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

[Erlich Bachman]

Yes, it does appear that this "yield harvesting" is no different than what  DASH has successfully done with its "Masternode" incentive to lock up value on the blockchain creating scarcity on the open market and raising its share price. 

And since DASH has an enviable market cap from our perspective (one that would speed up our development funding), then I am on board.  Because after all, the one thing we need in order to achieve our dreams here is dev funding.  Imagine what we could do, and how fast we could do it if our market cap was around 30 million like DASH.

[Empirical1.2]

I would recommend against this. I actually proposed something similar myself more than a year ago, but I have since then learned a lot more about economics.

what about economics makes you recommend against this experiment? i'm personally about indifferent on this hypothesis, but usually ere on the side of experimentation.

This is in essence a bet against the market by a public agent. I don't think it can possibly be profitable in the long run.

I'm also just speculating, macroeconomics are  mostly guesswork. I don't think there's anything wrong with experimenting but I wouldn't do that on the main bitshares blockchain.

I see this more like a kickstart project than a longterm solution. I'm also quite sure that this wouldn't be profitable in the long run, but this might be a good way to get liquid markets kickstarted. Although I'm still inclined to think that best way to pay yield is to pay it only for smartcoins that are in the orderbook.

I agree that it's not profitable in the long, long run but I believe it is during the Smartcoin growth phase which could end up being as long as 5 years+ depending. Of course it can be removed or phased out if it's not creating more value than it's costing BTS shareholders at the time. https://bitsharestalk.org/index.php/topic,21541.msg283518.html#msg283518



I'm also in favour of paying yield to orders on the books within a useful range around the peg as a liquidity measure & think this can be done cost effectively. Personally I've been impressed with NBT level liquidity which uses a similar approach and while most of us disagree with how NBT are created/collateralised their separate liquidity operations are fairly cost effective.  https://bitsharestalk.org/index.php/topic,21800.0.html

However yield for orders off the books is important in attracting man in the street money (who never want to see the exchange) into holding value in BTS collateralised BitAssets imo.  As BM said back in the day...

If the largest banks can achieve deposits of over $1 trillion dollars with no meaningful interest, how many deposits could BitShares attract and what would that mean for the value of the bank?

(Once the yield promotion is over in 6 months to 5 years+, banks will likely be in NIRP territory so at that point no yield will actually be the equivalent of yield - we cost less than banks.) The yield promotion described in this thread can also be mitigated by shareholders via yield harvesting, which also has a lot of positive side effects of it's own.

[Samupaha]

I would recommend against this. I actually proposed something similar myself more than a year ago, but I have since then learned a lot more about economics.

what about economics makes you recommend against this experiment? i'm personally about indifferent on this hypothesis, but usually ere on the side of experimentation.

This is in essence a bet against the market by a public agent. I don't think it can possibly be profitable in the long run.

I'm also just speculating, macroeconomics are  mostly guesswork. I don't think there's anything wrong with experimenting but I wouldn't do that on the main bitshares blockchain.

I see this more like a kickstart project than a longterm solution. I'm also quite sure that this wouldn't be profitable in the long run, but this might be a good way to get liquid markets kickstarted. Although I'm still inclined to think that best way to pay yield is to pay it only for smartcoins that are in the orderbook.

[cylonmaker2053]

Also, to receive yield, perhaps it should be required to lock up funds for a month at a time.  So yield would be paid every month starting 1 month after lock-up (on an account by account basis), and early withdrawal means yield is forfeited. 

I personally like this idea more & could be in favour of it. This would make the advertisable variable yield higher. In terms of liquidity, you want to increase Makers at key times but also reduce liquidity takers at those key times. This may incentivise those who would probably be liquidity takers to not suck liquidity out of the market as much at key times. (Buying BitUSD when BTC/BTS is rapidly falling & selling BitUSD when BTC/BTS is rapidly rising) So besides all the other benefits of yield, this would be a way of using yield to improve liquidity imo.

Edit: At the same time once we have merchants accepting BitUSD this might be a negative in terms of getting the good liquidity in terms of people easily spending their BitUSD & creating the Pool to customer to merchant back to pool liquidity cycle.

or a hybrid approach that pays out daily yield with a monthly holding bonus. fundamentally, i prefer we start with short-term instruments, but i appreciate the lock-in concept for stability.

[kokojie]

In the US, some credit cards will give you $500 if you use them for 3 months and spend over $6000 on it. Incentives like these are ok for marketing I think.

[abit]

Generally I'm against using worker to fund any marketing experiments without proper market research. Marketing guys should know how market works and how to do market researches. We've through out too much in 0.x days just because.

[Erlich Bachman]

The short term goal is simply getting a critical mass of money into BTS so that we can charge a fee whenever the "depositors" choose to collect their accrued interest. Once we reach deflationary status (profitibility), then we can tweak economic incentives. Because currently, we are paying for a ton of unused bandwith (paying witnesses to watch 5 transactions per minute, when it costs us the same to process thousands).

The system is already costing us money to run, so we might as well offer a bunch of simple services (bank with us and we will give you interest like Masternodes) to get the fees rolling in.

[Rune]

I would recommend against this. I actually proposed something similar myself more than a year ago, but I have since then learned a lot more about economics.

what about economics makes you recommend against this experiment? i'm personally about indifferent on this hypothesis, but usually ere on the side of experimentation.

This is in essence a bet against the market by a public agent. I don't think it can possibly be profitable in the long run.

I'm also just speculating, macroeconomics are  mostly guesswork. I don't think there's anything wrong with experimenting but I wouldn't do that on the main bitshares blockchain.

[Empirical1.2]

Also, to receive yield, perhaps it should be required to lock up funds for a month at a time.  So yield would be paid every month starting 1 month after lock-up (on an account by account basis), and early withdrawal means yield is forfeited. 

I personally like this idea more & could be in favour of it. This would make the advertisable variable yield higher. In terms of liquidity, you want to increase Makers at key times but also reduce liquidity takers at those key times. This may incentivise those who would probably be liquidity takers to not suck liquidity out of the market as much at key times. (Buying BitUSD when BTC/BTS is rapidly falling & selling BitUSD when BTC/BTS is rapidly rising) So besides all the other benefits of yield, this would be a way of using yield to improve liquidity imo.

Edit: At the same time once we have merchants accepting BitUSD this might be a negative in terms of getting the good liquidity in terms of people easily spending their BitUSD & creating the Pool to customer to merchant back to pool liquidity cycle.

[cylonmaker2053]

i voted YES purely on the condition that this is a LIMITED TRIAL with perpetuation of the policy contingent on results.

I, too, am in favor of limiting this to a 6-month trial.  I propose targeting it 75% to BitUSD, 20% BitCNY and 5% BitEur, with a goal of creating the equivalent of at least $1M in total BitAssets.  Also, to receive yield, perhaps it should be required to lock up funds for a month at a time.  So yield would be paid every month starting 1 month after lock-up (on an account by account basis), and early withdrawal means yield is forfeited. 

So we get people to move funds onto the DEX, they become more frequent users of the DEX, and create BitAssets propelling us to worldwide fiat-pegged leaders, which will garner greater overall attention for Bitshares in general and our smartcoins in particular.  Not to mention new users that might be attracted by the yield to buy and hold smartcoins.

On the liquidity front, we can launch this in conjunction with liquidity pools that any of these new users and new BitAsset creators/holders can voluntarily participate in.  This can be incentivized by the Nasdaq-style market maker liquidity rewards program (to be developed separately, discussed on another thread), which of course any liquidity provider can participate in (and which UIA issuers can use with their own funds to incentivize liquidity in the markets for their own assets). 

If we require generation of more liquidity, the rewards can be increased as necessary.  Conversely, as liquidity grows, the rewards can be diminished and directed to other BitAsset  markets such as BitGOLD, BitSILVER, BitOIL, BitAAPL, etc. 

These are just some suggestions and starting points for further discussion, including how some of the pieces of the puzzle might fit together.  Thoughts @Empirical1.2, @cylonmaker2053?  Anyone else with constructive input?

all really good points. only other thing i'd add is that my gut tells me it'd be better to start with an experiment with one smartcoin, whichever has the highest 3-month moving average volume, or something like that.

[Empirical1.2]

i voted YES purely on the condition that this is a LIMITED TRIAL with perpetuation of the policy contingent on results.

I, too, am in favor of limiting this to a 6-month trial.  I propose targeting it 75% to BitUSD, 20% BitCNY and 5% BitEur, with a goal of creating the equivalent of at least $1M in total BitAssets.  Also, to receive yield, perhaps it should be required to lock up funds for a month at a time.  So yield would be paid every month starting 1 month after lock-up (on an account by account basis), and early withdrawal means yield is forfeited. 

So we get people to move funds onto the DEX, they become more frequent users of the DEX, and create BitAssets propelling us to worldwide fiat-pegged leaders, which will garner greater overall attention for Bitshares in general and our smartcoins in particular.  Not to mention new users that might be attracted by the yield to buy and hold smartcoins.

On the liquidity front, we can launch this in conjunction with liquidity pools that any of these new users and new BitAsset creators/holders can voluntarily participate in.  This can be incentivized by the Nasdaq-style market maker liquidity rewards program (to be developed separately, discussed on another thread), which of course any liquidity provider can participate in (and which UIA issuers can use with their own funds to incentivize liquidity in the markets for their own assets). 

If we require generation of more liquidity, the rewards can be increased as necessary.  Conversely, as liquidity grows, the rewards can be diminished and directed to other BitAsset  markets such as BitGOLD, BitSILVER, BitOIL, BitAAPL, etc. 

These are just some suggestions and starting points for further discussion, including how some of the pieces of the puzzle might fit together.  Thoughts @Empirical1.2, @cylonmaker2053?  Anyone else with constructive input?

I think with the yield the goal is to trial it & guage it's efficacy. So I wouldn't necessarily suggest spreading it out over 3 assets but just trying it on 1. If we think we can accurately measure the impact on BitUSD with 75% then we might be better off trialling BitUSD at a lower cost and only rolling out the additional amount of CNY/EUR if shareholders feel the results are sufficiently positive.

Also regards the 1 month lock up, I don't know. On the one hand I imagine interest accrued at <1 month wouldn't be a very strong motivating factor, so it might not be worth the restriction. Then again without it many people might buy BitUSD whenever BTS was falling and vice versa, thus removing/putting pressure on buy/sell side liquidity at those key times and so actually incentivizing people to hold in those turns may help.

As for the liquidity front yeah that sounds good, it's not my area but given the spreads we clearly need to subsidize it in some way and I believe increasing BitAsset adoption is incredibly valuable to BTS so I think it's worth it. It also makes sense that yes you'd decrease the incentive when you had sufficient liquidity and/or move it around to other markets you wanted to bootstrap.

[tbone]

i voted YES purely on the condition that this is a LIMITED TRIAL with perpetuation of the policy contingent on results.

I, too, am in favor of limiting this to a 6-month trial.  I propose targeting it 75% to BitUSD, 20% BitCNY and 5% BitEur, with a goal of creating the equivalent of at least $1M in total BitAssets.  Also, to receive yield, perhaps it should be required to lock up funds for a month at a time.  So yield would be paid every month starting 1 month after lock-up (on an account by account basis), and early withdrawal means yield is forfeited. 

So we get people to move funds onto the DEX, they become more frequent users of the DEX, and create BitAssets propelling us to worldwide fiat-pegged leaders, which will garner greater overall attention for Bitshares in general and our smartcoins in particular.  Not to mention new users that might be attracted by the yield to buy and hold smartcoins.

On the liquidity front, we can launch this in conjunction with liquidity pools that any of these new users and new BitAsset creators/holders can voluntarily participate in.  This can be incentivized by the Nasdaq-style market maker liquidity rewards program (to be developed separately, discussed on another thread), which of course any liquidity provider can participate in (and which UIA issuers can use with their own funds to incentivize liquidity in the markets for their own assets). 

If we require generation of more liquidity, the rewards can be increased as necessary.  Conversely, as liquidity grows, the rewards can be diminished and directed to other BitAsset  markets such as BitGOLD, BitSILVER, BitOIL, BitAAPL, etc. 

These are just some suggestions and starting points for further discussion, including how some of the pieces of the puzzle might fit together.  Thoughts @Empirical1.2, @cylonmaker2053?  Anyone else with constructive input?

[cylonmaker2053]

I would recommend against this. I actually proposed something similar myself more than a year ago, but I have since then learned a lot more about economics.

what about economics makes you recommend against this experiment? i'm personally about indifferent on this hypothesis, but usually ere on the side of experimentation.

[Empirical1.2]

 

i voted YES purely on the condition that this is a LIMITED TRIAL with perpetuation of the policy contingent on results.

  Exactly, a limited trial with perpetuation contingent on results.

I think it's a great time to start the trial/promotion as the increase in BitUSD CAP and adoption may take the wind out of a lot of competitor's sails. 

I would recommend against this. I actually proposed something similar myself more than a year ago, but I have since then learned a lot more about economics.

Thanks for the recommendation & best of luck with the launch of MKR.

[Rune]

I would recommend against this. I actually proposed something similar myself more than a year ago, but I have since then learned a lot more about economics.