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

[Empirical1.2]

By "dilution" do you mean to alter the hard cap of 3.7B BTS, or fund yield from the reserve pool? [/b][/center]

I think it's a big mistake to not be clear on that point, and from what I've seen from various threads and my own reading of the OP of THIS thread I don't think the answer is well known.

Apologies if I wasn't clear, yeah I was suggesting using a worker proposal for 6 months that would NOT alter the hard cap but would use a portion of the current maximum 5BTS/sec rate.

On the subject of liquidity, I don't think liquidity is all that is required to bootstrap BitUSD when you look at exchange based crypto USD products, providing some liquidity, mostly only creates temporary crypto demand.

Personally I mostly look to use those USD products as a hedge when BTC is trending downwards. I think many people approach them the same way.  So demand for BitUSD if you only provided liquidity may be temporary and transient beyond a certain point. It also may be easier for people to use existing exchange based options for those short periods than BitUSD on the DEX.

By providing an incentive to hold BitUSD you are creating new demand for BitUSD in all market conditions. So people would have buy orders on the books regardless of the BTC/crypto general trending direction. (If you put some of the yield to the short side, which is an optional variation in the OP, suggested by tonyk, yield harvesting would remain the same but you would also create new shorting demand.) This would increase liquidity by increasing demand and do so in all market conditions.

Also similar to when you have an interest bearing savings account at a bank, even though you are sitting on a lot of it, you may still use it to make and receive payments as well as buy various products and services. This would be getting people to start using BitUSD in the same way. When businesses see thousands of potential customers with lots of price stable BitUSD in their account they can buy anything with in a few seconds then they will be attracted by that potential market and utility will increase.

A good example of this is BTC. a 2014 study showed that >70% of all BTC had not moved for >6 months.
http://www.ofnumbers.com/2014/11/22/approximately-70-of-all-bitcoins-have-not-moved-in-6-or-more-months/

So the majority of BTC was being hoarded and sat on but yet over 100 000 merchants were attracted to that large potential market and offered products and services in exchange for BTC which increased BTC utility thereby liquidity. So a combination of liquidity and holding incentives may be best suited to bootstrapping a BitUSD/SmartCoin economy imo.

[tbone]

I like both ideas (liquidity and yield), however liquidity is the one that has to come first. We can't experiment as much at the moment. We are even struggling to pay workers.

In the case of the assets, liquidity will stay in the BitAssets if we incentivise people to hold them. However, nothing flows to other assets like Obits. We need liquidity there too. Once people get on the DEX, the volume won't stay only on BitAssets because they have incentives. People will also check out other opportunities and help the asset exchange grow.

In this case, yield gets us liquidity, in more ways than one.  And perhaps more cheaply and easily.  You say we want to get people on the DEX, well that's what this does.  If we also add market making operations to the mix - which this proposal can facilitate via a liquidity pool (separate proposal) - then people can trade while here. 

By the way, we are only struggling to pay workers to the extent that we're letting uneducated, anti "dilution" obstructionists prevent us from doing the work necessary to bootstrap our offering.  Many of these people have very little stake, and may even be plants.  I'll be damned if I'm going to idly by and let that happen.  The system was designed such that funds would be available to do what is necessary.  The question is not whether the funds should be used i.e. whether work should be done.  We KNOW work needs to be done.  So the logical, sensible debate at this stage can only about specifically what work will help us the most.  This proposal has substantial benefits.  It's the best I've seen to achieve what we need most right now.  Actually, we need it YESTERDAY.  This whole thing is slipping through our fingers, people.  Wake up.

[Thom]

Anyone that just mentions alteration to the hard cap of 3.7B bts should be shot on sight!  EDIT==> You and me included!

Questions, especially those asking for clarification, should always be welcome and not ostracized. Whenever the term "Dilution" is used it triggers this reaction. That's why I called for the OP to be revised to be VERY CLEAR about this.

I'm no financial wizard, but that is easy even for me to answer: yield encourages people to buy and HOLD, which is the very opposite of liquidity, which is NOT holding but rather trading.

While I'm commenting, lets get one thing straight for the record. I also think you should amend the OP based on the answer to this:

By "dilution" do you mean to alter the hard cap of 3.7B BTS, or fund yield from the reserve pool?

I think it's a big mistake to not be clear on that point, and from what I've seen from various threads and my own reading of the OP of THIS thread I don't think the answer is well known.

The OP is not mine.  But no, @Empirical1.2 is absolutely NOT talking about altering the 3.7B cap.  He is talking about funding the proposal out of the reserve pool. 

As for yield decentivizing liquidity, I think you are oversimplifying and overgeneralizing it.  Think about it.  If I have a bunch of BTS sitting on an exchange, even a small yield would entice me to move my BTS to the DEX and harvest that yield.  Now my BTS goes into my own Bitshares account and out of circulation, which is a good thing on multiple levels.

Perhaps it is a simple view, and I have thought about it. You said it, "out of circulation". Your assumption that people will opt to invest a significant portion of the BitUSD elsewhere to stimulate liquidity is not certain. They may prefer to maximize yield and not split it up as you think may happen.

As far as the BitUSD I now hold, of course I'm not going to go and spend a large % of it...just like I wasn't going to spend a large % of the BTS I was holding on the exchange. 

Why do you assume that those who hold BTS on an exchange aren't going to spend much of it? Perhaps that's WHY it's on an exchange in the first place!

But I WILL spend some of it if there are places for me to spend it (thanks @kenCode!), and 2%, 3% or even 10% yield will not stop me from doing so.  As for the rest of the BitUSD I hold (or at least a good chunk of it) I would be eager to earn additional return by putting it into a liquidity pool, which of course will add major liquidity and tighten the peg.  So I think this idea that that yield will decentivie liquidity has no merit here.  But maybe @Empirical1.2 or someone else can explain it better than I can.

Thanks tbone for your reply to my concerns & "simplistic" view, but I am still not convinced. There appear to be several assumptions in your analysis I think need to be addressed. You may be right, but I'm not seeing the hard evidence to convince me.

[tarantulaz]

I like both ideas (liquidity and yield), however liquidity is the one that has to come first. We can't experiment as much at the moment. We are even struggling to pay workers.

In the case of the assets, liquidity will stay in the BitAssets if we incentivise people to hold them. However, nothing flows to other assets like Obits. We need liquidity there too. Once people get on the DEX, the volume won't stay only on BitAssets because they have incentives. People will also check out other opportunities and help the asset exchange grow.

[Pheonike]

You can't test that on a test net or with a test asset.

Not sure about test net, but you definitely can test it on test asset. If it outcompetes bitUSD, go ahead and apply same rules to all other assets.

Edit: In fact, you can do this experiment without asking nobody. Create you private asset, peg it to usd, pay holders yield out of your pocket, and see if it works as you expect.

Imagine a bank wanting to offer its shareholders an incentive to open accounts with them.  Would they create test accounts to see if shareholders will open them?  No, they will set a budget and a time frame, offer the incentive, and see if the shareholders will open real accounts.  If it works, they may continue it and even ratchet it up.  If not, they will discontinue it and perhaps try something else. 

The kind of testing you're talking about would be fine to test any modifications to the mechanics of the backend system and the GUI before putting it into production.  But you don't test behavior like that.

You are not a bank, and you don't manage accounts. If you want to play with different derivatives, create your own and play with it.

We need a sign on the the top of the forum that states that. People think we are talking total supply and we are not.

[tbone]

You can't test that on a test net or with a test asset.

Not sure about test net, but you definitely can test it on test asset. If it outcompetes bitUSD, go ahead and apply same rules to all other assets.

Edit: In fact, you can do this experiment without asking nobody. Create you private asset, peg it to usd, pay holders yield out of your pocket, and see if it works as you expect.

Imagine a bank wanting to offer its shareholders an incentive to open accounts with them.  Would they create test accounts to see if shareholders will open them?  No, they will set a budget and a time frame, offer the incentive, and see if the shareholders will open real accounts.  If it works, they may continue it and even ratchet it up.  If not, they will discontinue it and perhaps try something else. 

The kind of testing you're talking about would be fine to test any modifications to the mechanics of the backend system and the GUI before putting it into production.  But you don't test behavior like that.

You are not a bank, and you don't manage accounts. If you want to play with different derivatives, create your own and play with it.

The bank metaphor was just that.  If you want to create a straw man argument rather than educating yourself and making an actual valid point, you're free to that but you will get called on it. 

[tbone]

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?

Your argument against this extremely beneficial and timely proposal hinges on this statement.  So please explain how offering a small yield will decentivize liquidity.  Thanks.

I'm no financial wizard, but that is easy even for me to answer: yield encourages people to buy and HOLD, which is the very opposite of liquidity, which is NOT holding but rather trading.

While I'm commenting, lets get one thing straight for the record. I also think you should amend the OP based on the answer to this:

By "dilution" do you mean to alter the hard cap of 3.7B BTS, or fund yield from the reserve pool?

I think it's a big mistake to not be clear on that point, and from what I've seen from various threads and my own reading of the OP of THIS thread I don't think the answer is well known.

The OP is not mine.  But no, @Empirical1.2 is absolutely NOT talking about altering the 3.7B cap.  He is talking about funding the proposal out of the reserve pool. 

As for yield decentivizing liquidity, I think you are oversimplifying and overgeneralizing it.  Think about it.  If I have a bunch of BTS sitting on an exchange, even a small yield would entice me to move my BTS to the DEX and harvest that yield.  Now my BTS goes into my own Bitshares account and out of circulation, which is a good thing on multiple levels.  As far as the BitUSD I now hold, of course I'm not going to go and spend a large % of it...just like I wasn't going to spend a large % of the BTS I was holding on the exchange.  But I WILL spend some of it if there are places for me to spend it (thanks @kenCode!), and 2%, 3% or even 10% yield will not stop me from doing so.  As for the rest of the BitUSD I hold (or at least a good chunk of it) I would be eager to earn additional return by putting it into a liquidity pool, which of course will add major liquidity and tighten the peg.  So I think this idea that that yield will decentivie liquidity has no merit here.  But maybe @Empirical1.2 or someone else can explain it better than I can.

[yvv]

You can't test that on a test net or with a test asset.

Not sure about test net, but you definitely can test it on test asset. If it outcompetes bitUSD, go ahead and apply same rules to all other assets.

Edit: In fact, you can do this experiment without asking nobody. Create you private asset, peg it to usd, pay holders yield out of your pocket, and see if it works as you expect.

Imagine a bank wanting to offer its shareholders an incentive to open accounts with them.  Would they create test accounts to see if shareholders will open them?  No, they will set a budget and a time frame, offer the incentive, and see if the shareholders will open real accounts.  If it works, they may continue it and even ratchet it up.  If not, they will discontinue it and perhaps try something else. 

The kind of testing you're talking about would be fine to test any modifications to the mechanics of the backend system and the GUI before putting it into production.  But you don't test behavior like that.

You are not a bank, and you don't manage accounts. If you want to play with different derivatives, create your own and play with it.

[chryspano]

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?

Your argument against this extremely beneficial and timely proposal hinges on this statement.  So please explain how offering a small yield will decentivize liquidity.  Thanks.

I'm no financial wizard, but that is easy even for me to answer: yield encourages people to buy and HOLD, which is the very opposite of liquidity, which is NOT holding but rather trading.

While I'm commenting, lets get one thing straight for the record. I also think you should amend the OP based on the answer to this:

By "dilution" do you mean to alter the hard cap of 3.7B BTS, or fund yield from the reserve pool?

I think it's a big mistake to not be clear on that point, and from what I've seen from various threads and my own reading of the OP of THIS thread I don't think the answer is well known.

Anyone that just mentions alteration to the hard cap of 3.7B bts should be shot on sight!  EDIT==> You and me included!

[Thom]

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?

Your argument against this extremely beneficial and timely proposal hinges on this statement.  So please explain how offering a small yield will decentivize liquidity.  Thanks.

I'm no financial wizard, but that is easy even for me to answer: yield encourages people to buy and HOLD, which is the very opposite of liquidity, which is NOT holding but rather trading.

While I'm commenting, lets get one thing straight for the record. I also think you should amend the OP based on the answer to this:

By "dilution" do you mean to alter the hard cap of 3.7B BTS, or fund yield from the reserve pool?

I think it's a big mistake to not be clear on that point, and from what I've seen from various threads and my own reading of the OP of THIS thread I don't think the answer is well known.

[tbone]

You can't test that on a test net or with a test asset.

Not sure about test net, but you definitely can test it on test asset. If it outcompetes bitUSD, go ahead and apply same rules to all other assets.

Edit: In fact, you can do this experiment without asking nobody. Create you private asset, peg it to usd, pay holders yield out of your pocket, and see if it works as you expect.

Imagine a bank wanting to offer its shareholders an incentive to open accounts with them.  Would they create test accounts to see if shareholders will open them?  No, they will set a budget and a time frame, offer the incentive, and see if the shareholders will open real accounts.  If it works, they may continue it and even ratchet it up.  If not, they will discontinue it and perhaps try something else. 

The kind of testing you're talking about would be fine to test any modifications to the mechanics of the backend system and the GUI before putting it into production.  But you don't test behavior like that. 

[yvv]

You can't test that on a test net or with a test asset.

Not sure about test net, but you definitely can test it on test asset. If it outcompetes bitUSD, go ahead and apply same rules to all other assets.

Edit: In fact, you can do this experiment without asking nobody. Create you private asset, peg it to usd, pay holders yield out of your pocket, and see if it works as you expect.

 

[tbone]

Don't experiment on bitUSD. Create testAsset or use testnet for such experiments.

We're talking about providing an incentive for people to do something we want them to do.  You can't test that on a test net or with a test asset.  You have to try it out and see if it works.  Either it will or it won't.  If it doesn't, you discontinue it and try something else. 

C'mon people, does anyone have an actual, logical, reasonable argument against this extremely beneficial proposal??  The closest thing so far is abit's blanket statement that "yield decentivizes liquidity".  I seriously doubt that would be the case.  If abit cannot offer a reasonable explanation, then there is still no valid argument against this proposal and anyone blocking it should realize their obstructionism is harming Bitshares.

[tbone]

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?

Your argument against this extremely beneficial and timely proposal hinges on this statement.  So please explain how offering a small yield will decentivize liquidity.  Thanks.

[yvv]

Don't experiment on bitUSD. Create testAsset or use testnet for such experiments.