Author Topic: Lets bring " earn x% interest on 'anything' " back to Bitshares!  (Read 54110 times)

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Offline yvv

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If you put $10 from one of your pockets to another one, how much do you owe at the end?

You can technically borrow whatever on DEX, but until you give away or sell whatever you borrowed, you are not in short position and you debt is zero. By allowing yield harvesting you are not going to increase liquidity.

Bob borrows $10 from Alice.  Then Bob gives the $10 to Frank.  It changes nothing.  Bob still owes Alice $10.

Yeah, right. Now look at this: Bob creates 10 bitUSD and sends it to his own account. Not to Alice, not to Frank, but to himself. How much does Bob owes?

Tip: Bob owes nothing to nobody. Think about it.

Bob now has $10 in another account.  But it was borrowed from the blockchain with BTS as collateral.  He still owes the blockchain $10. 

No, he does not owe nothing to nobody. -$10 in one account and +$10 in another account totals to zero.

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If the collateralized debt could be erased simply by moving bitUSD around, don't you think MPA would have failed a loooooong time ago?

No collateralized debt was even created in this case to start with. Debt is created at the moment when borrowed asset actually changes hands. Sorry that you don't understand such a basic thing.

Offline Stan

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In fact I feel sick for the "+5%"
this title make Bitshares looks like a scam
I wish never see this title in the official site.

Why?

When I was a boy, I cut grass and put my wages in my little passbook savings account earning 5%.
Those were the days!

https://www.youtube.com/watch?v=0d8FTPv955I
« Last Edit: April 11, 2017, 01:09:12 pm by Stan »
Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline kani

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If you put $10 from one of your pockets to another one, how much do you owe at the end?

You can technically borrow whatever on DEX, but until you give away or sell whatever you borrowed, you are not in short position and you debt is zero. By allowing yield harvesting you are not going to increase liquidity.

Bob borrows $10 from Alice.  Then Bob moves it from right pocket to left pocket.  It changes nothing.  Bob still owes Alice $10.

You are confused here.  The problem is that people can short to themselves by just setting up another account.  What does that accomplish that is worth paying for?  This is a widely understood issue that people have dubbed "yield harvesting".

No, I'm not confused here.  The blockchain tracks collateral-to-debt ratio.  This is not a problem if dividend is sent only to those with current debt and not holders.  If dividend was to shorters and holders then yes, I see the problem.

Trust me, you're confused.  The point of paying shorters would be to incentivize them to provide liquidity.  In other words, we want them to borrow bitAssets and short sell them to someone else who wants/needs to buy them.  That is useful activity and is worth rewarding.  But if that person just shorts the bitAssets to himself in another account, then that is NOT useful activity and should not be rewarded.  That is the definition of "yield harvesting".  There is no way we can know if someone is legitimately shorting to other market participants, or just yield harvesting.  That is why we can't reward bitAsset short positions.  Please stop insisting otherwise.

Shelved.

Anyway, I'm shelving the idea in favor of the simpler "market fee revenue to holders" I outlined above.

What you're describing is not simpler.  You keep talking about market fees vs. transaction fees, as if we should be directing one type of fee for one purpose, and another type of fee for another purpose.  Right now we have general income from fees paid, period.  That income is split 80/20 between the referral program and the network.  We're talking about shifting a portion of that income currently going to the referral program in order to 1) replenish the reserve pool 2.5x faster, 2) drive demand for bitAssets by paying interest, 3) reward LTM accounts with a dividend. 

Another thing.  You keep saying you prefer "market fee distribution" because there is "no need to convert BTS to bitAsset for dividend payment."  Again, your idea of separate "market fee distribution" and "transaction fee distribution" is overly complicated.  Also, no one is talking about converting BTS to bitAssets.  You are either confused with some other proposal on another thread. Or you are intentionally confusing matters.

It is my understanding that this proposal would pay bitUSD dividends for bitUSD held, which would require BTS to bitUSD conversion at some point.  If I'm mistaken, then I'm sorry. 

And I really do feel that revenue sharing from market fees is a better option.
« Last Edit: April 11, 2017, 12:45:53 pm by kani »
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Offline tbone

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If you put $10 from one of your pockets to another one, how much do you owe at the end?

You can technically borrow whatever on DEX, but until you give away or sell whatever you borrowed, you are not in short position and you debt is zero. By allowing yield harvesting you are not going to increase liquidity.

Bob borrows $10 from Alice.  Then Bob moves it from right pocket to left pocket.  It changes nothing.  Bob still owes Alice $10.

You are confused here.  The problem is that people can short to themselves by just setting up another account.  What does that accomplish that is worth paying for?  This is a widely understood issue that people have dubbed "yield harvesting".

No, I'm not confused here.  The blockchain tracks collateral-to-debt ratio.  This is not a problem if dividend is sent only to those with current debt and not holders.  If dividend was to shorters and holders then yes, I see the problem.

Trust me, you're confused.  The point of paying shorters would be to incentivize them to provide liquidity.  In other words, we want them to borrow bitAssets and short sell them to someone else who wants/needs to buy them.  That is useful activity and is worth rewarding.  But if that person just shorts the bitAssets to himself in another account, then that is NOT useful activity and should not be rewarded.  That is the definition of "yield harvesting".  There is no way we can know if someone is legitimately shorting to other market participants, or just yield harvesting.  That is why we can't reward bitAsset short positions.  Please stop insisting otherwise.

Anyway, I'm shelving the idea in favor of the simpler "market fee revenue to holders" I outlined above.

What you're describing is not simpler.  You keep talking about market fees vs. transaction fees, as if we should be directing one type of fee for one purpose, and another type of fee for another purpose.  Right now we have general income from fees paid, period.  That income is split 80/20 between the referral program and the network.  We're talking about shifting a portion of that income currently going to the referral program in order to 1) replenish the reserve pool 2.5x faster, 2) drive demand for bitAssets by paying interest, 3) reward LTM accounts with a dividend. 

Another thing.  You keep saying you prefer "market fee distribution" because there is "no need to convert BTS to bitAsset for dividend payment."  Again, your idea of separate "market fee distribution" and "transaction fee distribution" is overly complicated.  Also, no one is talking about converting BTS to bitAssets.  You are either confused with some other proposal on another thread. Or you are intentionally confusing matters. 

Offline kani

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Benefits over transaction fee distribution:
* Market Fees produce bitAsset of choice -- no need to convert BTS to bitAsset for dividend payment.
* Does not violate LTM agreement
* Does not mess with referral expectations

"Your share in the Decentralized Exchange"

In my opinion suggested model doesn't affect LTM members at all. Lets see:
LTM member pays fee in advance (LTM mebership fee) and gets 80% cash back, on every fee they pay to the network.. It is simple bulk discount.
Proposed change ONLY affects non LTM users which pay same fee as anyone else. They doesn't get any cash back only.
Their fee goes 20% to the network and 80% to referrer and registrant coalition.

Proposed change increases network cut from 20% to 50% decreases referrer coalition cut from 80% to 20% and introduces new beneficiaries like bitAsset interests (20%) and LTM members interests(10%).

Non LTM users can decide whenever they like to pay LTM membership fee and get 80% cash back on their fees. As I understand current model, such action breaks referrers dill and network keeps all of membership fee. Am I right?

Ah, but the suggested model does affect LTM members in a non-obvious way.  If the LTM has self-registered sub-accounts with the expectation that the registering account gets 80% back in vesting from those accounts, then the proposal increases fees for that user.
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Offline Geneko

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Benefits over transaction fee distribution:
* Market Fees produce bitAsset of choice -- no need to convert BTS to bitAsset for dividend payment.
* Does not violate LTM agreement
* Does not mess with referral expectations

"Your share in the Decentralized Exchange"

In my opinion suggested model doesn't affect LTM members at all. Lets see:
LTM member pays fee in advance (LTM mebership fee) and gets 80% cash back, on every fee they pay to the network.. It is simple bulk discount.
Proposed change ONLY affects non LTM users which pay same fee as anyone else. They doesn't get any cash back only.
Their fee goes 20% to the network and 80% to referrer and registrant coalition.

Proposed change increases network cut from 20% to 50% decreases referrer coalition cut from 80% to 20% and introduces new beneficiaries like bitAsset interests (20%) and LTM members interests(10%).

Non LTM users can decide whenever they like to pay LTM membership fee and get 80% cash back on their fees. As I understand current model, such action breaks referrers dill and network keeps all of membership fee. Am I right?
 

Offline kani

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If you put $10 from one of your pockets to another one, how much do you owe at the end?

You can technically borrow whatever on DEX, but until you give away or sell whatever you borrowed, you are not in short position and you debt is zero. By allowing yield harvesting you are not going to increase liquidity.

Bob borrows $10 from Alice.  Then Bob gives the $10 to Frank.  It changes nothing.  Bob still owes Alice $10.

Yeah, right. Now look at this: Bob creates 10 bitUSD and sends it to his own account. Not to Alice, not to Frank, but to himself. How much does Bob owes?

Tip: Bob owes nothing to nobody. Think about it.

Bob now has $10 in another account.  But it was borrowed from the blockchain with BTS as collateral.  He still owes the blockchain $10.  If the collateralized debt could be erased simply by moving bitUSD around, don't you think MPA would have failed a loooooong time ago?
My opinions are my own

Turn up the H.E.A.T.

Offline yvv

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If you put $10 from one of your pockets to another one, how much do you owe at the end?

You can technically borrow whatever on DEX, but until you give away or sell whatever you borrowed, you are not in short position and you debt is zero. By allowing yield harvesting you are not going to increase liquidity.

Bob borrows $10 from Alice.  Then Bob gives the $10 to Frank.  It changes nothing.  Bob still owes Alice $10.

Yeah, right. Now look at this: Bob creates 10 bitUSD and sends it to his own account. Not to Alice, not to Frank, but to himself. How much does Bob owes?

Tip: Bob owes nothing to nobody. Think about it.


Offline kani

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If you put $10 from one of your pockets to another one, how much do you owe at the end?

You can technically borrow whatever on DEX, but until you give away or sell whatever you borrowed, you are not in short position and you debt is zero. By allowing yield harvesting you are not going to increase liquidity.

Bob borrows $10 from Alice.  Then Bob gives the $10 to Frank.  It changes nothing.  Frank doesn't owe Alice $10, Bob does.

You are confused here.  The problem is that people can short to themselves by just setting up another account.  What does that accomplish that is worth paying for?  This is a widely understood issue that people have dubbed "yield harvesting".

No, I'm not confused here.  The blockchain tracks collateral-to-debt ratio.  This is not a problem if dividend is sent only to those with current debt and not holders.  If dividend was to shorters and holders then yes, I see the problem.

Anyway, I'm shelving the idea in favor of the simpler "market fee revenue to holders" I outlined above.
« Last Edit: April 11, 2017, 12:18:30 pm by kani »
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Offline tbone

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And I honestly don't see why it can't be paid only to shorters (collateralized positions, only those who have current debt).  The 'yield-harvesting' "problem" mentioned above would not seem to apply if dividends are paid only to those with current debt.

The 'yield-harvesting' "problem" mentioned above does seem to apply, because there is no way to know who actually have current debt and who shorted to themselves.

Can you explain this?  It is my understanding that the blockchain retains a collateral-to-debt ratio per account and is enforced at a blockchain protocol level -- so this (debt portion) is the metric I'd choose.  How could someone short to themselves?


Someone can borrow bitUSD and send it to his other account. He is not in debt in this case and he shorts nothing on the market, but he is eligible for receiving yield. And you can't tell if someone is a legit shorter or a yield harvester just by looking at account debt, because you don't know who owns which account.

Um, no.  You can't erase your debt just by sending bitUSD to another account.  The debt remains on the original account.  The second account now holds bitUSD with no debt.  This argument makes no sense.

You are confused here.  The problem is that people can short to themselves by just setting up another account.  What does that accomplish that is worth paying for?  This is a widely understood issue that people have dubbed "yield harvesting". 

Offline yvv

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And I honestly don't see why it can't be paid only to shorters (collateralized positions, only those who have current debt).  The 'yield-harvesting' "problem" mentioned above would not seem to apply if dividends are paid only to those with current debt.

The 'yield-harvesting' "problem" mentioned above does seem to apply, because there is no way to know who actually have current debt and who shorted to themselves.

Can you explain this?  It is my understanding that the blockchain retains a collateral-to-debt ratio per account and is enforced at a blockchain protocol level -- so this (debt portion) is the metric I'd choose.  How could someone short to themselves?


Someone can borrow bitUSD and send it to his other account. He is not in debt in this case and he shorts nothing on the market, but he is eligible for receiving yield. And you can't tell if someone is a legit shorter or a yield harvester just by looking at account debt, because you don't know who owns which account.

Um, no.  You can't erase your debt just by sending bitUSD to another account.  The debt remains on the original account.  The second account now holds bitUSD with no debt.  This argument makes no sense.

If you put $10 from one of your pockets to another one, how much do you owe at the end?

You can technically borrow whatever on DEX, but until you give away or sell whatever you borrowed, you are not in short position and you debt is zero. By allowing yield harvesting you are not going to increase liquidity.

Offline tbone

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bank have many real business to pay the divident.
where is the business based bitshares?
I believe we'll get divident too after we have some real business.
pay divident is the result, not the reason.

In fact I feel sick for the "+5%"
this title make Bitshares looks like a scam
I wish never see this title in the official site.

@alt, what's wrong with paying a rate of return to bitAsset holders?  Banks have traditionally offered interest on savings accounts.  And in crypto, chains like DASH, NEM, PIVX, and others enable users to get a return on their holdings.  There's nothing scammy about it!

Also, Bitshares used to pay an interest rate of return and had $1M+ bitUSD in circulation.  Now we pay no such interest and have just $100k bitUSD in circulation.  Is this just a coincidence?

Finally, as you know, currently the network gets 20% of collected fees.  This proposal wants to raise that to 50%.  Don't you love that?  You should.  You should love this whole proposal.

We are talking about paying the dividends by using a percentage of the fees collected.  Those are fees that users paid for utilizing the services offered by bitshares.  This is not real business being conducted?  This is not value created by bitshares? 


Offline kani

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I'm just going to post my final thoughts on all this.

I think changing the transaction fee distribution is muddled with problems.  I do not favor this approach.

And while I tend to think paying a market-fee based dividend to shorters would have numerous benefits, it is rather complicated for an ordinary user, so I will shelve it here.

In finality, I think the following idea is my favorite:
* Generate revenue from smallish (0.01% to 0.1%) BTS and bitAsset "market fees"
* Distribute BTS market revenue to LTM members
* Distribute bitAsset market revenue to bitAsset holders

Benefits over transaction fee distribution:
* Market Fees produce bitAsset of choice -- no need to convert BTS to bitAsset for dividend payment.
* Does not violate LTM agreement
* Does not mess with referral expectations

"Your share in the Decentralized Exchange"

Producing revenue from market activity is a natural income source for an exchange.  Sharing it with Bitshares users makes sense to me.
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Offline kani

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And I honestly don't see why it can't be paid only to shorters (collateralized positions, only those who have current debt).  The 'yield-harvesting' "problem" mentioned above would not seem to apply if dividends are paid only to those with current debt.

The 'yield-harvesting' "problem" mentioned above does seem to apply, because there is no way to know who actually have current debt and who shorted to themselves.

Can you explain this?  It is my understanding that the blockchain retains a collateral-to-debt ratio per account and is enforced at a blockchain protocol level -- so this (debt portion) is the metric I'd choose.  How could someone short to themselves?


Someone can borrow bitUSD and send it to his other account. He is not in debt in this case and he shorts nothing on the market, but he is eligible for receiving yield. And you can't tell if someone is a legit shorter or a yield harvester just by looking at account debt, because you don't know who owns which account.

Um, no.  You can't erase your debt just by sending bitUSD to another account.  The debt remains on the original account.  The second account now holds bitUSD with no debt.  This argument makes no sense.
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Offline fav

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I tend to agree with alt on this. I would much rather have us start actually burning the fees instead of recycling them into the reserve pool so that bitshares would eventually go deflationary.

you don't burn your revenue stream as a company.

BitShares is a share in a company, first and foremost. at least in my view