Author Topic: Lets bring " earn x% interest on 'anything' " back to Bitshares!  (Read 53397 times)

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iHashFury

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  • "BitShares - Your share in the Decentralized Exchange"
Let's make that statement a reality.

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Offline kani

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Thanks to those who commented on what I wrote.  I have little time for detailed response but it's clear there is a wider perspective here which I did not consider.

But I will reinforce one idea in-particular: Substantial revenue for paying BTS and bitAsset interest can be made via "Market Fees".  This alleviates the risk of reserve pool managing short positions (or even touching the reserve pool at all).  One advantage is that "Market Fees" are produced in *that* asset (ie: bitUSD market fees come out in bitUSD, and etc).  The transaction fee schedule then remains, in effect, an anti-spam measure and does not take away from the existing referral system.  Plus there is no in-between step of converting BTS from transaction fees into the currency of choice.

Now, I do believe the market fees must be kept small to keep Bitshares a competitive trading platform.  Something like 0.05 to 0.1% is probably okay???  Would need broader community feedback and analysis.


EDIT: I really do think revenue sharing from exchange activity is important...  Does this phrase ring a bell?:
  • "BitShares - Your share in the Decentralized Exchange"
Let's make that statement a reality.
« Last Edit: April 10, 2017, 09:31:18 pm by kani »
My opinions are my own

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Offline R

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so who's formulating the idea and approaching blockpay.ch (via email)?

I'll raise this topic during the next Bitshares hangout on the 14th. I'd appreciate anyone reading this to reach out to others they believe would be interested in this topic (for discussion or development).

I know there are plenty voicing opinions in this thread, but I'd like to take a moment to share mine.

First and foremost, I do not agree with any actions that add strain to the reserve pool (without a very strong argument for long term benefit).  Witness pay has just increased and more active workers are draining the pool faster than increased activity can keep up.  Long term goal should be a sustainable pool which balances pay with fees.

I believe the idea re: fees allocated to the reserve pool has shifted towards an increase of fees being allocated to the reserve pool, which would be a deflationary move which would slow the rate at which we are burning through the reserve pool.

Second.  There should be no change to LTM fee percentages (small changes to non-LTM is fine with me).  Many have chosen LTM knowing the cost-benefit of 80% fees returned.  Don't mess with this.

Agreed, no changes to the existing fee schedule are in scope of this proposal. The topic is discussing the allocation of the fees accumulated from the existing fee schedule, between the reserve pool, referral system and asset holders.

Third.  We must explore motivations and desired outcomes for any suggested changes.  What problem are we trying to solve?  What impact does this have on the long-term health of the Bitshares ecosystem?

In my opinion, the two things which would help Bitshares the most is:
  • increased supply of bitAssets
  • usable liquidity


The problem we're trying to solve is the lack of incentives for holding assets on the Bitshares DEX long term; back in BTSX we offered 'x% on anything' where by holding bitUSD yielded a portion of the bitUSD fees (proportional to the total amount of bitUSD in existence). The potential 'interest' rate in such a profit sharing mechanism is/was greater than the interest rates offered by FIAT banks.

This profit sharing mechanism was one of the major marketing points of BTSX that I have missed in the BTS 2.0 DEX and I think that its reintroduction could boost the amount of users utilizing the BTS DEX.

By increasing the incentive to hold FIAT savings as bitassets on the BTS DEX we potentially increase the amount of bitassets in existence & thus less BTS are liquid.

Regarding usable liquidity, if there are more bitAsset holders then we have more individuals who could actively participate in market making (especially with the ease of use of new tools such as btsbots).

The reason being that more active and usable markets will attract new traders to the DEX.  Rewarding those who simply hold assets does not improve the DEX.
If we can get all/most/more Bitshares holders to hold their bitshares on the DEX instead of on centralized exchanges, we minimize the risk of said centralized exchanges having a massive voting weight with which they can disrupt the voting mechanism (proposals/polls/committee/witnesses/etc).

I come back, then, to the idea suggested a little while ago: Reward those who have bitAsset debt (collateralized position) with (new) market fees from same bitAsset markets.  Only those with debt collect dividends (from the market-produced trading fees -- aka "market fee") at a pro-rata basis.  Simply holding a bitAsset does not yield dividends.
Providing dividends upon shorting of bitassets is open to abuse, 'yield-harvesting' was one of the main reasons that this functionality was removed during the upgrade from BTS 0.x to 2.0.
https://bitshares.org/blog/2015/06/08/lessons-learned-from-bitshares-0.x/#socialized-yield-is-broken

Holding a bitAsset means that you've either bought these tokens off of someone that shorted them into existence, or you created them yourself with sufficient backing collateral, so an increased demand for bitAssets for long-term holding does improve liquidity.
« Last Edit: April 10, 2017, 11:34:00 pm by Customminer »

Offline Pheonike

I know there are plenty voicing opinions in this thread, but I'd like to take a moment to share mine.

First and foremost, I do not agree with any actions that add strain to the reserve pool (without a very strong argument for long term benefit).  Witness pay has just increased and more active workers are draining the pool faster than increased activity can keep up.  Long term goal should be a sustainable pool which balances pay with fees.

Second.  There should be no change to LTM fee percentages (small changes to non-LTM is fine with me).  Many have chosen LTM knowing the cost-benefit of 80% fees returned.  Don't mess with this.

Third.  We must explore motivations and desired outcomes for any suggested changes.  What problem are we trying to solve?  What impact does this have on the long-term health of the Bitshares ecosystem?

In my opinion, the two things which would help Bitshares the most is:
  • increased supply of bitAssets
  • usable liquidity

The reason being that more active and usable markets will attract new traders to the DEX.  Rewarding those who simply hold assets does not improve the DEX.

I come back, then, to the idea suggested a little while ago: Reward those who have bitAsset debt (collateralized position) with (new) market fees from same bitAsset markets.  Only those with debt collect dividends (from the market-produced trading fees -- aka "market fee") at a pro-rata basis.  Simply holding a bitAsset does not yield dividends.

What does this do?
  • encourages more to short, increasing supply
  • encourages riskier shorts closer to MCR to get most bitAsset for the BTS (which then results in more forced settlement activity)
  • encourages those who do short to actively make markets to increase usable liquidity, which in turn provides volume and increases dividend from market fees

If the idea is adopted, I'd like to see it applied (as a test case) to a less-active bitAsset first before moving on to the big ones.

Thanks for reading!

I agree with the paying interest to those who have collateral in the system. I think the LTM changes can be on table. I don't believe LTM is core feature of BTS that is sat in stone therefore  it should be able to be changed or removed by user user consensus with a vote. That's why we have voting so when add features that make sense and and remove features that are not performing to expectations.

Offline fav

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Agree @Thom - my views changed based on experience.

I'd rather get 10% of active users than 60% of nothing (current)

Offline Thom

This is basically situation we currently have. Current model is unsustainable. We are spending more then we earn.

^^THIS - you nailed it with this statement. THIS was the fundamental issue that truly hooked me that differentiated BitShares from virtually EVERY other coin out there, ESPECIALLY Bitcoin, so thank you for reminding everyone in this thread that this principle of operation cannot be minimized or swept under the rug.

However, it's also important to view our current situation from the standpoint of a startup company, which always operate at a loss conceptually until their product is out there in the market earning money b/c people value it. Is it true the "Current model is unsustainable" ? Over what period? Is the reserve pool growing or shrinking? We have sustained this ecosystem over the last 1.5 years with this model, so I'm not sure, so my question is not unreasonable.

Whether we could go another 10, 20 or 30 years with existing model as a financial projection is not the whole story, I don't think anyone here cares as long as we don't spend ourselves out of existence this year or next. Point is all of us here want to make it better, want to improve growth and adoption, and that is not happening with the current model, so from that standpoint something needs to change.

I also believe we need to remember how important marketing is to the success of BitShares. None of us want to see BitShares become the BetaMax of the crypto world (superior tech but failed due to inferior marketing) The referral program can help with that, but it may not be enough. At this stage of evolution marketing is crucial, and should be considered as a necessary cost of doing business that directly affects sustainability. It needs to be a factor, but not as a static or permanent expense. Ideally IMO marketing needs a big chunk of funds now but should be tapered off as traction is gained, where hopefully things like the referral program will kick in to sustain and fund growth after the major push is no longer needed. IMHO a worker proposal is perfect for such funding. It has the accountability and approval built in, no need to find an alternative now. Depending on how successful a campaign funded this way goes may require other funding, but to start with I believe a worker proposal will be adequate.

This is an excellent discussion. All it seems to be lacking is input from the coders and technical side regarding the cost to implement these ideas.

I am very pleased to see the participants here being open minded to the various distribution allocations, especially you @fav. You may feel you shouldn't be known as the strongest advocate for the referral system, but in my mind you are. Glad to see your willingness to be flexible. I wonder if this discussion had taken place 12 - 14 months ago if your perspective would be different.

I agree with @fav that this should not become a debate about whether referral programs have merit, because it's a proven fact that they can be incredibly powerful.  However, OPs idea cannot be realized without modification of the existing program. So that clearly has to be a part of this conversation. Not to mention, we know the referral program has issues that need to be addressed.  So this may also be a very good opportunity to make the referral program more sensible and effective...while simultaneously making it possible to pay interest to bitAsset holders, as well s fav's great new idea of paying a dividend to LTM accounts.  All without dilution.

EXACTLY tbone, well said.

Rewarding those who simply hold assets does not improve the DEX.

I disagree with that, however you raised several very good points so I don't want to dismiss everything. Thanks for contributing to the conversation @kani.

Your perspective appears to be that of a trader, not the average Joe or Joanne who are looking for a safe alternative to confiscatory practices of mainstream financial institutions. I agree with others who have stated they saw the removal of interest on BitUSD present in Bitshares 0.X era as a bad thing. That is a perfect example of factions that are at odds with each other, as traders who shorted BitUSD back then with their "Yield Harvesting" did not have the best interests of the ecosystem in mind and such activities ruined the sustainability and long term viability of BitUSD as a savings asset.

This. is an example of how different target audiences have different and sometimes opposing views on what bring them value and utility. We need to mange these differences in a balanced and reasonable manor so they don't become divisive. Diversity need not be detrimental if we view it as opportunities to sell in different markets.

Who here would say the USA should never have established trade relations with China b/c freedom and communism are not compatible? (disregarding the fact that NO gubermnt promotes and protects freedom. I could see an argument to avoid trade with others based on the principle of shunning or "helping an enemy", or the fact that the US gubermnt has adopted 9 out  of the 10 planks in the communist manifesto, but I'll not go there now)
« Last Edit: April 10, 2017, 03:53:57 pm by Thom »
Injustice anywhere is a threat to justice everywhere - MLK |  Verbaltech2 Witness Reports: https://bitsharestalk.org/index.php/topic,23902.0.html

Offline kani

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I know there are plenty voicing opinions in this thread, but I'd like to take a moment to share mine.

First and foremost, I do not agree with any actions that add strain to the reserve pool (without a very strong argument for long term benefit).  Witness pay has just increased and more active workers are draining the pool faster than increased activity can keep up.  Long term goal should be a sustainable pool which balances pay with fees.

Second.  There should be no change to LTM fee percentages (small changes to non-LTM is fine with me).  Many have chosen LTM knowing the cost-benefit of 80% fees returned.  Don't mess with this.

Third.  We must explore motivations and desired outcomes for any suggested changes.  What problem are we trying to solve?  What impact does this have on the long-term health of the Bitshares ecosystem?

In my opinion, the two things which would help Bitshares the most is:
  • increased supply of bitAssets
  • usable liquidity

The reason being that more active and usable markets will attract new traders to the DEX.  Rewarding those who simply hold assets does not improve the DEX.

I come back, then, to the idea suggested a little while ago: Reward those who have bitAsset debt (collateralized position) with (new) market fees from same bitAsset markets.  Only those with debt collect dividends (from the market-produced trading fees -- aka "market fee") at a pro-rata basis.  Simply holding a bitAsset does not yield dividends.

What does this do?
  • encourages more to short, increasing supply
  • encourages riskier shorts closer to MCR to get most bitAsset for the BTS (which then results in more forced settlement activity)
  • encourages those who do short to actively make markets to increase usable liquidity, which in turn provides volume and increases dividend from market fees

If the idea is adopted, I'd like to see it applied (as a test case) to a less-active bitAsset first before moving on to the big ones.

Thanks for reading!
My opinions are my own

Turn up the H.E.A.T.

Offline fav

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so who's formulating the idea and approaching blockpay.ch (via email)?

Offline tbone

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50% - network
20% - referral
20% - bitAsset interest
10% - LTM dividend


sounds like a plan. who can do it? @kenCode 's team? should we request a quote?

edit: peerplays' dividend code is free to use as far as I know

Fantastic.  Hopefully we can get a quote ASAP.  In the meantime, I hope we'll get some input from others such as @xeroc, @Chris4210, @JonnyBitcoin , @bitcrab, @alt

We also need to know more precisely what the monthly collected fees have been since inception of Bitshares 2.0.  I asked in the dev channel and @Taconator has graciously offered to help within a week if no one else has already helped by then. 

 

Offline Geneko

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50% - network
20% - referral
20% - bitAsset interest
10% - LTM dividend


This one sound reasonable.


I also propose that the referrer gets the 20% on ALL fees, even on fees paid by LTM users (which i'm 90% sure referrers currently get 0% of).  In addition, I propose that the referrer keeps 100% of the LTM fee.


This one sounds not so reasonable.  It makes LTM pointless. LTM is kind of bulk discount. It could be fair referrer gets 100% of LTM ( in my opinion 50:50 split would be fine) but additional taxation of poor referee (20% of all fees) or taking more of revenue stream from the network, is unreasonable.  This one should be clarified because it is not clear from where these 20% of ALL fees would come from.

Offline fav

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50% - network
20% - referral
20% - bitAsset interest
10% - LTM dividend


sounds like a plan. who can do it? @kenCode 's team? should we request a quote?

edit: peerplays' dividend code is free to use as far as I know
« Last Edit: April 10, 2017, 06:25:20 am by fav »

Offline tbone

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I agree with @fav that this should not become a debate about whether referral programs have merit, because it's a proven fact that they can be incredibly powerful.  However, OPs idea cannot be realized without modification of the existing program. So that clearly has to be a part of this conversation. Not to mention, we know the referral program has issues that need to be addressed.  So this may also be a very good opportunity to make the referral program more sensible and effective...while simultaneously making it possible to pay interest to bitAsset holders, as well s fav's great new idea of paying a dividend to LTM accounts.  All without dilution.

I think one of the problems with the referral program is that with the current split there will always be great resistance to raising fees since the network only gets 20% of any increase. The current split also dampens the ability to vote in worker proposals as well as reduces deflation, which are both factors that reduce demand for BTS.  This is a losing proposition for everyone including referrers.

If we can shift the split such that the network gets a much higher percentage, that would immediately make the network much more profitable.  In that scenario, we would have a) increased deflation, or b) an easier time voting in worker proposals, or c) some combination thereof.  And there would be less resistance to the idea of raising fees.  All of this means greater demand for BTS.

Imagine now that in addition to the above, we can also offer an interest rate of return on bitAssets AND a dividend on BTS for LTM accounts.  And again, without any dilution.  We can do all of this if we allocate the fees differently.  Here's my proposed split: 

50% - network
20% - referral
20% - bitAsset interest
10% - LTM dividend

I also propose that the referrer gets the 20% on ALL fees, even on fees paid by LTM users (which i'm 90% sure referrers currently get 0% of).  In addition, I propose that the referrer keeps 100% of the LTM fee.

Overall, I think a fee allocation like this would be a MASSIVE win for all parties involved.  Thoughts?

Offline fav

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You say 20% off of the fee pool, do you mean the 20% allocated from fees to top up the reserve pool, or a 20% sharedrop from the reserve pool?


trying to get the thread back to topic, as it's already derailing to nonsense.

and yes, 20% cut from referral %

Offline R

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This referral sys was BS since its inception. Its overall costs are several orders of magnitude higher then its benefits.
That was Max Wright idea, I remember BM was against at the time. It is mystery to me how they manage to persuade him to change his mind and include it in BTS 2.0, as well as leather disappearance of its sole creator. It reminds me of amateur marketing Bitshares consumes since Brian Page.

Overall this system didn't bring anything to Bitshares except a benefit to entities which take advantage of this hidden taxation tool. Which brings me to the point. I am afraid it will be very hard to get enough support for the change of this useless feature. But we'll see.

The referral system isn't worthless, it's driving new users to the network but I agree that it's currently allocated too large a slice of the overall network fees and not enough users are making use of it.

This referral sys was BS since its inception. Its overall costs are several orders of magnitude higher then its benefits.
That was Max Wright idea, I remember BM was against at the time. It is mystery to me how they manage to persuade him to change his mind and include it in BTS 2.0, as well as leather disappearance of its sole creator. It reminds me of amateur marketing Bitshares consumes since Brian Page.

Overall this system didn't bring anything to Bitshares except a benefit to entities which take advantage of this hidden taxation tool. Which brings me to the point. I am afraid it will be very hard to get enough support for the change of this useless feature. But we'll see.

I disagree. The fee change to nothing and the lack of features for ltm rendered it useless. Referral systems are multi billion dollars of magnitude better than what anyone else could possibly add to BitShares. Problem is no one here has any clue.

Fees aren't 0 though, the rough estimates of 1 million BTS per month at current rates works out at $6400 per month for the referral system.

I disagree that nothing better than the referral system will be implemented into the Bitshares network, this thread alone is proof that better ideas than the referral system can exist. Billions of dollars of magnitude? Bitshares hasn't seen this magnitude come from the referral system, lol.

No one here has any clue? Why not educate us on that which you claim we don't know instead of putting users down?

Let's not make this all about referral system, this topic is too important.

Here's a thought :

Take 20% off of the fee pool.
15% go to ALL DIVIDENDS
5% go to LTM DIVIDENDS

that would lead to yet another cycle, investors would upgrade, fuel fee pool by upgrading and marketers/registrars  would earn as well.

Win win win?

What happened to finding devs and price estimation before talking about the 'golden girls'? Haha ;D https://bitsharestalk.org/index.php/topic,23981.msg304394.html#msg304394

You say 20% off of the fee pool, do you mean the 20% allocated from fees to top up the reserve pool, or a 20% sharedrop from the reserve pool?

I agree with Tbone (https://bitsharestalk.org/index.php/topic,23981.msg304385.html#msg304385) that by cutting the 20% from the reserve pool income that we somewhat introduce inflation (as these assets would otherwise have been locked temporarily in the reserve pool), where as if we were to cut the fees allocated to the referral system we would not experience inflation.

I like the idea of introducing a separate allocation of the dividends to the LTM users, it could potentially drive up LTM registrations!

We should vote on the 80% fee allocation between referral and dividend features if this idea gains traction.

BTS reserve pool should be spent on essential network operations only, which are witnesses and essential development projects. Referrals, dividends and other farts and whistles  should be funded other ways.

And giving away 80% of BTS revenue to referrals is just stupid.
I agree that referrals and dividends should not come out of the reserve pool, and I don't believe anyone in here is proposing this - we're focused on the fees that are currently allocated to the referral system.

Offline yvv

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BTS reserve pool should be spent on essential network operations only, which are witnesses and essential development projects. Referrals, dividends and other farts and whistles  should be funded other ways.

And giving away 80% of BTS revenue to referrals is just stupid.