest BitUSD) Then we will have millions in fully collateralized BitUSD yield harvesting. Then for the same level of incentive, 0.2% a day we could entice some of that BitUSD into liquidity/market making operations and create cost effective buy and sell walls around our peg. 

As I say I will wait to hear from others if that is actually the case, but that is the part of the approach that interests me.

I would love to participate in such a liquidity pool for ~.2%/day return.  How variable would that be, and what are the risks, though?  Also, how do you see other BitAssets fitting into this whole creation-by-yield-harvesting scenario, especially BitCNY?  Could we do the same exact thing for BitCNY and the others?  Also, some have suggested perhaps having BitCNY and other BitAssets trade only against BitUSD.  Is that even possible in your scenario where BitAssets are created via yield harvesting?  And would it even be necessary to have other BitAssets trade only against BitUSD if the BitUSD liquidity pool you've described works as planned?

I would love to participate in such a liquidity pool for ~.2%/day return.  How variable would that be, and what are the risks, though?

A risk is that the market making operation could lose money in trending markets depending on the spread.  https://nupool.net/index.php/Risks_&_Chances

Hedging: Traders might be able to successfully hedge against you. This means that people speculate on the BTC BTS price movement and buy NBT BitUSD from you at a low price and sell them back to you when the price is high (or vice versa). Said behaviour might result in losses for the liquidity provider.

A risk is that you could lose money if the BTS price goes down, but I'd be assuming most people participating would be long term bullish on BTS. http://nulagoon.com/lqpools.html

It would be interesting to hear from someone who has participated in the NuBits pools to find out how variable/risky that rate of return is and if there other elements to be considered. I have no experience in market making so I would be looking to BM, experienced market makers and others to evaluate the merits of this approach.

Also, how do you see other BitAssets fitting into this whole creation-by-yield-harvesting scenario, especially BitCNY?  Could we do the same exact thing for BitCNY and the others?  Also, some have suggested perhaps having BitCNY and other BitAssets trade only against BitUSD.  Is that even possible in your scenario where BitAssets are created via yield harvesting?  And would it even be necessary to have other BitAssets trade only against BitUSD if the BitUSD liquidity pool you've described works as planned?

I imagine shareholders could apply dilution for yield to a single BitAsset or multiple BitAssets (incl. BitCNY) with pretty much the same outcome. (You just mitigate the dilution on your BTS stake by yield harvesting.) However there may be value in just bootstrapping 1 BitAsset to start. You could have everything trading against BitUSD in this approach which could help liquidity and bootstrapping the key Smartcoin, though I don't think it would be necessary.

But yeah I would be pretty excited  if I believed we'd implement dilution for yield, because we'd become crypto USD market leader by CAP and number of users virtually overnight for a fairly neutral cost, with a kick ass decentralized exchange and be able to advertise yield. If we could have strong buy and sell walls for a fairly low cost too, (The other $1000 a day proposal seems pretty high to me) by applying the same market making techniques that work for Nubits, once we have most BTS shareholders sitting on yield harvesting USD looking for something to do with it, we'd have liquidity too. Then it's on like Donkey Kong.

[tbone]

$10 a day liquidity??

@CoinHoarder I was reading an old thread of yours where nagalim commented on how NuBits achieves liquidity.
https://bitsharestalk.org/index.php/topic,20804.msg269419.html#msg269419

From what I gather, once there is a lot of BitUSD that can be directed to liquidity operations, (which there will be if we implement dilution for yield and end up creating a lot of BitUSD through yield harvesting) then we might be able to achieve thousands of dollars of liquidity for <$10 in incentives a day?

The end result is that we can get large amounts of funds (thousands of $$) by only rewarding a small, continual payout (single digit $/day).  The providers take on all default and volatility risks and get rewarded for it.  Everybody's happy, we make a contract, and the whole system becomes reliable and dependable for customers.

Except we won't even have the risk of bter/polo exchange default like they do as it will all be on the internal exchange

I'd suggest we start with something like $1/day until we get a real handle on the price feed. 

Doesn't really sound plausible that NuBits level liquidity could be achieved so cheaply once the BitUSD funds are available, really interested to learn more.

For every nubit they print out of thin air in order to pay their liquidity providers (or whatever they are calling them) they demand 0.5 bitUSD, can you guys understand that? Those funds(bitUSD) will be used WHEN their ponzi starts to collapse, they need real money(bitUSD) to back SOME of their monopoly money.

So far they have grabbed 500 btc as "profits" from nubits hodlers but their nushares buy support is only 23 btc(most of those btc's are "profits" and not real support), every week their "profits"(and also the real money backing nubits) are becoming lower and lower https://discuss.nubits.com/t/nsr-buyback-21-week-of-february-15-2016/3530, obviously there are not enought suckers out there and their ponzi starts to collapse. They will either have to reduce their "profits" to almost zero and stay in a fractional reserve state or keep grabbing more money as profits and colapse.

We can probably steal some of their ideas but please stay away from those crooks.

I'm not advocating taking them up on their offer in that thread (The silly 0.5 BitUSD thing) or endorsing the way NuBits are created, (which I agree sucks) but I am interested in the cost to maintain their buy and sell walls you see on the exchanges.

It appears to me their liquidity pools offer NuBits owners circa 0.2% a day to send their NuBits to the liquidity pools and create the buy and sell walls you see in the tight range around the peg.  That particular method appears to be cheaper & possibly more effective than the liquidity proposal described here which would cost BTS circa $1000 per day https://bitsharestalk.org/index.php/topic,21544.0.html

So our BitUSD would be fully backed and created properly via the idea in this thread - Diluting BTS for BitAsset Yield - (All you have to do to avoid dilution is yield harvest BitUSD) Then we will have millions in fully collateralized BitUSD yield harvesting. Then for the same level of incentive, 0.2% a day we could entice some of that BitUSD into liquidity/market making operations and create cost effective buy and sell walls around our peg. 

As I say I will wait to hear from others if that is actually the case, but that is the part of the approach that interests me.

I would love to participate in such a liquidity pool for ~.2%/day return.  How variable would that be, and what are the risks, though?  Also, how do you see other BitAssets fitting into this whole creation-by-yield-harvesting scenario, especially BitCNY?  Could we do the same exact thing for BitCNY and the others?  Also, some have suggested perhaps having BitCNY and other BitAssets trade only against BitUSD.  Is that even possible in your scenario where BitAssets are created via yield harvesting?  And would it even be necessary to have other BitAssets trade only against BitUSD if the BitUSD liquidity pool you've described works as planned?

[Empirical1.2]

$10 a day liquidity??

@CoinHoarder I was reading an old thread of yours where nagalim commented on how NuBits achieves liquidity.
https://bitsharestalk.org/index.php/topic,20804.msg269419.html#msg269419

From what I gather, once there is a lot of BitUSD that can be directed to liquidity operations, (which there will be if we implement dilution for yield and end up creating a lot of BitUSD through yield harvesting) then we might be able to achieve thousands of dollars of liquidity for <$10 in incentives a day?

The end result is that we can get large amounts of funds (thousands of $$) by only rewarding a small, continual payout (single digit $/day).  The providers take on all default and volatility risks and get rewarded for it.  Everybody's happy, we make a contract, and the whole system becomes reliable and dependable for customers.

Except we won't even have the risk of bter/polo exchange default like they do as it will all be on the internal exchange

I'd suggest we start with something like $1/day until we get a real handle on the price feed. 

Doesn't really sound plausible that NuBits level liquidity could be achieved so cheaply once the BitUSD funds are available, really interested to learn more.

For every nubit they print out of thin air in order to pay their liquidity providers (or whatever they are calling them) they demand 0.5 bitUSD, can you guys understand that? Those funds(bitUSD) will be used WHEN their ponzi starts to collapse, they need real money(bitUSD) to back SOME of their monopoly money.

So far they have grabbed 500 btc as "profits" from nubits hodlers but their nushares buy support is only 23 btc(most of those btc's are "profits" and not real support), every week their "profits"(and also the real money backing nubits) are becoming lower and lower https://discuss.nubits.com/t/nsr-buyback-21-week-of-february-15-2016/3530, obviously there are not enought suckers out there and their ponzi starts to collapse. They will either have to reduce their "profits" to almost zero and stay in a fractional reserve state or keep grabbing more money as profits and colapse.

We can probably steal some of their ideas but please stay away from those crooks.

I'm not advocating taking them up on their offer in that thread (The silly 0.5 BitUSD thing) or endorsing the way NuBits are created, (which I agree sucks) but I am interested in the cost to maintain their buy and sell walls you see on the exchanges.

It appears to me their liquidity pools offer NuBits owners circa 0.2% a day to send their NuBits to the liquidity pools and create the buy and sell walls you see in the tight range around the peg.  That particular method appears to be cheaper & possibly more effective than the liquidity proposal described here which would cost BTS circa $1000 per day https://bitsharestalk.org/index.php/topic,21544.0.html

So our BitUSD would be fully backed and created properly via the idea in this thread - Diluting BTS for BitAsset Yield - (All you have to do to avoid dilution is yield harvest BitUSD) Then we will have millions in fully collateralized BitUSD yield harvesting. Then for the same level of incentive, 0.2% a day we could entice some of that BitUSD into liquidity/market making operations and create cost effective buy and sell walls around our peg. 

As I say I will wait to hear from others if that is actually the case, but that is the part of the approach that interests me.

[chryspano]

$10 a day liquidity??

@CoinHoarder I was reading an old thread of yours where nagalim commented on how NuBits achieves liquidity.
https://bitsharestalk.org/index.php/topic,20804.msg269419.html#msg269419

From what I gather, once there is a lot of BitUSD that can be directed to liquidity operations, (which there will be if we implement dilution for yield and end up creating a lot of BitUSD through yield harvesting) then we might be able to achieve thousands of dollars of liquidity for <$10 in incentives a day?

The end result is that we can get large amounts of funds (thousands of $$) by only rewarding a small, continual payout (single digit $/day).  The providers take on all default and volatility risks and get rewarded for it.  Everybody's happy, we make a contract, and the whole system becomes reliable and dependable for customers.

Except we won't even have the risk of bter/polo exchange default like they do as it will all be on the internal exchange

I'd suggest we start with something like $1/day until we get a real handle on the price feed. 

Doesn't really sound plausible that NuBits level liquidity could be achieved so cheaply once the BitUSD funds are available, really interested to learn more.

For every nubit they print out of thin air in order to pay their liquidity providers (or whatever they are calling them) they demand 0.5 bitUSD, can you guys understand that? Those funds(bitUSD) will be used WHEN their ponzi starts to collapse, they need real money(bitUSD) to back SOME of their monopoly money.

So far they have grabbed 500 btc as "profits" from nubits hodlers but their nushares buy support is only 23 btc(most of those btc's are "profits" and not real support), every week their "profits"(and also the real money backing nubits) are becoming lower and lower https://discuss.nubits.com/t/nsr-buyback-21-week-of-february-15-2016/3530, obviously there are not enought suckers out there and their ponzi starts to collapse. They will either have to reduce their "profits" to almost zero and stay in a fractional reserve state or keep grabbing more money as profits and colapse.

We can probably steal some of their ideas but please stay away from those crooks.

[Empirical1.2]

$10 a day liquidity??

@CoinHoarder I was reading an old thread of yours where nagalim commented on how NuBits achieves liquidity.
https://bitsharestalk.org/index.php/topic,20804.msg269419.html#msg269419

From what I gather, once there is a lot of BitUSD that can be directed to liquidity operations, (which there will be if we implement dilution for yield and end up creating a lot of BitUSD through yield harvesting) then we might be able to achieve thousands of dollars of liquidity for <$10 in incentives a day?

The end result is that we can get large amounts of funds (thousands of $$) by only rewarding a small, continual payout (single digit $/day).  The providers take on all default and volatility risks and get rewarded for it.  Everybody's happy, we make a contract, and the whole system becomes reliable and dependable for customers.

Except we won't even have the risk of bter/polo exchange default like they do as it will all be on the internal exchange

I'd suggest we start with something like $1/day until we get a real handle on the price feed. 

Doesn't really sound plausible that NuBits level liquidity could be achieved so cheaply once the BitUSD funds are available, really interested to learn more.

[Empirical1.2]

How effective do you think this would be if we offered a smaller % on a trial basis, perhaps 2-3% instead of 5%, just to prove the concept?  Actually, maybe 2-3% would be fully sufficient, especially as we move toward an environment when zero or negative bank interest rates become the norm?  Either way, could the % be dynamic based on different needs in different market conditions?

Yeah 5% or greater, was the variable yield, BitAssets would hopefully achieve if you offered BTS minting rewards at 2.5%. However you could trial it at less than that, say 1% and probably still achieve a large increase in total BitUSD and number of holders. (At a fairly neutral cost thanks to yield harvesting.) It could also be dynamic in that it could be changed based on results, also with some of the rewards going to the short side as tonyk suggested earlier in the thread.

(1% dilution going to BiAsset yield would be $100 000 a year, which should still incentivize many millions of BitUSD)

For that reason, I would personally be likely to dedicate at least 1M BTS of my own funds to a liquidity pool such as the one you're describing.  Although of course I would first need to better understand the mechanics of it all, as well as the full implications for individual shareholders in different circumstances (i.e. Those yield harvesting, those not. Those participating in the liquidity pool, those not. Those bullish on BTS, those bearish. Etc). 

Looking at the NuBits model we should be able to create fairly low risk pools with fairly high rates of interest for very low dilution.
It may be cheaper though because we'll all be yield harvesting anyway and have BitUSD we'd be willing to contribute for additional yield.

I don't know much about the mechanics so I'll see if BM, experienced market makers and perhaps some existing NuPool operators can comment to give us an idea of the cost/benefit vs. other approaches.

@Empirical1.2: I love your ideas on offering yield to incentivize the creation of BitAssets.  In my estimation there is NOTHING more important we could be doing right now than ensuring many people have BitAssets in their possession that they'll be ready to spend once merchants start coming online with @kenCode's POS systems. 

Thanks, I agree. A lot of the Chinese market especially are opposed to dilution in general. So while I think we can make the case dilution for yield will significantly increase BitUSD CAP and number of users for a 'fairly' neutral cost.  The liquidity proposals whether it's the one described in the other thread or a subsidized liquidity pool making use of the yield harvesting BitUSD are the ones that need to draw in new money to offset their cost to BTS so those are the ones I'd trial at a lower amount first to evaluate their efficacy.

[tbone]

I like the idea of Smartcoins earning interest. However, I prefer that the interest be paid from a percentage of the fee pool like in BTS1.0

If I had to choose in between dilution for liquidity, or dilution for Smartcoin interest, then I would choose the former becuase I think it is more important to the success of Bitshares.

I don't think it's a choice you have to make.

Perhaps you are right.

I have an English paper due tomorrow that I haven't started on. I better get to it... I'll be back next week to discuss more. 

@CoinHoarder: I know you don't always believe people are listening to you, but they are.  Your input is valuable.  So I hope you return quickly from writing your paper and continue to contribute to these extremely important topics.

[tbone]

I like the idea of Smartcoins earning interest. However, I prefer that the interest be paid from a percentage of the fee pool like in BTS1.0

If I had to choose in between dilution for liquidity, or dilution for Smartcoin interest, then I would choose the former becuase I think it is more important to the success of Bitshares.

I don't think it's a choice you have to make. POS minting rewards are a fairly neutral cost so they don't have to severely limit your ability in other areas.

You're a fan of Nubits liquidity right? This could also be a part of a two step liquidity process that sees us create huge buy and sell BitUSD  that new BitUSD holders can easily participate and benefit.

Step 1: Implement this proposal, BTS minting rewards, and you will create $Millions of BitUSD for very low/fairly neutral cost.

Step 2: Implement a trustless Nubits liquidity style pool, possibly with the help of an existing Nubits pool. Then we can send our BitUSD to the trustless pool and participate in the process and earn additional interest. https://nubits.com/current-liquidity-pools

Result:  We will have created a BitUSD with millions in circulation and large buy and sell walls and the main cost will have been the subsidy we give to the liquidity pool.

If you're in contact with anyone there, I would be particularly interested as to whether a liquidity pool could do the job better and for less than the current liquidity proposal?

@Empirical1.2: I love your ideas on offering yield to incentivize the creation of BitAssets.  In my estimation there is NOTHING more important we could be doing right now than ensuring many people have BitAssets in their possession that they'll be ready to spend once merchants start coming online with @kenCode's POS systems. 

We need to foster an environment where an ecosystem can spring up, and we need to do it NOW.  For that reason, I would personally be likely to dedicate at least 1M BTS of my own funds to a liquidity pool such as the one you're describing.  Although of course I would first need to better understand the mechanics of it all, as well as the full implications for individual shareholders in different circumstances (i.e. Those yield harvesting, those not. Those participating in the liquidity pool, those not. Those bullish on BTS, those bearish. Etc). 

By the way, how effective do you think this would be if we offered a smaller % on a trial basis, perhaps 2-3% instead of 5%, just to prove the concept?  Actually, maybe 2-3% would be fully sufficient, especially as we move toward an environment when zero or negative bank interest rates become the norm?  Either way, could the % be dynamic based on different needs in different market conditions?  And finally, do you see the nubits-style liquidity pool you're proposing as compatible with the idea of rewarding market makers for liquidity (as is being discussed on another thread)?  Thanks in advance.

[CoinHoarder]

I like the idea of Smartcoins earning interest. However, I prefer that the interest be paid from a percentage of the fee pool like in BTS1.0

If I had to choose in between dilution for liquidity, or dilution for Smartcoin interest, then I would choose the former becuase I think it is more important to the success of Bitshares.

I don't think it's a choice you have to make.

Perhaps you are right.

I have an English paper due tomorrow that I haven't started on. I better get to it... I'll be back next week to discuss more. 

[Empirical1.2]

I like the idea of Smartcoins earning interest. However, I prefer that the interest be paid from a percentage of the fee pool like in BTS1.0

If I had to choose in between dilution for liquidity, or dilution for Smartcoin interest, then I would choose the former becuase I think it is more important to the success of Bitshares.

I don't think it's a choice you have to make. POS minting rewards are a fairly neutral cost so they don't have to severely limit your ability in other areas.

You're a fan of Nubits liquidity right? This could also be a part of a two step liquidity process that sees us create huge buy and sell BitUSD  walls that new BitUSD holders can easily participate in and benefit from. 

Step 1: Implement this proposal, BTS minting rewards, and you will create $Millions of BitUSD for very low/fairly neutral cost.

Step 2: Implement a trustless Nubits liquidity style pool, possibly with the help of an existing Nubits pool. Then we can send our BitUSD to the trustless pool and participate in the process and earn additional interest. https://nubits.com/current-liquidity-pools

Result:  We will have created a BitUSD with millions in circulation and large buy and sell walls and the main cost will have been the subsidy we give to the liquidity pool.

If you're in contact with anyone there, I would be particularly interested as to whether a liquidity pool could do the job better and for less than the current liquidity proposal?

[CoinHoarder]

I like the idea of Smartcoins earning interest. However, I prefer that the interest be paid from a percentage of the fee pool like in BTS1.0

If I had to choose in between dilution for liquidity, or dilution for Smartcoin interest, then I would choose the former becuase I think it is more important to the success of Bitshares.

[xeroc]

Lots of coins already offer POS minting rewards, which exchanges currently mint their balances and return the rewards to their customers which is presumably a much simpler process?

In case of 5% yield, this has to be perpetuated until the ponzi colapses.

On the contrary, BitAssets have had variable yield before ranging from 0-5% in BTS 1.0, it was removed in 2.0, nothing collapsed...

The yield can be only financed from the latecomer investors, when the marketcap will start to deflate, it's over.

It's also not a ponzi scheme, it's a redistribution scheme.

those POS coins do not generate yield on derived assets, so they can provide whatever fixed yield they
want.

in BTS  1.0 the yield was financed from shorters, it was a bit ponzi too, but not so evident.

Whatever yield,  the dilution has to be fianced /compensated by new investors buying in,
otherwise the value of single BTS would go down and no one would like that.

Dont forget that the 'dilution' is taken from the reserve fund which is filled up again by customers of the system. So its not 'only' the newcomers that would pay for the yield

[Empirical1.2]

Lots of coins already offer POS minting rewards, which exchanges currently mint their balances and return the rewards to their customers which is presumably a much simpler process?

In case of 5% yield, this has to be perpetuated until the ponzi colapses.

On the contrary, BitAssets have had variable yield before ranging from 0-5% in BTS 1.0, it was removed in 2.0, nothing collapsed...

The yield can be only financed from the latecomer investors, when the marketcap will start to deflate, it's over.

It's also not a ponzi scheme, it's a redistribution scheme.

Whatever yield,  the dilution has to be fianced /compensated by new investors buying in,
otherwise the value of single BTS would go down and no one would like that.

This is not true imo. When PPC offers 1% minting rewards. It doesn't have to be funded by new investors coming in.
All existing coin holders have to do is put their coins into minting and the net result is neutral.

Similarly when BTS offers 2.5% minting rewards. It doesn't have to be funded by new investors coming in.
All existing coin holders have to do is put their coins into minting (yield harvesting) and the net result is neutral.

because in crypto 1% means nothing when the coin fluctuates hundreds % in value, but imagine you would mint 10% every day. the value of the coin
would go down unless someone would be be buying them or the minters would keep them all.
The point is lets not pretend this is magic money where you can create more of it
without having new investors coming in and keep the price steady.
In bitcoin it is the same. There have to be new buyers for new minted coins.
But bitcoin does not provide yields to the holders and especially not on derived assets.

In bitcoin it is the same. There have to be new buyers for new minted coins.

In Bitcoin there have to be buyers for newly minted coins because those coins don't go to existing Bitcoin holders.

In POS minting rewards the coins go to existing coin holders provided they take part in the minting process so there don't have to be new buyers for the process to be net neutral.

If you view BitAsset yield harvesting as the minting process you'll see the 2.5% BTS minting rewards proposed in this thread also go to existing coin holders provided they take part in the minting process.

(Yield harvesting is where you are both short & long the BitAsset at the same time, so your underlying BTS position effectively stays the same.)

[jtme]

Lots of coins already offer POS minting rewards, which exchanges currently mint their balances and return the rewards to their customers which is presumably a much simpler process?

In case of 5% yield, this has to be perpetuated until the ponzi colapses.

On the contrary, BitAssets have had variable yield before ranging from 0-5% in BTS 1.0, it was removed in 2.0, nothing collapsed...

The yield can be only financed from the latecomer investors, when the marketcap will start to deflate, it's over.

It's also not a ponzi scheme, it's a redistribution scheme.

Whatever yield,  the dilution has to be fianced /compensated by new investors buying in,
otherwise the value of single BTS would go down and no one would like that.

This is not true imo. When PPC offers 1% minting rewards. It doesn't have to be funded by new investors coming in.
All existing coin holders have to do is put their coins into minting and the net result is neutral.

Similarly when BTS offers 2.5% minting rewards. It doesn't have to be funded by new investors coming in.
All existing coin holders have to do is put their coins into minting (yield harvesting) and the net result is neutral.

because in crypto 1% means nothing when the coin fluctuates hundreds % in value, but imagine you would mint 10% every day. the value of the coin
would go down unless someone would be be buying them or the minters would keep them all.
The point is lets not pretend this is magic money where you can create more of it
without having new investors coming in and keep the price steady.
In bitcoin it is the same. There have to be new buyers for new minted coins.
But bitcoin does not provide yields to the holders and especially not on derived assets.