Liquidity, smartcoins, dilution and competitors

[xeroc]

actually this statement is wrong on many levels!

Sometimes I really don't get your thinking. Let's try to break this to pieces and figure out where we are actually disagreeing.

- Bitshares has no dilution/inflation. Quantity of BTS is hardcapped to 3.7 billion.
- Bitshares has reserve pool that contains all BTS that are not in active circulation.
- Reserve pool is used to fund workers and witnesses. Bitshares is a DAC, so it's like a company, and companies need workers that can produce products and services that their customers will use.
- BTS is taken out from the reserve pool with fixed rate 5 BTS/s.
- BTS can be put back to the reserve pool by two means: Refund worker (a special worker that doesn't to anything else than transfers BTS to the reserve pool) and customers paying fees (part of the transaction fee goes to the reserve pool).
- Size of the reserve pool depends on initial amount of BTS in there, continuous subtraction of 5 BTS/s, variable addition of BTS depending on how much goes to refund workers and how much users are doing transactions, what the fees are and what portion of the fees goes to the reserve pool.
- The goal of the Bitshares DAC is to grow the reserve pool by having paying customers who pay more in fees than the DAC pays for it's workers as salaries.

So it is highly misleading to talk about only the fixed rate of 5 BTS/s coming out from reserve pool. The formula has other variables too that are important if you want to understand how the system works.

I think tony referred to the funds that are still vesting due to the
merger ..
Those funds are not liquid right now and not in the reserves either ..

[tbone]

There is no d word... dilution is misnomer for btc and BTS...Let's assume I believe this (just because there is cap), and everyone else should/ is as well.

BUT

There are 23,000,000 new BTS entering into circulation each month.

23 Mil BTS needed to be absorbed by new money entering the system just so the price stays the same...

Do you think that on average 90,000 K USD are entering/buying into BTS every month right now?

 

Wait what? I think some of these numbers are wrong or I didn't get what you actually meant. First of all, if 23,000,000 new BTS entered into circulation each month the funds would be depleted in 5 years, with an inflation ~10% per year.

https://bitshares.org/technology/stakeholder-approved-project-funding/ This is the max we can use, please link me to another source if that's wrong.

You've got to understand @tonyk , that by increasing the liquidity or incentivising people to hold bts, you are going to earn a lot more. Offering a 2.5% a year, for people to hold BTS is nothing. How many people are going to lock their funds or trade? 30% of the users? 50%? then you have 1.25% of actual inflation (dilution). This way you destroy the sell wall. Even one whale a month. Just one, that would hold their funds, would buy those 50k$ worth of shares.

And again, 90k$ a month (which is the wrong number), is nothing compared to the average trading volume which is more than 90k$.

I've followed NXT, I've followed Dash, I've followed NuBits, I own some too. But this community superior in every fucking sense. People are working on projects, expecting to be paid after they completed the work and you don't want to pay them? There are so many good things that can be done and you are rejecting these ideas. So BM is a moron and retard that is offering some feautures for free.

Let's say that BM isn't doing anything for free, that's why he got CNX formed etc etc. If BM didn't expect his shares price to rise by implementing that liquidity model, would he do it that for free? Do you think that CNX and those people own no shares? Or the people who are in this community? Please see the bigger picture and don't get stuck with some potential initial loses.

My numbers tend to be right... unfortunately.
Other people might tell you there is 6% dilution per year... but that is the long term print rate...
Read the above post.. there is a shit load of other new BTS coming into the market that are not counted in thier calculations...for the convenience of the poster...or just cause "they will end in meager 8 mo."
Those alone will be netting 100 mil or 160 mil new BTS.

PS
and do not get me started on trading volume... you think more than 3% are actual final buys/sells?
I can show you trading volume of 10x the market cap of a coin...or (if you really pay me)  I can show you I day where I traded 75 BTC and started and ended with a position of ~ 0.5-1.0 BTC worth of that coin.

You're hilarious, tony.  The MAXIMUM dilution rate is 432,000 BTS per day, or ~13M BTS per month.  At today's prices, that's about $53k/month, or $1800/day.  And we're only spending a small fraction of that.  Fact is, @tarantulaz caught you in a lie, and instead of at least saying you made a mistake, you stuck to your guns without backing up your numbers.  All you did was give a circular reference i.e. "see above post" which of course contained nothing but your original empty claim.  And then for good measure, you threw in some obfuscation by going on and on about how you could teach us things about trading volume.  Cut the crap, tony.

Our dilution rate, which is minimal, barely contributes to sell pressure.  A MUCH bigger factor is the 21M BTS/month from the merger, which is coming to an end in a matter of months, as @chryspano has pointed out.  But even THAT is not a huge number compared to the biggest factor causing sell pressure over the last couple of years, which has been the crypto bear market. 

Given the competitive, fast-paced environment of crypto, we need to continue building and maintaining our product or we will not be able to compete which will ultimately lead to zero demand for BTS.  So it's incredibly foolish to skimp on development work, which causes minimal dilution and contributes almost ZERO to sell pressure.  Why is this difficult for a segment of our community to understand?  It really doesn't take a genius.

[Samupaha]

actually this statement is wrong on many levels!

Sometimes I really don't get your thinking. Let's try to break this to pieces and figure out where we are actually disagreeing.

- Bitshares has no dilution/inflation. Quantity of BTS is hardcapped to 3.7 billion.
- Bitshares has reserve pool that contains all BTS that are not in active circulation.
- Reserve pool is used to fund workers and witnesses. Bitshares is a DAC, so it's like a company, and companies need workers that can produce products and services that their customers will use.
- BTS is taken out from the reserve pool with fixed rate 5 BTS/s.
- BTS can be put back to the reserve pool by two means: Refund worker (a special worker that doesn't to anything else than transfers BTS to the reserve pool) and customers paying fees (part of the transaction fee goes to the reserve pool).
- Size of the reserve pool depends on initial amount of BTS in there, continuous subtraction of 5 BTS/s, variable addition of BTS depending on how much goes to refund workers and how much users are doing transactions, what the fees are and what portion of the fees goes to the reserve pool.
- The goal of the Bitshares DAC is to grow the reserve pool by having paying customers who pay more in fees than the DAC pays for it's workers as salaries.

So it is highly misleading to talk about only the fixed rate of 5 BTS/s coming out from reserve pool. The formula has other variables too that are important if you want to understand how the system works.

[tonyk]

There is no d word... dilution is misnomer for btc and BTS...Let's assume I believe this (just because there is cap), and everyone else should/ is as well.

BUT

There are 23,000,000 new BTS entering into circulation each month.

23 Mil BTS needed to be absorbed by new money entering the system just so the price stays the same...

Do you think that on average 90,000 K USD are entering/buying into BTS every month right now?

 

Wait what? I think some of these numbers are wrong or I didn't get what you actually meant. First of all, if 23,000,000 new BTS entered into circulation each month the funds would be depleted in 5 years, with an inflation ~10% per year.

https://bitshares.org/technology/stakeholder-approved-project-funding/ This is the max we can use, please link me to another source if that's wrong.

You've got to understand @tonyk , that by increasing the liquidity or incentivising people to hold bts, you are going to earn a lot more. Offering a 2.5% a year, for people to hold BTS is nothing. How many people are going to lock their funds or trade? 30% of the users? 50%? then you have 1.25% of actual inflation (dilution). This way you destroy the sell wall. Even one whale a month. Just one, that would hold their funds, would buy those 50k$ worth of shares.

And again, 90k$ a month (which is the wrong number), is nothing compared to the average trading volume which is more than 90k$.

I've followed NXT, I've followed Dash, I've followed NuBits, I own some too. But this community superior in every fucking sense. People are working on projects, expecting to be paid after they completed the work and you don't want to pay them? There are so many good things that can be done and you are rejecting these ideas. So BM is a moron and retard that is offering some feautures for free.

Let's say that BM isn't doing anything for free, that's why he got CNX formed etc etc. If BM didn't expect his shares price to rise by implementing that liquidity model, would he do it that for free? Do you think that CNX and those people own no shares? Or the people who are in this community? Please see the bigger picture and don't get stuck with some potential initial loses.

My numbers tend to be right... unfortunately.
Other people might tell you there is 6% dilution per year... but that is the long term print rate...
Read the above post.. there is a shit load of other new BTS coming into the market that are not counted in thier calculations...for the convenience of the poster...or just cause "they will end in meager 8 mo."
Those alone will be netting 100 mil or 160 mil new BTS.

PS
and do not get me started on trading volume... you think more than 3% are actual final buys/sells?
I can show you trading volume of 10x the market cap of a coin...or (if you really pay me)  I can show you I day where I traded 75 BTC and started and ended with a position of ~ 0.5-1.0 BTC worth of that coin.

[tarantulaz]

There is no d word... dilution is misnomer for btc and BTS...Let's assume I believe this (just because there is cap), and everyone else should/ is as well.

BUT

There are 23,000,000 new BTS entering into circulation each month.

23 Mil BTS needed to be absorbed by new money entering the system just so the price stays the same...

Do you think that on average 90,000 K USD are entering/buying into BTS every month right now?

 

Wait what? I think some of these numbers are wrong or I didn't get what you actually meant. First of all, if 23,000,000 new BTS entered into circulation each month the funds would be depleted in 5 years, with an inflation ~10% per year.

https://bitshares.org/technology/stakeholder-approved-project-funding/ This is the max we can use, please link me to another source if that's wrong.

You've got to understand @tonyk , that by increasing the liquidity or incentivising people to hold bts, you are going to earn a lot more. Offering a 2.5% a year, for people to hold BTS is nothing. How many people are going to lock their funds or trade? 30% of the users? 50%? then you have 1.25% of actual inflation (dilution). This way you destroy the sell wall. Even one whale a month. Just one, that would hold their funds, would buy those 50k$ worth of shares.

And again, 90k$ a month (which is the wrong number), is nothing compared to the average trading volume which is more than 90k$.

I've followed NXT, I've followed Dash, I've followed NuBits, I own some too. But this community superior in every fucking sense. People are working on projects, expecting to be paid after they completed the work and you don't want to pay them? There are so many good things that can be done and you are rejecting these ideas. So BM is a moron and retard that is offering some feautures for free.

Let's say that BM isn't doing anything for free, that's why he got CNX formed etc etc. If BM didn't expect his shares price to rise by implementing that liquidity model, would he do it that for free? Do you think that CNX and those people own no shares? Or the people who are in this community? Please see the bigger picture and don't get stuck with some potential initial loses.

[chryspano]

There are 23,000,000 new BTS entering into circulation each month.

23 Mil BTS needed to be absorbed by new money entering the system just so the price stays the same...

There is BTS coming out of the reserve pool and there is BTS going into it.

How much markets need to absord depends on how much is going back to the reserve pool. This depends on how much we have paying customers. The whole point of the DAC as a company is to get so much paying customers that we can collect more fees than there is BTS coming out from reserve pool.

Also you have to remember that most of the developers probably see BTS as longterm investment and don't sell all of their salary immediately but only as much as they really need to.

The real "problem" is not the development funds but the merger(21M bts/ month that ends once and for all in 8 months) thats why I find irational the  Chinese trying to stop ALL the workers at this point, because they starve they choose to eat their legs instead of spending energy for hunting.

[tonyk]

There are 23,000,000 new BTS entering into circulation each month.

23 Mil BTS needed to be absorbed by new money entering the system just so the price stays the same...

How much markets need to absord depends on how much is going back to the reserve pool. This depends on how much we have paying There is BTS coming out of the reserve pool and there is BTS going into it.

customers. The whole point of the DAC as a company is to get so much paying customers that we can collect more fees than there is BTS coming out from reserve pool.

Also you have to remember that most of the developers probably see BTS as longterm investment and don't sell all of their salary immediately but only as much as they really need to.

actually this statement is wrong on many levels!

>>>There is BTS coming out of the reserve pool and there is BTS going into it.

How much markets need to absord depends on how much is going back to the reserve pool.

Not true...same amount goes out no matter how much goes back in....that is to say, among other things.... my numbers above are correct!!!
[even If for the sake of argument, we assume the fees paid go out of the amount needed to be absorbed by the market...the number of fees paid is negligible; what 1%-5% of new money coming in?]

Also you have to remember that most of the developers probably see BTS as longterm investment and don't sell all of their salary immediately but only as much as they really need to.

This is not true, as a fact. And neither it should be.[devs are not, and have never promised to be long term investors]
Devs need all the money they are paid...actually on average more than that, as some are also paying business space, legal and other fees/expenses. So they on average sell more than the number mentioned above [this is besides the scope of this discussion though; unavoidable evel non of us can do anything about,imho]

[Samupaha]

There are 23,000,000 new BTS entering into circulation each month.

23 Mil BTS needed to be absorbed by new money entering the system just so the price stays the same...

There is BTS coming out of the reserve pool and there is BTS going into it.

How much markets need to absord depends on how much is going back to the reserve pool. This depends on how much we have paying customers. The whole point of the DAC as a company is to get so much paying customers that we can collect more fees than there is BTS coming out from reserve pool.

Also you have to remember that most of the developers probably see BTS as longterm investment and don't sell all of their salary immediately but only as much as they really need to.

[tonyk]

There is no d word... dilution is misnomer for btc and BTS...Let's assume I believe this (just because there is cap), and everyone else should/ is as well.

BUT

There are 23,000,000 new BTS entering into circulation each month.

23 Mil BTS needed to be absorbed by new money entering the system just so the price stays the same...

Do you think that on average 90,000 K USD are entering/buying into BTS every month right now?

 

[tbone]

@tarantulaz: I agree with what you're saying.  Please see my post on another thread discussing some measures to bootstrap key markets, with a bit of a bias toward BitUSD pairs. 

https://bitsharestalk.org/index.php/topic,21581.msg281219.html#msg281219

[Akado]

Yes, I think if we had a table with current dilution rate, maximum dilution rate, max share cap, people could have a better and more unbiased understanding of this situation.

[tarantulaz]

Hello everyone!

For quite some time now I wanted to give my opinion these hot topics. There are various altcoins out there and we can learn from them, but also have more confidence in our powers and superiority.

Most people would agree that liquidity is key, and dilution would have limited downsides (if any) compared to upsides. I have to confess that I hate the term dilution. Everytime I hear this term, I think of about an insolvent company that is creating many shares. What many people don't understand is that the dilution we are talking about is miniscule and will happen over a period of time. I am not an expert and correct me if I am wrong, but not many companies create shares every day like Bitshares.

I was once reading a thread on which people were talking about diluting bitshares by more than 10% and I admittedly got scared because I didn't know how the reserve pool worked. There is a ~6% cap per year, which even if all the funds were used for different purposes, it would have little to no impact. So the main thing that we should talk about isn't about how to change the 6% to a higher number or how to use as much of it as possible, but how to slowly start funding more and more projects and keep the inflation low so that it doesn't scare investors (as that would require more and more dilution, with less 'money' in return), but not too low that developement is staying behind.

Now on our competitors :

Dash : the block rewards are split in the following way - 45% miners, 45% Masternodes ( ~15-16% APR per masternode) and 10% to projects that get voted (one superblock every month). Dash's current inflation is ~13%. First of all we can change that 10% to whatever suits us, with a maximum cap. As the price of Dash changes through time and there are projects voted before and after pumps, that is highly problematic, as people have to wait for a month, until they get their share from the Super Block. That means that some people get more money than they should and others less. Then an external fund is needed to tackle these issues, which isn't ideal. Also, most of that 10% of the rewards that were 'collected' over a month are dumped immediately so that the people don't 'lose' money. Finally, their inflation is a lot higher than our dilution and they are still doing fine. They have 3500 masternodes or more. That means 3.500.000 are sitting just to provide instant transaction and privacy.

Bitcoin : Well, not much to say about bitcoin. My only point is that bitcoins inflation is higher that what people think, as many coins have been lost etc etc. The current bitcoin inflation is ~8% and if we consider 1/4 of the bitcoins being lost etc, then that goes up to 10%. 10% just for security.
http://www.coinbuzz.com/2015/03/31/23-bitcoins-mined-13-may-lost/
https://www.cryptocoinsnews.com/thousands-bitcoins-lost-time/
http://www.ofnumbers.com/2014/11/22/approximately-70-of-all-bitcoins-have-not-moved-in-6-or-more-months/#comment-3483271

NuShares : As someone mentioned on an other thread, NuShares look more like a ponzi. The can create money out of thin air, without any restrictions from the protocol. We should definitely discard the idea of having limitless access to the reserve pool. However, they have some other really good ideas like parking rates for NuBits (something like bonds, which is a way to prevent people from selling all their coins in periods of market crisis, i.e everyone selling NuBits). They also have share buybacks (they have bought more than 200.000$ worth of NuShares, using Bitcoin which they got by selling NuBits). That is a good concept and we could use in the future for assets or even buying BitShares with BitAssets. Also they focused only on one currency, the USD. I see there is a lot of need for CNY markets (BTC38 usually holding 3 times or more Bitshares than Poloniex) , however the USD is a much stronger currency and i would suggest to avoid CNY for the sake of stability. It would be great to see everyone using the BitUSD and BitBTC especially when it comes to Blocktrades, Metaexchange and Openledger to achieve higher liquidity.

I will be happy to see any solution implemented that community will agree on to. Every liquidity solution will have pros and cons, but there is no way that Bitshares will be harmed by it.