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

[cylonmaker2053]

What we need is to create a bond/margin trading market, and then allow people to loan BTS/bitAssets to others for margin trading purposes, like you can do at poloniex.  Then rather than the yield being a theft from one party to another, it is deriving from legitimate use and its rate is set by the free market.  This would increase the value and usefulness and liquidity of BTS and nitAssets, rather than reduce it.

Yes! we need a bond market, and even better if bonds are denominated in Smartcoins, which will boost demand for them. i'm loving 2.0 so far, but the bond market is the big missing item i'd love to see.

i like the idea of a Bitshares Treasury bond, either for just the BTS-USD market, or for others; something issued by the network that pays out some % of fees from that market. A bitUSD bond, for instance, would be denominated in bitUSD and pay out some % of fees generated in that market. As to where the borrowed funds go, that's up for debate. Initially, we might as well just park the bitUSD bonds on the ledger and simply use them as means for distributing fees to lenders. at some point maybe we can think of how to use the funds, likely to pay workers to build or maintain our infrastructure.

We should also have capability for UIB (user issued bonds), like small businesses that float bond offerings as means of raising capital in our markets.

[Empirical1.2]

I think this is a terrible idea that does nothing but steal value from BTS bulls (people who hold BTS), and give it to BTS bears (people who hold bitUSD instead of BTS). 

This will not achieve the goals you want of encouraging bitasset adoption, rather it will reduce the incentive to hold BTS, reduce the value of BTS, take money away from bulls and give it to bears.

You can still maintain your current BTS position by yield harvesting. Being long BitUSD and short BitUSD at the same time.

So it doesn't take any value from BTS holders provided they yield harvest. However this would remove BTS from the centralized exchanges and make most shareholders owners of BitAssets while still maintaining their current overall BTS positons. 

(Provided total BitAssets in circulation < 1/2 of BTS market capitalization, then directing funds to yield can be mitigated by yield harvesting as far as I understand.)

So you are forced to take a bunch of margin positions that are opposite each other in order to avoid having your money stolen from you? 

How is that the free market?    What happens if the price moves a bunch in one direction and one of your positions gets margin called, then it moves back where it started?

Build real utility that makes people want to use bitAssets, rather than introducing a tyrannical rule system that forces them to. 

If you implement this, the people you are trying to force to buy bitAssets will not buy bitAssets, they will sell all their BTS and leave the project.

On the contrary we have already had the opposite problem in practice. When yield was offered in 1.0 BTS holders created a million + USD to generate a very low risk return at the expense of interest paying shorts. 

Under BitShares the BitAsset holders receive a yield simply by holding BitUSD. This yield was between 1% and 5% APR on average. Unfortunately, yield harvesting can happen at any time by someone shorting to themselves to gain a very low risk return and undermining goal of encouraging people to buy and hold BitUSD.

https://bitshares.org/blog/2015/06/08/lessons-learned-from-bitshares-0.x/

So it stands to reason we would see shareholders making the effort to yield harvest for a very low risk return to mitigate the cost if they felt affected by it.

Do you think DASH Masternodes or PPC minting rewards are anti-free market? Most POS alts these days offer various rewards which can be mitigated by holders if they engage in the network positive behaviour the reward is attempting to incentivize.   

Also what's creates the most utility is merchants and third parties offering products and services for BitUSD but it would only be a lucrative market if there were thousands of holders with BitUSD in their accounts they could easily spend anywhere in the world in three seconds which is what this proposal incentivizes. At the current BitUSD CAP of $98 000 & probably less than 200 unique holders few third parties will be interested in offering products and services for BitUSD.

[Ander]

I think this is a terrible idea that does nothing but steal value from BTS bulls (people who hold BTS), and give it to BTS bears (people who hold bitUSD instead of BTS). 

This will not achieve the goals you want of encouraging bitasset adoption, rather it will reduce the incentive to hold BTS, reduce the value of BTS, take money away from bulls and give it to bears.

You can still maintain your current BTS position by yield harvesting. Being long BitUSD and short BitUSD at the same time.

So it doesn't take any value from BTS holders provided they yield harvest. However this would remove BTS from the centralized exchanges and make most shareholders owners of BitAssets while still maintaining their current overall BTS positons. 

(Provided total BitAssets in circulation < 1/2 of BTS market capitalization, then directing funds to yield can be mitigated by yield harvesting as far as I understand.)

So you are forced to take a bunch of margin positions that are opposite each other in order to avoid having your money stolen from you? 

How is that the free market?    What happens if the price moves a bunch in one direction and one of your positions gets margin called, then it moves back where it started?

Build real utility that makes people want to use bitAssets, rather than introducing a tyrannical rule system that forces them to. 

If you implement this, the people you are trying to force to buy bitAssets will not buy bitAssets, they will sell all their BTS and leave the project.

[Pheonike]

Everybody is looking for a sure-thing. But there is no such thing as a sure-thing especially in crypto. The reason why we fail is because we are too scared too fail. That's why we need to try something see if fails then move on to the next thing to try if it does. Instead we try, fail, then sit on our hands pointing fingers instead on focusing on trying the next experiment.

That's the problem with being young, you think you have all the time in world.

[Empirical1.2]

I'm tired of this endless arguments. Nobody can make sure that a not-did thing can be done, or not.

Just create a worker proposal and see WHETHER you can get enough votes.

I'm sorry you are tired of the 'endless arguments'. This poll is only 2 days old... 

While it is only a 6 month trial, the cost is high and there is a lot to consider so it is natural that we should debate, discuss & challenge it. We would also need to ultimately see where BM/others weigh in on the subject & it would also require some coding.

After that point perhaps it can be transformed into a valid worker proposal.

[abit]

I'm tired of this endless arguments. Nobody can make sure that a not-did thing can be done, or not.

Just create a worker proposal and see WHETHER you can get enough votes.

[Empirical1.2]

I think this is a terrible idea that does nothing but steal value from BTS bulls (people who hold BTS), and give it to BTS bears (people who hold bitUSD instead of BTS). 

This will not achieve the goals you want of encouraging bitasset adoption, rather it will reduce the incentive to hold BTS, reduce the value of BTS, take money away from bulls and give it to bears.

You can still maintain your current BTS position by yield harvesting. Being long BitUSD and short BitUSD at the same time.

So it doesn't take any value from BTS holders provided they yield harvest. However this would remove BTS from the centralized exchanges and make most shareholders owners of BitAssets while still maintaining their current overall BTS positons. 

(Provided total BitAssets in circulation < 1/2 of BTS market capitalization, then directing funds to yield can be mitigated by yield harvesting as far as I understand.)

[Ander]

Well, if you agree your OP wasn't clear about the source of dilution why not go back and edit it?

Also, BM & Stan explained why they thought "yield harvesting" doesn't work, but in all of this discussion I don't see a strong case made for why their take is wrong. If anyone could explain that clearly and concisely or point to such an explanation that would be great.

If it was just a topic I would but I'm personally not a fan of changing anything in a poll, once people have started voting on principle.

We've yet to hear BM & Stan's take on this but personally I think they were right that yield harvesting was a negative in 1.0 because of the way yield was derived (from shorts hoping to incentivize longs) I'm hoping they will see the merits of this approach in 2.0

In 1.0, I believe BM was right that yield harvesting was bad, because shorts would offer yield to entice longs which went into a large pool but then BTS shareholders would yield harvest, thereby reducing the average yield and discouraging genuine longs.

In this example where we send dilution to the yield, yield harvesting is a great thing because it means shareholders aren't diluted as long as they yield harvest. However it acts as a behaviour incentive to get BTS holders to remove their BTS from the centralized exchanges (which is a big positive) and support Smartcoins.

There is nothing different between this proposal and that one.  This proposal is still taking money from bitasset shorts and giving it to longs.  This resulted in no one wanting to create bitassets.

[Ander]

I think this is a terrible idea that does nothing but steal value from BTS bulls (people who hold BTS), and give it to BTS bears (people who hold bitUSD instead of BTS). 

This will not achieve the goals you want of encouraging bitasset adoption, rather it will reduce the incentive to hold BTS, reduce the value of BTS, take money away from bulls and give it to bears.

In addition, it goes against the free market principles that Bitshares claims to believe in.



What we need is to create a bond/margin trading market, and then allow people to loan BTS/bitAssets to others for margin trading purposes, like you can do at poloniex.  Then rather than the yield being a theft from one party to another, it is deriving from legitimate use and its rate is set by the free market.  This would increase the value and usefulness and liquidity of BTS and nitAssets, rather than reduce it.

[yvv]

However, it's looking like the community is evenly split over whether to move forward on this idea or rather wait to see how other proposals will affect liquidity.

Having too many choices and too many levers to pull is not a good way to run an experiment. So how do we determine the best one to try first? We need a decision matrix with the pros & cons of each proposal that targets improving liquidity.

Bitshares should be assessed by professional market maker, and (s)he should tell what would (s)he need the most for successful market making.

[Thom]

However, it's looking like the community is evenly split over whether to move forward on this idea or rather wait to see how other proposals will affect liquidity.

Having too many choices and too many levers to pull is not a good way to run an experiment. So how do we determine the best one to try first? We need a decision matrix with the pros & cons of each proposal that targets improving liquidity.

[Thom]

Well, if you agree your OP wasn't clear about the source of dilution why not go back and edit it?

Also, BM & Stan explained why they thought "yield harvesting" doesn't work, but in all of this discussion I don't see a strong case made for why their take is wrong. If anyone could explain that clearly and concisely or point to such an explanation that would be great.

If it was just a topic I would but I'm personally not a fan of changing anything in a poll, once people have started voting on principal.

We've yet to hear BM & Stan's take on this but personally I think they were right that yield harvesting was a negative in 1.0 because of the way yield was derived (from shorts hoping to incentivize longs) I'm hoping they will see the merits of this approach in 2.0

In 1.0, I believe BM was right that yield harvesting was bad, because shorts would offer yield to entice longs which went into a large pool but then BTS shareholders would yield harvest, thereby reducing the average yield and discouraging genuine longs.

In this example where we send dilution to the yield, yield harvesting is a great thing because it means shareholders aren't diluted as long as they yield harvest. However it acts as a behaviour incentive to get BTS holders to remove their BTS from the centralized exchanges (which is a big positive) and support Smartcoins.

Thx for the answers Empirical. You're right about not editing the OP given this being a poll. Didn't think about that.

Hard evidence?  There's no such thing as hard evidence.  You have to use common sense and do it on a trial basis.  Worst case scenario, people don't respond to the incentive and we stop it after 6 months or whatever the trial period is.  Best case scenario is we bootstrap the crap out of our BitAssets, create liquidity, and turn the DEX into a happening place.  This is a good proposal with tremendous upside and little downside.  Let's not sit on our hands.  We're running out of time.  Inaction is doom.  Mark my words.

I'm starting to be convinced. Another concern is the length of the "experiment" and the impact it will have on the reserve pool. The committee needs to be ready to act to stop the experiment well in advance of it depleting the pool, not that I think that will happen at such a fast rate, but as you say we're dealing with a lack of hard evidence here and trying to predict what people will do. Last thing I want to see is the reserve pool drained by a "runaway incentive", again, not that I think it would be.

[Empirical1.2]

Well, if you agree your OP wasn't clear about the source of dilution why not go back and edit it?

Also, BM & Stan explained why they thought "yield harvesting" doesn't work, but in all of this discussion I don't see a strong case made for why their take is wrong. If anyone could explain that clearly and concisely or point to such an explanation that would be great.

If it was just a topic I would but I'm personally not a fan of changing anything in a poll, once people have started voting on principle.

We've yet to hear BM & Stan's take on this but personally I think they were right that yield harvesting was a negative in 1.0 because of the way yield was derived (from shorts hoping to incentivize longs) I'm hoping they will see the merits of this approach in 2.0

In 1.0, I believe BM was right that yield harvesting was bad, because shorts would offer yield to entice longs which went into a large pool but then BTS shareholders would yield harvest, thereby reducing the average yield and discouraging genuine longs.

In this example where we send dilution to the yield, yield harvesting is a great thing because it means shareholders aren't diluted as long as they yield harvest. However it acts as a behaviour incentive to get BTS holders to remove their BTS from the centralized exchanges (which is a big positive) and support Smartcoins.

[tbone]

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.

I was referring to getting BTS off the exchanges and out of circulation, which is obviously a good thing.  As for what people will do with their BitUSD, if they want to maximize their yield, then they will want to earn the additional returns from participating in the yield pool.  You actually made my point for me, thanks.

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!

Thom, please rethink this statement.  You're using circular logic.  We're talking about whether yield will cause people to hoard BitUSD.  Someone looking to sell their BTS is not part of this equation because they are not going to get into BitUSD, let alone hoard it.  Actually, if someone like that decides not to sell because now they can get yield, then you just took some BTS out of circulation and now who cares what they do with the BitUSD?  Not to mention, if they like the yield so much, why wouldn't they earn additional returns by participating in the liquidity pool?  As for hoarding BitUSD to maximize yield, that's not going to stop people from spending a small fraction of their finds (assuming there's a place to spend them - thanks for POS @kenCode!), which is all we should expect.  How many people spend their entire holdings?

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.

Hard evidence?  There's no such thing as hard evidence.  You have to use common sense and do it on a trial basis.  Worst case scenario, people don't respond to the incentive and we stop it after 6 months or whatever the trial period is.  Best case scenario is we bootstrap the crap out of our BitAssets, create liquidity, and turn the DEX into a happening place.  This is a good proposal with tremendous upside and little downside.  Let's not sit on our hands.  We're running out of time.  Inaction is doom.  Mark my words.

[Thom]

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.

Similar to when you have an interest bearing savings account at a bank 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 because it was a large market with thousands of holders, over 100 000 merchants were attracted to that potential market and offered products and services in exchange for BTC which increased BTC utility thereby liquidity.

Well, if you agree your OP wasn't clear about the source of dilution why not go back and edit it?

Also, BM & Stan explained why they thought "yield harvesting" doesn't work, but in all of this discussion I don't see a strong case made for why their take is wrong. If anyone could explain that clearly and concisely or point to such an explanation that would be great.