Would you support 2% dilution to BitAsset Yield for a 6 month limited trial?

[BunkerChainLabs-DataSecurityNode]

no enough  active  users
no real  liquidity！！！！！！！！！！！

OK... then get to work and send them here quick for free and stop the madness ！！！！！！！！！！！

[cylonmaker2053]

Yield decentivizes liquidity. So if we have yield, we need more incentives on liquidity. Do we have enough fund from the reserve pool to support both?

yield works through two channels: on the one hand, it provides incentive to simply sit on the yielding asset, which can decrease liquidity; the second channel is that yield increases demand for the asset in the first place, increasing liquidity. How these two forces play out isn't completely obvious. for our scarcely traded markets, the first force may dominate; for fully functioning, highly traded markets with lots of different types of participants, yield should unambiguously boost liquidity. going the former type of market to the latter isn't easy, but i firmly believe some sort of yield-producing assets are critical to pull in more market participants.

[sudo]

no enough  active  users
no real  liquidity！！！！！！！！！！！

[Empirical1.2]

I gave it a second thought and I am pro liquidity at the moment. Only liquidity. I am on abit's side.

I would agree with the yield, only in periods of crisis i.e big swings in currency markets and BTS. For example, NuShares holders can create park rates depending on market conditions (if any needed). Park rates = interest rates, where funds get locked for a certain period and the user can't use them. When it comes to interest rates, all we need is to have the delegates able to vote for specific interest rates, like the FED. Having fixed rates and people distributing the yield isn't good at all.

People that keep saying that dilution for the sake of BitAssets is bad, should think again. We keep refering to BitShares as Shares, but we don't actually have a viable product. So what is the point? As I said in my previous reply to this thread only one 1% is needed to achieve a 5%+ for BitAssets.

NuShares need to offer parking rates in big swings because NBT are not properly backed so if there was a lot of selling pressure the peg would break, BitUSD is fully collateralized in all but black swan conditions so luckily this is not an issue for us. If we were to offer yield it would be for the benefits listed in the OP but for a fairly circular/neutral cost.

It's fine that you are more in favour of liquidity though, provided it is not too expensive that should also be a big benefit and increase the appeal of BitAssets. 

[tarantulaz]

I gave it a second thought and I am pro liquidity at the moment. Only liquidity. I am on abit's side.

I would agree with the yield, only in periods of crisis i.e big swings in currency markets and BTS. For example, NuShares holders can create park rates depending on market conditions (if any needed). Park rates = interest rates, where funds get locked for a certain period and the user can't use them. When it comes to interest rates, all we need is to have the delegates able to vote for specific interest rates, like the FED. Having fixed rates and people distributing the yield isn't good at all.

People that keep saying that dilution for the sake of BitAssets is bad, should think again. We keep refering to BitShares as Shares, but we don't actually have a viable product. So what is the point? As I said in my previous reply to this thread only one 1% is needed to achieve a 5%+ for BitAssets.

[Empirical1.2]

Yield decentivizes liquidity. So if we have yield, we need more incentives on liquidity. Do we have enough fund from the reserve pool to support both?

In our case it may make liquidity cheaper.

The current liquidity proposal is suggesting spending about $1000 a day on liquidity https://bitsharestalk.org/index.php/topic,21544.0.html

Assuming we implement this feature in the BTS / USD market and voters approve workers funding this at a rate of 2.5 BTS / sec (50% of allowed dilution) and the internal exchange had $100,000 of daily volume then users trading on the internal exchange would see a 1% more than they would get by trading off chain. If daily volume was $50,000 then they would see a 2% profit over doing the same trades off-chain.

Your quoted text is either outdated or just an assumption/proposal. Final numbers would be decided by the committee (read: stake holders) at last. As a result, it's nonsense to compare the proposed cost between your proposal and the proposal in you link/quoted text. Instead, we need to analyse WHAT cost these proposals really need.

The figures are taken from BM in his introduction to the liquidity proposal which was started 5 days ago. I understand the thread is still in progress which is why I clearly said it is a 'proposal' in which the OP is 'suggesting' that amount.

If BM has since updated that original suggestion amount I was unaware of it.

However once we have incentivized the creation of millions of BitUSD with yield we may be able to incentivize that BitUSD to take part in liquidity operations very cheaply...

In fact we may be able to get BitUSD trading in close to a 1% spread around the peg with $100 000 of liquidity a day for < $200.

MAY be able to? Just assumption, or any evidence and/or logical reasoning?

While we're incentivizing liquidity, there will be more bitUSD created to support the liquidity. But if we incentivize creation of bitUSD only, it's not sure that we'll get more liquidity, it's my logic.

The evidence and logical reasoning was based on the fact that NBT appears to be able to achieve that spread and that level of liquidity for those costs.

While the current proposal (which I understand isn't final and is still being evaluated and tweaked) seemed to be targeting wider spreads and higher costs.

Also given that there is only $98 000 BitUSD at the moment, it would seem that a liquidity incentive would have to pay people enough to both create some new BitUSD and use it in liquidity operations. So I thought that if yield had already incentivized the creation of lots of new BitUSD then the next step of incentivizing just liquidity would be cheaper by comparison. I don't know if this is true but that was part of my reasoning.

There may be something I've misunderstood but if you have NuBits you can earn circa 0.25% per day participating in their liquidity pools.

The NuBits liquidity you see on Poloniex is achieved for an avg. of $100 a day https://nupool.net/index.php/Current_rates
The liquidity you see on Bittrex is achieved for an avg. of $25 a day https://nupool.net/index.php/Current_rates
The liquidity you see on bter (NBT/CNY and NBT/BTC) is achieved for an avg. of $40 a day http://nupond.net/
The liquidity you see on CCDEK is achieved for an avg. of $30 a day http://cybnate.github.io/index-liquidbits.html

I don't want to speak much about NBT. True it has more liquidity right now. But IMO they act like a ponzi schema so we can't just copy their ways to provide liquidity.

I need someone to look at it more detail but as far as I can tell even though the way NBT are created is questionable, the way they provide buy and sell walls seems fairly straight-forward and can be replicated whether your USD was created the way NBT is or how BitUSD is but as I said someone more knowledgeable than me would have to evaluate it.
 

[abit]

Yield decentivizes liquidity. So if we have yield, we need more incentives on liquidity. Do we have enough fund from the reserve pool to support both?

In our case it may make liquidity cheaper.

The current liquidity proposal is suggesting spending about $1000 a day on liquidity https://bitsharestalk.org/index.php/topic,21544.0.html

Assuming we implement this feature in the BTS / USD market and voters approve workers funding this at a rate of 2.5 BTS / sec (50% of allowed dilution) and the internal exchange had $100,000 of daily volume then users trading on the internal exchange would see a 1% more than they would get by trading off chain. If daily volume was $50,000 then they would see a 2% profit over doing the same trades off-chain.

Your quoted text is either outdated or just an assumption/proposal. Final numbers would be decided by the committee (read: stake holders) at last. As a result, it's nonsense to compare the proposed cost between your proposal and the proposal in you link/quoted text. Instead, we need to analyse WHAT cost these proposals really need.

However once we have incentivized the creation of millions of BitUSD with yield we may be able to incentivize that BitUSD to take part in liquidity operations very cheaply...

In fact we may be able to get BitUSD trading in close to a 1% spread around the peg with $100 000 of liquidity a day for < $200.

MAY be able to? Just assumption, or any evidence and/or logical reasoning?

While we're incentivizing liquidity, there will be more bitUSD created to support the liquidity. But if we incentivize creation of bitUSD only, it's not sure that we'll get more liquidity, it's my logic.

There may be something I've misunderstood but if you have NuBits you can earn circa 0.25% per day participating in their liquidity pools.

The NuBits liquidity you see on Poloniex is achieved for an avg. of $100 a day https://nupool.net/index.php/Current_rates
The liquidity you see on Bittrex is achieved for an avg. of $25 a day https://nupool.net/index.php/Current_rates
The liquidity you see on bter (NBT/CNY and NBT/BTC) is achieved for an avg. of $40 a day http://nupond.net/
The liquidity you see on CCDEK is achieved for an avg. of $30 a day http://cybnate.github.io/index-liquidbits.html

I don't want to speak much about NBT. True it has more liquidity right now. But IMO they act like a ponzi schema so we can't just copy their ways to provide liquidity.

This would be great as we would be the market leader with millions of USD, thousands of holders and lots of liquidity for less than the current liquidity proposal is suggesting using just for liquidity.

More importantly the money wouldn't just be going to professional market makers but mostly back to shareholders through yield harvesting and the little we spent on liquidity would go back to shareholders who wanted to participate in the liquidity pool.

[Empirical1.2]

Yield decentivizes liquidity. So if we have yield, we need more incentives on liquidity. Do we have enough fund from the reserve pool to support both?

In our case it may make liquidity cheaper.

The current liquidity proposal is suggesting spending about $1000 a day on liquidity https://bitsharestalk.org/index.php/topic,21544.0.html

Assuming we implement this feature in the BTS / USD market and voters approve workers funding this at a rate of 2.5 BTS / sec (50% of allowed dilution) and the internal exchange had $100,000 of daily volume then users trading on the internal exchange would see a 1% more than they would get by trading off chain. If daily volume was $50,000 then they would see a 2% profit over doing the same trades off-chain.

However once we have incentivized the creation of millions of BitUSD with yield we may be able to incentivize that BitUSD to take part in liquidity operations very cheaply...

In fact we may be able to get BitUSD trading in close to a 1% spread probably slightly above the peg with $100 000 of liquidity a day for < $200.

There may be something I've misunderstood but if you have NuBits you can earn circa 0.25% per day participating in their liquidity pools.

The NuBits liquidity you see on Poloniex is achieved for an avg. of $100 a day https://nupool.net/index.php/Current_rates
The liquidity you see on Bittrex is achieved for an avg. of $25 a day https://nupool.net/index.php/Current_rates
The liquidity you see on bter (NBT/CNY and NBT/BTC) is achieved for an avg. of $40 a day http://nupond.net/
The liquidity you see on CCDEK is achieved for an avg. of $30 a day http://cybnate.github.io/index-liquidbits.html

This would be great as we would be the market leader with millions of USD, thousands of holders and lots of liquidity for less than the current liquidity proposal is suggesting using just for liquidity.

More importantly the money wouldn't just be going to professional market makers but mostly back to shareholders through yield harvesting and the little we spent on liquidity would go back to shareholders who wanted to participate in the liquidity pool.

[abit]

Yield decentivizes liquidity. So if we have yield, we need more incentives on liquidity. Do we have enough fund from the reserve pool to support both?

[tbone]

Whether we call it dilution or not, the reserve pool was created to be used and it would be foolish not to use it for something critical like this.

[Empirical1.2]

I'm not sure I understand. Are you saying if I create bitusd and keep it I will get a 1% yeild on it?

i'd also like to know this answer, though it looks like the proposal is something like a 4% yield for borrowing bitUSD short?
What exactly do we mean by dilution anyway? I thought the blockchain specks set BTS supply up front and that can't be changed? I'm uncomfortable with thinking that anyone can vote on changing the supply. Why not recycle fees from the USD-BTS market into some sort of yield instead of diluting?

BTS shareholders can currently vote for dilution up to 5BTS/sec under the current specs  https://bitshares.org/technology/stakeholder-approved-project-funding/

I'm personally against most forms of dilution however this one wouldn't effect me or you if you 'yield harvest', go long BitUSD with half your stake and short BitUSD with the other half. The yield you received on your BitUSD half would be equal too or overcompensate you for the amount BTS was being diluted. However the benefits of incentivizing all of us to remove our BTS from the centralized exchanges and become holders of BitUSD and use the DEX are very large as described in the OP. 

I'd really really really like to people stop talking about dilution. If I understand your proposal right, you essentially mean that there would be a worker that distributes BTS for bitUSD-owners.

So the question isn't that should we dilute or not dilute, because we have 5 BTS/s to be used for workers anyway. The real question is about prioritizing. Is this proposal good when compared to other worker proposals? Is this really a profitable way of using development funds (aka reserve pool)?

Yip, it's a worker that distributes BTS for BitUSD owners which BTS owners can mitigate via yield harvesting.

I appreciate your POV, however personally I refer to any expansion of the current supply as dilution. (While you can argue the current supply includes the reserve pool, it's the act of bringing that supply to market which dilutes shareholders today in practical terms & often much more than the headline figure due to fairly thin speculative demand supporting current price levels.)

I agree though the question is whether it will increase revenue/profit/users/BTS demand enough to justify the cost and hopefully I've made a strong enough case in this thread why that will be the case. (Like many POS minting type rewards the majority of the cost is fairly neutral/circular and goes back to existing shareholders so is unlikely to create large sell pressure, while at the same time increasing new demand for BitUSD which creates net new demand for BTS as well as removing BTS from centralized exchanges, making BitUSD the market leader by CAP and holders and possibly making BitAsset liquidity operations cheaper, which should all be valuation positive for BTS.)

[tbone]

If a bank had 10 million shares and then they created 200 000 shares but gave it back to shareholders who opened an account at the bank then every shareholder who opened a bank account would have at least 1.02 per 1 share and only people who didn't open an account would lose. However the bank would have turned all their shareholders into account holders.

This is an excellent analogy and really helps demonstrate the basic mechanics of your proposal.  Like the bank shareholders in your example, all BTS holders have to do is move their BTS to the DEX and short BitAssets to themselves, and there will be zero cost to them. 

By the way, you mentioned the only people that "lose" are the bank shareholders that don't open an account, or in our case the BTS holders that don't participate in yield harvesting.  Although I would argue that it could easily be a net wash (or better) for them since this whole effort will ultimately add value to the entire network, which would accrue to all shareholders, even those with BTS on the exchanges.  Of course, they just wouldn't benefit as much as those who are yield harvesting.

The more I think about this idea, the more I like it.  And so far no one has poked any holes in it as far as I've seen.  I also love that this would position us to have a voluntary liquidity pool, which I assume could be plugged into the market maker rewards program being discussed on another thread.  In that case, I imagine such a liquidity pool could be used to provide liquidity not just for BitAssets, but for ANY asset.  Just imagine what it would mean to have such market making operations in terms of supporting/bootstrapping markets for promising new coins that aren't trading elsewhere.  The most recent one was Decred, which still isn't trading on Poloniex.  That could have been a good opportunity for us to gain attention and users, and may actually still be.  Also, there is another very promising ICO coming up and just imagine what it would mean if we could become the dominant exchange for that coin?

C'mon people, let's get behind this proposal.  It's low cost and we stand to bootstrap the heck out of our BitAssets product.  That alone will gain us a lot of attention.  But more importantly, it is INCREDIBLY crucial to jump start BitAssets ASAP, especially considering @kenCode's POS system will soon be ready and we should be in position to use that as a very powerful network effect generator.  Without bootstrapping BitAssets, we totally lose out on that and much more, and in that case we might as well just give up.  Seriously.     

So what are we waiting for? 

[Samupaha]

I'm not sure I understand. Are you saying if I create bitusd and keep it I will get a 1% yeild on it?

i'd also like to know this answer, though it looks like the proposal is something like a 4% yield for borrowing bitUSD short?
What exactly do we mean by dilution anyway? I thought the blockchain specks set BTS supply up front and that can't be changed? I'm uncomfortable with thinking that anyone can vote on changing the supply. Why not recycle fees from the USD-BTS market into some sort of yield instead of diluting?

BTS shareholders can currently vote for dilution up to 5BTS/sec under the current specs  https://bitshares.org/technology/stakeholder-approved-project-funding/

I'm personally against most forms of dilution however this one wouldn't effect me or you if you 'yield harvest', go long BitUSD with half your stake and short BitUSD with the other half. The yield you received on your BitUSD half would be equal too or overcompensate you for the amount BTS was being diluted. However the benefits of incentivizing all of us to remove our BTS from the centralized exchanges and become holders of BitUSD and use the DEX are very large as described in the OP. 

I'd really really really like to people stop talking about dilution. If I understand your proposal right, you essentially mean that there would be a worker that distributes BTS for bitUSD-owners.

So the question isn't that should we dilute or not dilute, because we have 5 BTS/s to be used for workers anyway. The real question is about prioritizing. Is this proposal good when compared to other worker proposals? Is this really a profitable way of using development funds (aka reserve pool)?

[Empirical1.2]

Who exactly is the target of this proposal?

At a high level people with BTS on exchanges want to trade BTS along with other crypto.  One minute they hold BTS, the next something else they think will rise.  A few % may not be enough for them to be motivated to move their bts onto the internal exchange.

What would stop 3rd party exchanges from taking advantage of this?

We claim to be a DEX that is not exposed to a Mt. GOX but with so much BTS on both Poloniex and BTC38 we are very exposed to a hack/default/voting/other of those particular exchanges. So incentivizing BTS off them will be a big positive. (Incentivizing that BTS to then create Smartcoins will be a further positive still.)

Who exactly is the target of this proposal?

- BTS shareholders who keep their BTS on the DEX but don't learn to use it or participate in SmartCoin creation as it's not worth the hassle.
- BTS shareholders who keep too much of their BTS on centralized exchanges as it's not worth the hassle to either move some of it to the DEX or participate in SmartCoin creation. (However yes there are % of crypto-speculators who will still find greater value in keeping most of their BTS on centralized exchanges even though they have an extremely high long term failure rate. In this blog BM lists some of the benefits of rewarding helpful investors over speculators http://bytemaster.github.io/article/2016/01/04/The-Benefits-of-Proof-of-Work/ )
- Potential BitUSD customers who might recognise the benefits of fully collateralized USD on a DEX but need the additional USP of yield to say hell yeah, this is better than NuBits/Uphold or even my regular bank and worth the effort.

What would stop 3rd party exchanges from taking advantage of this?

Nothing. AFAIK DASH offers Masternode rewards, PPC offers minting and other POS alts offer various fairly circular rewards to incentivise network beneficial behaviour but I'm not sure how many exchanges participate in these as it's not part of their business model. If exchanges chose to participate with BTS that couldn't be incentivised to be removed anyway, they would at least be helping to rapidly propel BitUSD to Crypto USD market leader.

Uphold  $2 million
Tether   $1.4 million
Nubits   $0.78 Million
BitUSD  $0.098 Million 

The other thing BTS is trying to do is encourage BitAsset liquidity however incentivising the creation of new BitUSD via a long meeting a short may be harder & more expensive than incentivising some of the millions of BitUSD that will have already been created via this initiative to participate in market making operations. https://bitsharestalk.org/index.php/topic,21547.msg281099.html#msg281099

[Brekyrself]

Who exactly is the target of this proposal?

At a high level people with BTS on exchanges want to trade BTS along with other crypto.  One minute they hold BTS, the next something else they think will rise.  A few % may not be enough for them to be motivated to move their bts onto the internal exchange.

What would stop 3rd party exchanges from taking advantage of this?