[Committee Member] - johnr's proposal to join the BitShares Committee

[JohnR]

No, we haven't saw that the premium stimulate people to do more shorting, as high premium is always with BTS price down trend and high risk that play a much important role for a shorter to make decision.

Jerry,

Thank you for your thoughtful comments above.  You've provided clarity into your rationale for the negative feedback price feed idea.  I support your effort for it and am eager to see what the future brings.

Clearly you are right that the premium remains, so the incentive mechanisms are not functioning as we intend.  I think what pc is missing is the interplay between the cost of capital, short squeeze ratio, and the equivalency between the premium and the risk of stakeholding. 

1) Yes it may be the case that a bitUSD trading for 1.02 should incentivize short sellers.  In reality it takes a large amount of capital in BTS to synthesize enough bitUSD to sell down to par (this is expensive and hard to justify from the traders perspective). 
2) Combine this with the additional risk placed by the short squeeze ratio which in effect creates a 'net-negative' force on the supply of bitUSD.  As margin calls accumulate with a squeeze ratio above 1 what you see is more and more bts collateralizing less bitUSD (same for any asset).  This downward spiral in outstanding bitUSD exacerbates the supply side problem.
3) The biggest problem with assuming the premium will incentivize sellers to help market reach equilibrium is that with the structural issues still in place that risk (premium) simply transfers to the new short.  True arbitrage is hard to find - and it's definitely not likely in the most liquid markets on BitShares.

[JohnR]

Does the above analysis make sense to you?  We can concentrate our collective efforts on supply side solutions if so.

I would mostly agree with the analysis. To go further regarding the supply side, IMO people are not motivated enough to create (borrow) MPAs because the risk being margin called is quite high in volatile/bear market as of now.
How about adding one more incentive to those who takes the risk? As mentioned above, MPA is a good service/product, it has big demand. And therefore it can generate revenue stream (e.g. market fees). IMO it would be nice if those who take the risk and support (borrow) MPA shall have a cut from the revenue. To avoid passive yield harvesting, the borrower shall release borrowed MPA to the open market:
1. An MPA owner specifies market fee portion he would like to share with borrowers.
2. A user borrows the MPA providing the collateral (this may be BTS or any other MPA or UIA, as specified in the MPA collateral settings).
3. To receive the cut of the MPA market fees, the user has to place market sell order on MPA:Collateral asset (e.g. bitUSD:BTS) market.
4. As the MPA is being bought and sold by other users, market fee goes to the MPA's owner vesting balance, particular part of it (as specified in 1st step) is proportionally sharedropped to all borrowers who has executed step 3.

Yury thank you for the message and thoughtful comment.  There is a an aspect to this that is very appealing as it more appropriately aligns the risk/reward proposition between stakeholders and fee beneficiaries.  Maybe it would be prudent to explore this option first with private smart coins and see the results.  What do you think? The issue of course would be that in the bitasset/smart coin universe, committee bitassets far and away dominate in overall transaction volume.

[bitcrab]

with BTS price going down, bitCNY are squeezed out, risk and capital cost of shorts increase. but demand change slowly than that, all these lead to higher premium and vice versa.

that's one problem of smartcoin, when premium go farer from 0 there's nothing to stimulate the premium to go toward 0, and that's why we now try the negative feed back price feeding, hope that can help.

Keep in mind that margin called short positions create automatic demand, and the amount of poorly collateralized bitCNY short positions is the biggest reason for the premium.

The whole theory of bitassets is based upon the premium. If bitXY trades with a premium there is an incentive for shorters to create (and sell) more bitXY, which brings the premium down. If bitXY trades below par there is an incentive for shorters to buy up cheap bitXY and close their positions. In both cases, the market price is driven towards par. Therefore it doesn't make sense to claim that nothing stimulates the premium - the premium exists to stimulate market participants.

No, we haven't saw that the premium stimulate people to do more shorting, as high premium is always with BTS price down trend and high risk that play a much important role for a shorter to make decision.

[pc]

with BTS price going down, bitCNY are squeezed out, risk and capital cost of shorts increase. but demand change slowly than that, all these lead to higher premium and vice versa.

that's one problem of smartcoin, when premium go farer from 0 there's nothing to stimulate the premium to go toward 0, and that's why we now try the negative feed back price feeding, hope that can help.

Keep in mind that margin called short positions create automatic demand, and the amount of poorly collateralized bitCNY short positions is the biggest reason for the premium.

The whole theory of bitassets is based upon the premium. If bitXY trades with a premium there is an incentive for shorters to create (and sell) more bitXY, which brings the premium down. If bitXY trades below par there is an incentive for shorters to buy up cheap bitXY and close their positions. In both cases, the market price is driven towards par. Therefore it doesn't make sense to claim that nothing stimulates the premium - the premium exists to stimulate market participants.

[bitcrab]

smartcoin premium depend highly on BTS price, we always observe that in bear market, with BTS price going down, bitCNY are squeezed out, risk and capital cost of shorts increase. but demand change slowly than that, all these lead to higher premium and vice versa.

that's one problem of smartcoin, when premium go farer from 0 there's nothing to stimulate the premium to go toward 0, and that's why we now try the negative feed back price feeding, hope that can help.

[yury]

Does the above analysis make sense to you?  We can concentrate our collective efforts on supply side solutions if so.

I would mostly agree with the analysis. To go further regarding the supply side, IMO people are not motivated enough to create (borrow) MPAs because the risk being margin called is quite high in volatile/bear market as of now.
How about adding one more incentive to those who takes the risk? As mentioned above, MPA is a good service/product, it has big demand. And therefore it can generate revenue stream (e.g. market fees). IMO it would be nice if those who take the risk and support (borrow) MPA shall have a cut from the revenue. To avoid passive yield harvesting, the borrower shall release borrowed MPA to the open market:
1. An MPA owner specifies market fee portion he would like to share with borrowers.
2. A user borrows the MPA providing the collateral (this may be BTS or any other MPA or UIA, as specified in the MPA collateral settings).
3. To receive the cut of the MPA market fees, the user has to place market sell order on MPA:Collateral asset (e.g. bitUSD:BTS) market.
4. As the MPA is being bought and sold by other users, market fee goes to the MPA's owner vesting balance, particular part of it (as specified in 1st step) is proportionally sharedropped to all borrowers who has executed step 3.

[gghi]

      又见到降低MCR的理论，降低MCR是愚蠢的。相反，我们应该建立个长效机制，不断地上调MCR,以促进系统的稳定运行。人性是贪婪的，必须强制玩家降低抵押率，最好的办法就是不断的抬升MCR。同时，在bitcny需求不变的时候，MCR的上升和喂价是正反馈的关系，MCR的上升要求喂价上升，从而带动BTS市场价不断上涨。

Seeing the theory of reducing MCR, it is foolish to reduce MCR. On the contrary, we should establish a long-term mechanism to continuously increase MCR so as to promote the stable operation of the system. Human nature is greedy. We must force players to reduce mortgage rates. The best way is to keep lifting MCR. At the same time, when the demand for bitcny remains unchanged, the rise of MCR and feeding is a positive feedback relationship. The rise of MCR requires feeding to rise, thus driving the BTS market price to rise continuously.
   

[JohnR]

A Microeconomic Introduction to Market-Pegged Assets on BitShares
Active Committee Member: JohnR

For the economic analysis skip to section 2.

1. My Background with BitShares and the explanation for this post.
When I first discovered BitShares and its decentralized exchange I was only moderately interested.  When I discovered that its core asset: BTS functions as collateral for dynamic stable coins I became addicted to learning how it worked.  I am interested in understanding how the operate and their infinite applications.  As a nice bonus I started to realize the cryptoasset itself (BTS) had a strong price sensitivity to the usage of smartcoins.  In simple terms, every dollar demanded in smartcoins puts a lot of demand pressure on BTS itself (this means price will have a tendency to increase).  Not only is this good for holders looking to see appreciation, but I appreciate the mathematical elegance of such a relationship.  When I was a BitShares novice it seemed simple: clearly the demand for USD is huge.  There are billions of them floating around the world.  Also people in the crypto world seemed to be obsessed with stable coins and the front runner at the time: Tether, was facing a lot of scrutiny for being unbacked.  I felt that it was only a matter of time before the market realized this and BTS went to the moon.  The truth, as I am closer to understanding now, is more mixed and definitely more interesting.

1.0.  A special thanks to bitcrab for showing me the scalability risks associated with a loose peg to the USD (exchanges will think critically of bitUSD if it consistently trades above one USD).  And additional thanks to xeroc and clockwork for refining my understanding of smart-coin technical operations.

1.1 Background: bitUSD
One of the most practical use cases for BitShares are market-pegged assets.  Two of the most practical MPAs are bitCNY (Chinese Yuan) and bitUSD (United States Dollar).  These are cryptoassets which attempt to track the real-world value of their nominal counterparts.  The first challenge is quite obvious: the real-world currencies are backed by nothing but the ‘full faith and credit of each sovereign nation (or at least the respective central banks thereof).  The crypto-corollaries are backed by our native asset: BTS.  Currently one bitUSD mandates 1.75 x (n BTS = 1 USD).

Reference image 1: bitUSD https://i.imgur.com/HcyqBKf.png

BitUSD has value because it is collateralized by BTS.  Users can exchange bitUSD for any cryptoasset on the BitShares exchange.  They can post limit orders for whatever exchange rate they choose.  But where bitUSD technically gets its value, the backstop in an illiquid market, is from the settlement feature which allows a holder to exchange bitUSD for 100% of the feed price (after a 24 hour waiting grace period). 

2: Stimulus: bitUSD market price is “inefficient”.

Reference image 2: https://i.imgur.com/CrXsoTR.png . -  Notice something? 

Why does bitUSD trade at a premium for fiat USD?  Anything above or below that one USD mark is technically ‘inefficient’.

2.1 Explanation 1: Risk Premium
So now we know what the holder of bitUSD gets for holding, but what does the other side of the equation get out of this?  The user who created that bitUSD and puts it into the market (the bitUSD ‘short’) has a future liability.  He sacrifices the free use of some BTS for the present right to exchange the bitUSD.  Now the short would of course prefer that bitUSD never gets settled – an unanticipated forced swap may come at an inconvenient time.  Yet this risk is ever-present.  In financial theory, market participants are compensated for taking on risk.  Investors in highly distressed companies negotiate for higher premiums or returns.  In BitShares this demand for premium may take the form of an unwillingness to sell the bitUSD at par value – a reservation price of 1.02 or 1.03 may satisfy the short’s incurred risk for keeping the position.

2.2 Explanation 2: Cost of Capital
There is only one way for bitUSD shorts to minimize the risk of being called on a settlement: maintaining a high collateral ratio.  As the network currently functions, a call for settlement exchanges with the least collateralized position.  It is entirely possible that the least collateralized position may in fact be 2x collateralized.  This leads to the second potential explanation for a higher bitUSD price.  Notice in the first chart that perfect collateralization of BitUSD with BTS is 1:1.  Anything above this amount is categorized as ‘overcollateralization’.  Many critics of conventional private banking focus on the fractional reserve lending system: wherein a single bank will take in one dollar of deposits then proceed to issue ten dollars worth of loans on the same dollar.  BitUSD is the opposite of this: for one dollar worth of ‘deposits’ with the network, the network will issue ~ .5 USD worth of bitUSD (the true number depends on the average collateral ratio for all bitUSD but this simplification is sufficient to prove the point).  While the conventional monetary system is awash with digital dollars, the BitShares network suffers a lack of supply. 

Similar to the risk premium mentioned above, bitUSD shorts may seek to be compensated for the excess capital sitting idly in the position.  That individual could deploy his capital in various activities more productive than earning zero percent return.  If he has to put up so much capital it is rational to expect him to be reluctant to sell for close to par value (1 usd).  Here the motivation is slightly different than the risk premium, but the result is the same: a reluctance to sell one bitUSD for one usd. 


3 Supply/Demand/Equilibrium Models

A note.  Typically the models below are used to analyze discrete shifts in demand or supply.  I will bend the rules here.  I am not examining the impact of a shift in demand/supply for BitShares.  Rather I am seeking to prove that the reason bitUSD has shifted from its equilibrium price of 1 USD is driven by supply side forces rather than demand side forces.

Perfect Harmony a.k.a. Equilibrium.  When the quantity demanded equals the quantity supplied the price and quantity are considered “efficient”.

Reference image 3: https://i.imgur.com/jhKnkoE.png

This is a theoretical situation that serves as a starting point for modeling the outcome we seek to achieve. 

When a good or service is undersupplied on the market, prices will increase and quantities exchanged at the market price will decrease.  The distinctive characteristic of an under-supply is that quantity exchanged is depressed from equilibrium.

When a good or service is overdemanded on the market, prices will increase and quantities exchanged at the market price will increase.  The distinctive characteristic of an over-demand is that a higher quantity are exchanged at the market price than would be exchanged at equilibrium.

Reference image 4: https://i.imgur.com/1kXua58.png

Reference image 5: https://i.imgur.com/GqdrU9l.png

4 Model Conclusion. 

Without perfect information we cannot know precisely what is causing the inefficiency (increase in demand or decrease in optimal supply).  But the key is to notice the difference in quantity; this supports a supply side problem rather than a demand side problem.  If bitUSD were facing a lack of demand we would expect to see a lower price and not a higher price.  More often than not, bitUSD trades above it’s par value.  Further I believe there is a sub-optimal amount of circulating bitUSD (compare Tether to bitUSD/CNY) and the inference is that the network faces a supply-side problem rather than a demand side.

The value in this exercise is to identify the most appropriate method for addressing a problem.  Supply side problems should be solved with supply side solutions.  Demand side problems should be addressed with demand side solutions.  Observing the charts above should give some intuition why mismatching problem and solution type will further exacerbate price/quantity dislocations.

5. Exploring solutions with members

Does the above analysis make sense to you?  We can concentrate our collective efforts on supply side solutions if so.

[JohnR]

Thank you for the comment.  I had some recent conversations that enlightened me about the community demand for bitCNY and bitUSD to track their fiat counterparts more closely.  The committee is hard at work considering how to make this a reality.

     


              I hope you can work hard for 1BITCNY=1cny.    and   work hard for  1bitusd=1usd

[gghi]

     


              I hope you can work hard for 1BITCNY=1cny.    and   work hard for  1bitusd=1usd

[ripplexiaoshan]

Welcome on board!

[Digital Lucifer]

Thank you all for the amazing support.  At the moment I am out of the USA and will be more available after the upcoming week.  I look forward to solidifying relationships with the global BTS community and constantly learning in order to serve all stakeholders effectively.

Kind regards,
JohnR

Welcome and thank you in advance for all future (fresh for now) blood donations you will do for the blockchain.

Good luck!

[JohnR]

Thank you all for the amazing support.  At the moment I am out of the USA and will be more available after the upcoming week.  I look forward to solidifying relationships with the global BTS community and constantly learning in order to serve all stakeholders effectively.

Kind regards,
JohnR

[binggo]

Charge the security deposit from the asset.   the security deposit should be 888bts at least, to curb the fraudulent and phishing asset.

when someone create a asset，the man need to pay the security deposit to active the asset every year, the security deposit is circular, when paid the new security deposit, then return the old security deposit.

when the asset didn't renew the security deposit timely，then forbid the trading of this asset;

if the asset didn't renew the security deposit  two years，then the DEX can confiscate the security deposit.

hmmm..you might have something there

just for BITCNY and B1TCNY or BITUSD and B1TUSD，so amazing asset！！！

[clockwork]

Charge the security deposit from the asset.   the security deposit should be 888bts at least, to curb the fraudulent and phishing asset.

when someone create a asset，the man need to pay the security deposit to active the asset every year, the security deposit is circular, when paid the new security deposit, then return the old security deposit.

when the asset didn't renew the security deposit timely，then forbid the trading of this asset;

if the asset didn't renew the security deposit  two years，then the DEX can confiscate the security deposit.

hmmm..you might have something there

[binggo]

and i don't think change fee is a good idea, let's consume the Reserve Pool and see what will happen!!!

and you will find soon: you do anything is nothing.

[binggo]

1. Asset-Specific:CREATE ASSET:Longer Symbols.

The standard FEE of Longer Symbols should be 1000 bts at least, to curb the fraudulent and phishing asset.

2. Charge the security deposit from the asset.   the security deposit should be 888bts at least, to curb the fraudulent and phishing asset.

when someone create a asset，the man need to pay the security deposit to active the asset every year, the security deposit is circular, when paid the new security deposit, then return the old security deposit.

when the asset didn't renew the security deposit timely，then forbid the trading of this asset;

if the asset didn't renew the security deposit  two years，then the DEX can confiscate the security deposit.

[JohnR]

I am sure the other committee members, proxies, and large stakeholders who have not voiced an opinion already are beyond busy carrying out their efforts for the general welfare of the blockchain and all constituents. 

That being said I do sincerely hope to engage more people in an honest discussion about the matters discussed already in this thread as well as my continued earnest candidacy for committee membership.

We are entering a phase of legitimacy for distributed enterprise (including BitShares) and I am encouraged by the professionalism being displayed by key community members already.  And I know the future holds more promise of the same.

[Digital Lucifer]

I would also like to ask why the rest of Committee is not welcoming new member proposal and fees discussion ?

I see few of them active around but not in this specific thread for a week, is that a way to welcome new initiatives ?

[Digital Lucifer]

LTM Users too, they'll only get 50% instead of 80% cashback.

Right .. that's somewhat of a show stopper assuming LTM upgrades were made with the expectation to spare 80% of the fees .. :-/
I'd say, the most fair approach, if committee chooses to change network percentage was to have it changed independent of the other fees and have a proposal expire after 4 weeks. That at least gives everyone sufficient time to do their math ..

I support the limit order fee increase. I would suggest that the prominent gateways specifically get informed on that with a weeks notice to adjust their market fees. Additionally, if the committee feels like network fee % is a to deep-cutting decision the BTS holders can always be asked.

Since we are setting up Newsletter and Support departments for new bitshares.org - Committee can have department to issue newsletter/updates to gateways who submitted their respective legal contacts for it. If they not comply with it, in worst case can be delisted from wallet.bitshares.org

I support fully these movements towards more success for BitShares as Priority 1 - enforcing some Compliance with 3rd parties.

[sschiessl]

LTM Users too, they'll only get 50% instead of 80% cashback.

Right .. that's somewhat of a show stopper assuming LTM upgrades were made with the expectation to spare 80% of the fees .. :-/
I'd say, the most fair approach, if committee chooses to change network percentage was to have it changed independent of the other fees and have a proposal expire after 4 weeks. That at least gives everyone sufficient time to do their math ..

I support the limit order fee increase. I would suggest that the prominent gateways specifically get informed on that with a weeks notice to adjust their market fees. Additionally, if the committee feels like network fee % is a to deep-cutting decision the BTS holders can always be asked.

[xeroc]

LTM Users too, they'll only get 50% instead of 80% cashback.

Right .. that's somewhat of a show stopper assuming LTM upgrades were made with the expectation to spare 80% of the fees .. :-/
I'd say, the most fair approach, if committee chooses to change network percentage was to have it changed independent of the other fees and have a proposal expire after 4 weeks. That at least gives everyone sufficient time to do their math ..

[clockwork]

One cool thing about increasing the network's cut on transaction fees is .... wait for it ... the users are not affected. They pay 100% anyways. The only ones impacted are basically
* openledger, who claimed that referral fees are not their business
* cryptobridge, who seems to make money by listing fees and trading
* other frontends that may come with their own assets just like OL and CB
* bitshares europe, which sofar only has referral fees as income (as it's owner, I would rather see BitShares grow than hold back rational business decisions out of pure and stupid greed)

LTM Users too, they'll only get 50% instead of 80% cashback.

Not sure how many bots are depending on that for their profit margin.

[JohnR]

As far as trading fees are concerned. Network fees for trading are WAY too low. Market fees (on gateway assets as well as bitAssets) are too high.

I agree with this completely.  The main point I'm trying to get across is that bts:bitUSD & bts:bitCNY are by FAR the most actively traded pairs.  If we want to a have an impact we should focus on variable/marginal fees there.  Since there is already a market fee, already within committee (community) control it seems intuitive to me to start there.  Note the network fee is a flat fee, and since the overwhelming majority of exchange trading pairs have low order creation I'm not sure it will have a huge impact.  Clockwork has a lot of experience here (not to mention put a lot of energy/thought into the matter) so I do support raising network fees while we consider how best to use bitasset market fees.  I can understand not wanting to formally apply some of the current market fee to network integrity (reserve pool).  I'm indifferent between that and simply raising network fees/lowering bitasset fees. 

I do not want to subsidize private gateways either.  I don't immediately see how charging low network fees is bailing out private gateways.  They are basically CEXs leveraging the BTS infrastructure.  In that sense I do see your point - although 'free-riding' is probably the more accurate term.  Probably a longer conversation about how we can better align the incentives there.

One cool thing about increasing the network's cut on transaction fees is .... wait for it ... the users are not affected. They pay 100% anyways. The only ones impacted are basically
* openledger, who claimed that referral fees are not their business
* cryptobridge, who seems to make money by listing fees and trading
* other frontends that may come with their own assets just like OL and CB
* bitshares europe, which sofar only has referral fees as income (as it's owner, I would rather see BitShares grow than hold back rational business decisions out of pure and stupid greed)

I am glad we all seem to agree on this.  A more equitable split between the network and the referrer will make all of our efforts more effective.

[xeroc]

One cool thing about increasing the network's cut on transaction fees is .... wait for it ... the users are not affected. They pay 100% anyways. The only ones impacted are basically
* openledger, who claimed that referral fees are not their business
* cryptobridge, who seems to make money by listing fees and trading
* other frontends that may come with their own assets just like OL and CB
* bitshares europe, which sofar only has referral fees as income (as it's owner, I would rather see BitShares grow than hold back rational business decisions out of pure and stupid greed)

[paliboy]

Paliboy, are you suggesting unwinding prior accounts or making account names renewable on a going-forward basis?

It should be as non-destructive as possible, we can't just take account names from people.

I don't think we should be touching accounts. They work fine as they are. Just increase fees there because people make more accounts than they need (>1.1m accounts created for 30k active users). Faucet improvements in account creation would help. Large number of accounts also puts unneeded strain on the chain.

Large account creation income does not mean it's a profitable operation. It means that the ratio of fees / op is wrong and that other ops are much cheaper than they should be.

I completely agree that we shouldn't touch accounts as long as there are other ideas to increase income.

Committee asset fee income != reserve pool. I will gladly entertain the suggestion that escrow workers come to an agreement with the committee so that they can always trade worker pay BTS to bitUSD or bitCNY at a fair price if the market doesn't provide enough liquidity. I will not accept treating fee income as part of the reserve pool though.

What do you suggest to do with this income if committee doesn't agree with escrow workers on fair price?

It's not asset creation that brings in a lot of funds but rather asset issuance (as gateways transfer UIA IOUs in and out). That is a fee that should probably be not raised (or even lowered) as it should not be such a big part of the reserve pool income and it is also a large cost gateways need to cover (by setting higher market fees). So I would gladly lower their costs there if that means agreeing to lower market fees.

I misunderstood this income. I agree that asset issuance fees should stay low.

[clockwork]

Xeroc I think 50/50 makes sense as a starting point.  That would more than double the income from network fees and referrers still retain a strong incentive to splash their ref links and bring on new users.

Your point of concern about trading fees I think is on everyone's mind here.  That's why I suggest leveraging some of the current asset variable fee towards maintaining the network.  I understand the original intent of the asset fee was to increase liquidity on those two asset in a neutral way, managed by committee.  That's a good objective.  But is it worth 10x the capital flow than accrues to the network?  Put more simply: is committee offered liquidity on two bitassets worth ten times more than all witness and worker proposal pay which power the entire platform?  To me it is clearly not worth the discrepancy.

Paliboy, are you suggesting unwinding prior accounts or making account names renewable on a going-forward basis?

Increasing the network's cut is my ideal starting point too. I believe 20% is way too low. At the same time , I believe it will be difficult for the community to accept (especially those that invested in LTM accounts on the premise of 80% cashback) hence why I focused on base fees first.

As far as trading fees are concerned. Network fees for trading are WAY too low. Market fees (on gateway assets as well as bitAssets) are too high.

Ignoring bitUSD/bitCNY for a moment which I also would like to see market fees reduced for since it's a "community" owned asset through the committee (which blurs the lines a bit...it might be so but it's not really equivalent to reserve profits), the rest of the gateway assets are business owned.

Are we seriously suggesting that the network should charge ridiculously low fees so that someone else's for-profit business remains competitive? I'm sorry but I don't see why *I* or xeroc or any other committee member should spend hours studying fee schedules and operation breakdowns etc. trying to "fix" stuff just so that a gateway can make more profit (or incur less loss). If they can't figure out a way to increase their userbase & stay competitive , I really don't see why the network should bail them out by charging less than 1/8th of a cent so they can charge 0.1-0.2%

(This is also the point where I remind you that committee work is unpaid )


As far as paliboy's suggestions are concerned.

Committee asset fee income != reserve pool. I will gladly entertain the suggestion that escrow workers come to an agreement with the committee so that they can always trade worker pay BTS to bitUSD or bitCNY at a fair price if the market doesn't provide enough liquidity. I will not accept treating fee income as part of the reserve pool though.

It's not asset creation that brings in a lot of funds but rather asset issuance (as gateways transfer UIA IOUs in and out). That is a fee that should probably be not raised (or even lowered) as it should not be such a big part of the reserve pool income and it is also a large cost gateways need to cover (by setting higher market fees). So I would gladly lower their costs there if that means agreeing to lower market fees.

I don't think we should be touching accounts. They work fine as they are. Just increase fees there because people make more accounts than they need (>1.1m accounts created for 30k active users). Faucet improvements in account creation would help. Large number of accounts also puts unneeded strain on the chain.

Large account creation income does not mean it's a profitable operation. It means that the ratio of fees / op is wrong and that other ops are much cheaper than they should be.

[binggo]

https://bitsharestalk.org/index.php?topic=26762.0

[JohnR]

Xeroc I think 50/50 makes sense as a starting point.  That would more than double the income from network fees and referrers still retain a strong incentive to splash their ref links and bring on new users.

Your point of concern about trading fees I think is on everyone's mind here.  That's why I suggest leveraging some of the current asset variable fee towards maintaining the network.  I understand the original intent of the asset fee was to increase liquidity on those two asset in a neutral way, managed by committee.  That's a good objective.  But is it worth 10x the capital flow than accrues to the network?  Put more simply: is committee offered liquidity on two bitassets worth ten times more than all witness and worker proposal pay which power the entire platform?  To me it is clearly not worth the discrepancy.

Paliboy, are you suggesting unwinding prior accounts or making account names renewable on a going-forward basis?

[paliboy]

1) I agree with asset fees on USD/CNY, I would rather use these fund directly to fund worker than to trade
2) totally agree that the network should get bigger share, probably gradually adjusted (e.g. 10 per cent points with every hard fork, target being something between 50% and 80% for network)

I'll copy my Steemit reply to clockwork's post here:

Since account creation and asset creation brings most of the fees, why not to leverage that first?

1. let's start with assets, switch to pricing model similar to domain names... asset creation fee pays it for e.g. 1 year, then you need to renew, assets are being create mainly by businesses so it wouldn't annoy ordinary users; some safety measures would be necessary so that e.g. you cannot "steal" an asset name that issuer forgot to renew; what to do with prefixed assets etc.
2. decouple private keys and account names... similar to first point, human-readable account name is a service that you need to renew annually; users need to be able to get their funds back after their name expires

[xeroc]

1) I aggree that trading fees might be the easierst to "earn" some solid money. The only hesitation that comes to my mind is the risk of users going somewhere else (including centralized exchanges). We are not in the position of risking those few traders over trading fee. Also trading is only one aspect of the blockchain

2) I would very much rather change the network fee percentage. Although I am biased here as the operator of BitShares Europe which earns its income there, I do belive that a) the blockchain should benefit more from the transactions fees and b) changing this very publicly might actually bring some people to look into the referral program that didn't know about it already. So, I personally think we could as well raise it to 50%

[JohnR]

Clockwork,

The equivalent result could be had by apportioning some of the 0.1% variable fee from committee trading to reserve pool.  I agree that network fees are very low.  At the same time I would like to see trading across many assets and not concentrated in a few UIA gateways.  My concern is crowding out some of the more obscure/low volume tokens when we are already charging more than 10x the network fee on a couple trading pairs.  Does that make sense?

If you disagree, or think that's too complex I understand.  It sits a little strange with me to debate raising network fees when net fees are already rather high on our most prized trading pairs.

Regarding 2, yes I know some accounts have a lot at stake there so I would like to see a community discussion.

[clockwork]

1) Changing network fess on SPECIFIC assets would require a HF (and not sure if even possible)

Network fees are way too low across the board.. Might as well increase them overall like I suggest.

2) Would be ideal but unsure how the community will react.

Interesting to note your thoughts on USD/CNY market fees. Demand for those assets is indeed exceptionally high (which is the reasoning behind the fees + operation worker in the first place)

[JohnR]

I would like to build on the solid research already published by Clockwork (https://steemit.com/bitshares/@clockwork/bitshares-fees-the-fee-schedule-and-dex-profitability) and Abit (https://steemit.com/bitshares/@abit/bitshares-block-chain-historical-data-search-analysis-and-visualization) 

I was interested with Clockwork’s observation that the BitShares reserve pool is running at a chronic deficit.  So far as the community desires fiscal balance and sustainability, it’s clear we must decrease expenses (witness/worker proposals) or increase income (revenue from fees).  Decreasing expenses significantly is short-sighted because BitShares has a lot of growth ahead and doing so would be akin to cutting the legs from under ourselves.  So naturally we should have a conversation about increasing network operations and or the fees associated with those operations.

I am against raising networks across the board before considering how the bitUSD/CNY variable fee can be used to support the health of the network (witness/worker proposals).  As shown below, fees are already rather high, even by centralized exchange standards.  For some of the more popular trading pairs, users face fees over 0.3% in total.  With only a small fraction of that actually going to support the core infrastructure of the platform.

Fees in context:
Hypothetical fees incurred on 100 bitUSD round-trip trade for BTC and back         
              BTS Network Fee  bitUSD Variable Fee     Private Gateway Fee
OpenLedger   0.01156           $0.10                  $0.20
GDEX            0.01156           $0.10                  $0.10
RuDex           0.01156           $0.10                  $0.05


The private gateway fees are off the table for this discussion.  What is immediately noticeable is how much greater the bitUSD variable fee is than the network fee.  Of course, the difference is less on smaller orders and greater on larger orders.  Still, considering bitUSD/CNY have shown robust trading activity this is a data point that the market can bear significantly higher fees than the flat network fee.

When the bitUSD/bitCNY variable fees were originally introduced I was against them.  Notwithstanding the results of the liquidity market operations (the explicit intention of the additional fee) I have come around to realize a much bigger point.  The demand for trading bitUSD has proven rather inelastic with respect to the transaction fees. 

Elasticity is a short-hand economics term meaning how much market participants will alter their behavior in response to a given change.  E.g. alcohol and cigarette taxes are considered the most efficient taxes because they do not alter behavior significantly – people who smoke will likely continue to smoke whether the cost of a pack amounts to two USD or three.  The upshot here is that bitUSD is a unique token and the market demand for trading remains robust despite the increased fee.  If we want to increase the reserve pool, we should consider tapping some of the current fees levied on bitUSD/CNY or increasing network fees slightly on those assets alone.

A second observation is the 20/80% referral vesting mechanism.  Even a strong increase in network activity/revenue will have a muted effect so long as only 1/5 of the revenues are actually returning to the reserve pool.  I understand the original reasoning for such lucrative referral structures.  I also think it’s worth having a discussion whether this structure has yielded the results the community feels is worthy of such a high price to pay.  This is the most immediate way to increase the force multiplier of network activity.  At the same time I recognize this may be a sensitive topic because people may have planned according to this current 20/80 program.

So my calls for discussion are:
1) What do you think of augmenting the fee structure on bitCNY/USD to increase the flow to the reserve pool from the trading of those assets? 
2) What do you think of slightly modifying the ratio between referrer vesting and reserve pool income?

[JohnR]

Thank you abit.  That means a great deal coming from such a public and respected individual as yourself.

[abit]

Thanks for your efforts. Voted.

[JohnR]

Honored to have your feedback and support xeroc, clockwork, and sschiessl

I appreciate the important role that both proxies and the committee play in the BTS ecosystem.  Having many proxies representing diverse factions of holders increases the decentralization of power as well as improving voting participation and efficiency.  I see the logic in recommending to become a proxy.  As you know, the proxies interaction with the governance protocol is only affirmative at this time.  Proxy can add their vote or remove their vote if they already support.  If the proxy had more ability to express both affirmative and negative votes I would reconsider campaigning as a proxy.

I prefer an opportunity to make a direct contribution on technical governance.  Rolling up the sleeves to measure and modify efficient fee structures on DEX is the kind of nerdy activity I am looking for.  I will study the economic state of the native DEX and share all conclusions and recommendations   

I do not mind saying that I have a strong preference for smartcoins and believe fees should encourage their prosperity and fecundity.  I look forward to joining your discussions about details like network fees.  And I am optimistic about the future of BitShares and look forward to working the great team of decentralized and talented people in this governance community.

[sschiessl]

Voted as well

[clockwork]

Voted,

as per previous responses, proxy is a better way to make a difference at this point but also agree with xeroc.

[xeroc]

much appreciated, but to destroy your illusion: committee is mostly a janitor job. there's no prestige or any other bonus you'll get from it.

I would rather see you becoming a proxy, trying to get influence. influence is where you can make an impact, not the committee, my opinion of course.

This.
There's not much prestige to get as a committee member and it is mostly work and no pay (at all)
Still, I do believe some more business mind is needed in the committee and once the number chrunching thru kibana is done and we get some statistics, we can
surely need someone with experience in economics. I am willing to approve this proposal to also get some freshness into the committee.

[Digital Lucifer]

John, after this discussion and after I've seen you are on-chain Committee member to be voted, i have nothing else to say, except:

Me, not as any 4profit or non-profit organization/company gave you my vote (with my account steem-not) to become an Active Committee Member.

And be careful if you get upvoted... how easy is to get some, its more easy to lose all

All the best wishes and good luck in this election!

Cheers,

DL.

[JohnR]

Fav, a valuable opinion at that.  Thank you for the perspective.

[fav]

Just a quick reality check: how do you imagine the work in committee and what tasks do you think they need to perform?

Fav,

I will be completely honest with you.  I am not the most experienced person around the BitShares blockchain.  I was not around for AngelShares or the genesis block.  As I said in the OP, I have been learning since I joined BitShares last summer.  So when I imagine work on the Committee, I imagine just that: a lot of work learning from the more senior members.

I am aware that this is not paid position. I also am aware that I know little about committee work from the backend/blockchain side.  I believe that I do have knowledge to help people such as Clockwork and all of the Committee members to improve stability of the blockchain, fees, and reserve pool.  Joining the Committee is not just a position; to me it is about being a good steward for the blockchain on behalf of the people who use it everyday.

I am just a humble guy from Michigan.  But I found some great people in this community.  I will do whatever is asked of me in order to contribute value to this community.

If you would like to speak more in-depth about a specific concrete issue (e.g. network fees on MPAs) I would be happy to do that in another thread.

much appreciated, but to destroy your illusion: committee is mostly a janitor job. there's no prestige or any other bonus you'll get from it.

I would rather see you becoming a proxy, trying to get influence. influence is where you can make an impact, not the committee, my opinion of course.

[JohnR]

Just a quick reality check: how do you imagine the work in committee and what tasks do you think they need to perform?

Fav,

I will be completely honest with you.  I am not the most experienced person around the BitShares blockchain.  I was not around for AngelShares or the genesis block.  As I said in the OP, I have been learning since I joined BitShares last summer.  So when I imagine work on the Committee, I imagine just that: a lot of work learning from the more senior members.

I am aware that this is not paid position. I also am aware that I know little about committee work from the backend/blockchain side.  I believe that I do have knowledge to help people such as Clockwork and all of the Committee members to improve stability of the blockchain, fees, and reserve pool.  Joining the Committee is not just a position; to me it is about being a good steward for the blockchain on behalf of the people who use it everyday.

I am just a humble guy from Michigan.  But I found some great people in this community.  I will do whatever is asked of me in order to contribute value to this community.

If you would like to speak more in-depth about a specific concrete issue (e.g. network fees on MPAs) I would be happy to do that in another thread.

[Digital Lucifer]

As a reminder: the Committee is approved by stakeholders and formally tasked with setting policy for the BitShares blockchain including:

Transaction and trading fees;
Blockchain parameters, such as block size, block interval; &
Referral and vesting parameters such as cash back percentage and vesting periods.

re Fav and seems like its perfect set of tasks for someone with B.A. in Economics.

Yep, that's the paper description.

I get your point on this one... Lets see what Candidate will answer to Active Member of Committee.

[fav]

As a reminder: the Committee is approved by stakeholders and formally tasked with setting policy for the BitShares blockchain including:

Transaction and trading fees;
Blockchain parameters, such as block size, block interval; &
Referral and vesting parameters such as cash back percentage and vesting periods.

re Fav and seems like its perfect set of tasks for someone with B.A. in Economics.

Yep, that's the paper description.

[Digital Lucifer]

As a reminder: the Committee is approved by stakeholders and formally tasked with setting policy for the BitShares blockchain including:

Transaction and trading fees;
Blockchain parameters, such as block size, block interval; &
Referral and vesting parameters such as cash back percentage and vesting periods.

re Fav and seems like its perfect set of tasks for someone with B.A. in Economics.

[fav]

Just a quick reality check: how do you imagine the work in committee and what tasks do you think they need to perform?

[kimchi-king]

John will be a fantastic addition to the BitShares Committee without out a doubt. He is a man of action which the community always welcomes. I fully support John and hope that others will do the same.

[apasia.tech]

Just like to offer firstly a thanks for the mention, and that our full whole-hearted support goes behind this. John is a great young mind and having completed an extensive education in the fields of law and economics, I know from following his studious and professional work around here, it would be a fantastic motivation for him and asset to the community having him as a community member.

[JohnR]

Today I formally announce my intent to join the BitShares Committee. 

As a reminder: the Committee is approved by stakeholders and formally tasked with setting policy for the BitShares blockchain including:

Transaction and trading fees;
Blockchain parameters, such as block size, block interval; &
Referral and vesting parameters such as cash back percentage and vesting periods.

I discovered the Graphene-based chains last summer.  I was hooked.  I watched every public video with Dan Larimer talking about the potential for BitShares to revolutionize finance (BitShares TV: https://www.youtube.com/channel/UChtICzF0ZEhhgoMA8YWhULw/videos is a great resource for those new to the platform or interested in its beginnings).  For months I could not shake the question of why BTS had yet to have a bigger impact.

This lead me to become more active in the community.  Joining the Discord and Telegram channels where I met great individuals like Kimchi-King, Fav, and Fuzzy.  On BitShares hangouts and in the chat rooms I listened to the community and began taking more upon myself to contribute.  I identified two areas where I could bring value: network infrastructure and legal perspective. 

As many of you know Bittrex, halted trading in BTS in the fall of 2017.  This opened my eyes to the serious challenges facing a DAC like BitShares.  In many ways BitShares is vulnerable to adversaries in the real world who have not the time nor interest in understanding what we are doing here.  I believe this network can thrive and prosper within the current system of national boundaries and jurisdictions.

My platform principle is the support and sustainability of smartcoins on the DEX.  Native trust-less assets with autonomous and sound collateral ratios (e.g. bitUSD) remains one of the core advantages BitShares holds over the rest of the crypto world.  I will strive to foster innovation for new smartcoins and collaboration and support for existing smartcoins.

I hope to join the Committee and help the community make the most of every person working to make BitShares realize it’s full potential.  Thank you.