DAC employees

[Agent86]

You can vote against any of the initial delegates to abstain.

I know.  This is true for current DPOS voting.
Sorry if it wasn't clear.  I proposed a different voting system to be used to elect DAC employees.  In that voting system (approval voting) the absence of a vote for is a vote against.  A person trying to get elected as a DAC employee would essentially have to get over 50% of the stake to actively approve him/her so anyone who isn't aware of this person's candidacy is a default "no" vote.  Abstaining allows that person to remove themselves from these votes.

[bytemaster]

Ok, Another optimization to the voting algorithm:  THE RIGHT TO ABSTAIN.

A voter should have the ability to abstain.  For instance: I am a shareholder but I know that I'm a busy guy with other things going on and there are other shareholders who are more on top of things.  I am going to put my shares in cold-storage for a year.  I should have the right to send those shares to cold storage in a state of abstention where I am removed from the voting process.  This way I'm not gumming up the works for other shareholders trying to accomplish things by being a default "no" vote on everything.  I'm also not voting for somebody (employee/delegate) without keeping an eye on things so I might be voting for them after they have proven themselves unworthy of votes.

You can vote against any of the initial delegates to abstain. 

[Agent86]

Ok, Another optimization to the voting algorithm:  THE RIGHT TO ABSTAIN.

A voter should have the ability to abstain.  For instance: I am a shareholder but I know that I'm a busy guy with other things going on and there are other shareholders who are more on top of things.  I am going to put my shares in cold-storage for a year.  I should have the right to send those shares to cold storage in a state of abstention where I am removed from the voting process.  This way I'm not gumming up the works for other shareholders trying to accomplish things by being a default "no" vote on everything.  I'm also not voting for somebody (employee/delegate) without keeping an eye on things so I might be voting for them after they have proven themselves unworthy of votes.

[donkeypong]

Proving real world identity and and publicly available long term fitness / network reliability tests would be the two metrics I would judge a delegate on.

Yes, and initially I'll be supporting only delegates who show a deep commitment to Bitshares. Pretty soon, we'll need others as well and that new blood will be good. But I'll feel better if we start out with a group who understand Bitshares, appreciate it, and have stuck with the development through 'thick and thin'. There may be some growing pains and the profitability will not come instantly.

[Agent86]

I am updating the voting method and I believe this voting method can be robust and fair, it also requires broad consensus (over 50%):

The voting method for employees I propose to be "approval voting."  There are no down-votes and no restriction on how many different employees you can vote for using your stake.  Not voting for an employee indicates you do not support that employee.  Along with your vote for an employee you indicate an appropriate annual salary in bips (gets paid out daily).  Only an employee with over 50% support from the DAC will end up being paid.  Their salary is the median voted by stake (people who did not vote for the employee are included in the median as voting for a "0" salary).

Any "inactive stake" (no transactions for over 1 year and paid inactivity penalty) should be removed from the voting algorithm.

[santaclause102]

Representation isn't equivalent to consent, and dilution with seignorage granted to someone else is just redistribution.... and shareholders have motivation to invest time and resources to grow the value of their investment voluntarily.

If transaction fees are insufficient I'd suggest convincing shareholders to reinvest directly and voluntarily.  Allowing even a majority of stakeholders the discretion to dilute the stake of the minority without their consent is problematic.

I think you are worried about some kind of tyranny of the majority if elected employees were allowed to issue new shares.  I think what you have to keep in mind is that there is very little motivation for a majority to try to take advantage of a minority or "redistribute" money to themselves because there is just nothing keeping the minority there.  It's just too easy for them to take there support to a DAC that isn't majority owned by stupid A*holes.  And then those majority owners become majority owners of a whole lot of nothing.

It's just like if the US government tried to buy up half of bitshares X and then control it.  All they would do is put a bunch of money in peoples pockets who would then proceed to fork the DAC without the government stake honored.

A DAC is a FREE ASSOCIATION of people who's interests are aligned.

Our current representative government has problems and opportunities for abuse and corruption but a huge part of that is because of the barriers to entry/exit/participation.  If you have to take time off work to vote and then sometimes stand in line for hours and then someone makes a law you don't like, what can you do?  You can't say well "count me out" I'll not be following these laws and will just join this other group instead.

I think the larger a DAC became the more you would find how ineffective relying on volunteers to do things to boost everyone's value would become.  If you own 1 millionth of a DAC are you going to take time out of your day to grow the market cap of that DAC just so you can get 1 millionth of the fruits of your labor?

The key to decentralization is low barriers to entry and competition.   I fully suspect that if the majority went some stupid direction then the fall in the value of the shares could outweigh the benefits.   I think that all of these things are worth considering and as much as I hate 'inflation' in monetary systems backed by force, so long as there is competition the market will work things out.

Centralization isn't even really so much a problem with low barriers for competitor entry.  The issue is that this system needs to be designed for the long term, and as it succeeds and becomes more widespread, the barrier to entry increases due to the difficulty of achieving competitive network effect.  Because of this risk, I think great care should be taken before designing it in such a way that users may be forced to choose between enduring mild (or gradually increasing) oppression at the hands of the majority and abandoning the network and starting a new one.  The network will put down roots, and the the inertia that must be overcome to replace it will be significant.  Look at the current banking system, or even Bitcoin.  The fact that other solutions are technically superior isn't enough to replace an entrenched network.  It can still be done, but not until the disparity is quite wide and obvious it seems.

Also, particularly earlier on, and to those who don't spend hours debating these issues on the internet, splitting the network, or even a discussion of possibly needing to split it can shake confidence in the system.  Deliberately programming in potential exploits requires significant justification in my opinion.  Would anyone here support allowing delegates to confiscate funds selectively from particular addresses?  I think most of the same supportive arguments apply.

Once the DAC is too large to rely on volunteers (including initial AGS startup funding that's already being provided), I think transaction fees should be sufficient to cover expenses.  Transaction fees are the cost payed by customers.  If the business is too large and established to attract voluntary investors for growth, and too unprofitable to sustain its operations on what customers are willing to pay for service, I think we should either accept failure gracefully and try again, or try to convince the shareholders to deliberately engage to save the business.  Looking for murky semi-coercive alternate revenue streams seems like a bad answer.

The question is why should shareholders which all have the same interests (deflation) decide for dilution that hurts them long term. It can easily be a bad strategic / operational decision but to not have dilution can be the same bad decision.
One reason for a divergence of interests if that shareholders collude with those that get the money from the dilution (from the sell of new shares). 

[santaclause102]

If a delegate chooses to destroy his income as dividends, the rest of the network will accept it, since it's just a standard transaction.
If a delegate tries to take a higher income for himself (in the case it's not 100% of income already), the rest of the network will reject it, as it won't validate.

The requirement is "fee > required_fee", and "delegate_pay < max_delegate_pay".

So "fee >> required_fee" still passes, as does "delegate_pay << max_delegate_pay".

"fee < required_fee" or "delegate_pay > max_delegate_pay" does.

(actually, I think at the moment delegate_pay is fixed and they would pay dividends manually - but you get the concept)

The requirement is "fee > required_fee", and "delegate_pay < max_delegate_pay".

So setting max_delegate_pay to 1 or 100% should do the job of allowing delegates and therefore shareholders to decide about how tx are used.

You meant

"fee < required_fee" or "delegate_pay > max_delegate_pay" does NOT...

[santaclause102]

I say the delegates should be able to use transaction fees to hire people, take them as profit, or destroy them as dividends, and the shareholders should elect the delegates based on their plans.

Yep. This is what will happen no matter what you want to happen, as delegates are the ones who produce blocks and thus decide which rules they use to produce them.

What are the rules the delegates can choose to aspect or reject?

A delegate can do whatever they like, just like yourself. You can modify the code, rebuild the client, and run it. The only question is whether the rest of the network will accept it.

So if you choose to only accept transactions with a higher than standard fee, you can, because it will still validate.
If you choose to accept a *lower* than standard fee, the rest of the delegates will not validate your block. So you'd need a majority to change.

If a delegate chooses to destroy his income as dividends, the rest of the network will accept it, since it's just a standard transaction.
If a delegate tries to take a higher income for himself (in the case it's not 100% of income already), the rest of the network will reject it, as it won't validate.

Just think about whether the change is a *stricter* or *looser* requirement and that will tell you whether a delegate needs majority approval or not.

Equally the 10% is only a recommendation and some delegates can take 10%, some 5% and some 100% of the tx fees and have the rest (if it's not 100%) burned and the rest of the network would still validate the blocks from all those delegates (no need to fork)?

Lets discuss the difference between ideas and what is implemented:

Right now all delegates get paid the same average rate for producing a block.  This rate adjusts with the fees.  This is done to prevent perverse incentives around when to include transactions or not.   A delegate gets the same pay whether he includes the transactions or not.   However, delegates still have incentives to include transactions because the more fees that are collected the higher the average delegate pay goes.

I'm asking because the non controversial part in the CPOS thread was that delegates should get 100% of tx fees and then campaign for what they want to do with it: burn them/pay dividends, specific marketing actions, how much they want to keep for themselves etc.

[bytemaster]

I say the delegates should be able to use transaction fees to hire people, take them as profit, or destroy them as dividends, and the shareholders should elect the delegates based on their plans.

Yep. This is what will happen no matter what you want to happen, as delegates are the ones who produce blocks and thus decide which rules they use to produce them.

What are the rules the delegates can choose to aspect or reject?

A delegate can do whatever they like, just like yourself. You can modify the code, rebuild the client, and run it. The only question is whether the rest of the network will accept it.

So if you choose to only accept transactions with a higher than standard fee, you can, because it will still validate.
If you choose to accept a *lower* than standard fee, the rest of the delegates will not validate your block. So you'd need a majority to change.

If a delegate chooses to destroy his income as dividends, the rest of the network will accept it, since it's just a standard transaction.
If a delegate tries to take a higher income for himself (in the case it's not 100% of income already), the rest of the network will reject it, as it won't validate.

Just think about whether the change is a *stricter* or *looser* requirement and that will tell you whether a delegate needs majority approval or not.

Equally the 10% is only a recommendation and some delegates can take 10%, some 5% and some 100% of the tx fees and have the rest (if it's not 100%) burned and the rest of the network would still validate the blocks from all those delegates (no need to fork)?

Lets discuss the difference between ideas and what is implemented:

Right now all delegates get paid the same average rate for producing a block.  This rate adjusts with the fees.  This is done to prevent perverse incentives around when to include transactions or not.   A delegate gets the same pay whether he includes the transactions or not.   However, delegates still have incentives to include transactions because the more fees that are collected the higher the average delegate pay goes.

[toast]

If a delegate chooses to destroy his income as dividends, the rest of the network will accept it, since it's just a standard transaction.
If a delegate tries to take a higher income for himself (in the case it's not 100% of income already), the rest of the network will reject it, as it won't validate.

The requirement is "fee > required_fee", and "delegate_pay < max_delegate_pay".

So "fee >> required_fee" still passes, as does "delegate_pay << max_delegate_pay".

"fee < required_fee" or "delegate_pay > max_delegate_pay" does.

(actually, I think at the moment delegate_pay is fixed and they would pay dividends manually - but you get the concept)

[santaclause102]

I say the delegates should be able to use transaction fees to hire people, take them as profit, or destroy them as dividends, and the shareholders should elect the delegates based on their plans.

Yep. This is what will happen no matter what you want to happen, as delegates are the ones who produce blocks and thus decide which rules they use to produce them.

What are the rules the delegates can choose to aspect or reject?

A delegate can do whatever they like, just like yourself. You can modify the code, rebuild the client, and run it. The only question is whether the rest of the network will accept it.

So if you choose to only accept transactions with a higher than standard fee, you can, because it will still validate.
If you choose to accept a *lower* than standard fee, the rest of the delegates will not validate your block. So you'd need a majority to change.

If a delegate chooses to destroy his income as dividends, the rest of the network will accept it, since it's just a standard transaction.
If a delegate tries to take a higher income for himself (in the case it's not 100% of income already), the rest of the network will reject it, as it won't validate.

Just think about whether the change is a *stricter* or *looser* requirement and that will tell you whether a delegate needs majority approval or not.

Equally the 10% is only a recommendation and some delegates can take 10%, some 5% and some 100% of the tx fees and have the rest (if it's not 100%) burned and the rest of the network would still validate the blocks from all those delegates (no need to fork)?

[Troglodactyl]

Representation isn't equivalent to consent, and dilution with seignorage granted to someone else is just redistribution.... and shareholders have motivation to invest time and resources to grow the value of their investment voluntarily.

If transaction fees are insufficient I'd suggest convincing shareholders to reinvest directly and voluntarily.  Allowing even a majority of stakeholders the discretion to dilute the stake of the minority without their consent is problematic.

I think you are worried about some kind of tyranny of the majority if elected employees were allowed to issue new shares.  I think what you have to keep in mind is that there is very little motivation for a majority to try to take advantage of a minority or "redistribute" money to themselves because there is just nothing keeping the minority there.  It's just too easy for them to take there support to a DAC that isn't majority owned by stupid A*holes.  And then those majority owners become majority owners of a whole lot of nothing.

It's just like if the US government tried to buy up half of bitshares X and then control it.  All they would do is put a bunch of money in peoples pockets who would then proceed to fork the DAC without the government stake honored.

A DAC is a FREE ASSOCIATION of people who's interests are aligned.

Our current representative government has problems and opportunities for abuse and corruption but a huge part of that is because of the barriers to entry/exit/participation.  If you have to take time off work to vote and then sometimes stand in line for hours and then someone makes a law you don't like, what can you do?  You can't say well "count me out" I'll not be following these laws and will just join this other group instead.

I think the larger a DAC became the more you would find how ineffective relying on volunteers to do things to boost everyone's value would become.  If you own 1 millionth of a DAC are you going to take time out of your day to grow the market cap of that DAC just so you can get 1 millionth of the fruits of your labor?

The key to decentralization is low barriers to entry and competition.   I fully suspect that if the majority went some stupid direction then the fall in the value of the shares could outweigh the benefits.   I think that all of these things are worth considering and as much as I hate 'inflation' in monetary systems backed by force, so long as there is competition the market will work things out.

Centralization isn't even really so much a problem with low barriers for competitor entry.  The issue is that this system needs to be designed for the long term, and as it succeeds and becomes more widespread, the barrier to entry increases due to the difficulty of achieving competitive network effect.  Because of this risk, I think great care should be taken before designing it in such a way that users may be forced to choose between enduring mild (or gradually increasing) oppression at the hands of the majority and abandoning the network and starting a new one.  The network will put down roots, and the the inertia that must be overcome to replace it will be significant.  Look at the current banking system, or even Bitcoin.  The fact that other solutions are technically superior isn't enough to replace an entrenched network.  It can still be done, but not until the disparity is quite wide and obvious it seems.

Also, particularly earlier on, and to those who don't spend hours debating these issues on the internet, splitting the network, or even a discussion of possibly needing to split it can shake confidence in the system.  Deliberately programming in potential exploits requires significant justification in my opinion.  Would anyone here support allowing delegates to confiscate funds selectively from particular addresses?  I think most of the same supportive arguments apply.

Once the DAC is too large to rely on volunteers (including initial AGS startup funding that's already being provided), I think transaction fees should be sufficient to cover expenses.  Transaction fees are the cost payed by customers.  If the business is too large and established to attract voluntary investors for growth, and too unprofitable to sustain its operations on what customers are willing to pay for service, I think we should either accept failure gracefully and try again, or try to convince the shareholders to deliberately engage to save the business.  Looking for murky semi-coercive alternate revenue streams seems like a bad answer.

[santaclause102]

Proving real world identity and and publicly available long term fitness / network reliability tests would be the two metrics I would judge a delegate on.

[Agent86]

FreeTrade, I think you bring up important points and I don't know what a perfect implementation looks like or if there is such a thing.

I like the idea of voting by proxy. I also like the idea that maybe every share gets a for and against vote so people who vote for themselves will be voted against by others.  I don't know if a time delay so people can evaluate a candidate before they have any power helps, and prevents people from switching to evade the votes of people opposed.

I'm not saying it's easy to do.

[FreeTrade]

Several ideas exist for this such as Role Based Bounties and I think the Memorycoin team implemented exactly something like this.

It's a good idea to let DACs hire but we need to have an effective way of voting. It's actually harder to hire for long term role based bounties than for short jobs which can be easily defined in a smart contract.

Yes, this idea is very similar to the voting in MemoryCoin.  There was a lot of positivity about the idea from the outset, but also considerable criticism and some outright hostility about my management of it. It hasn't fared well and it's difficult to separate shortcomings in the idea from shortcomings in my launch of it.

From experience, the main problems you have to solve are

1. Shareholder disengagement - most shareholders, even those with large positions won't vote and won't educate themselves on the options - allowing proxy voting might help . . you might just be able to motivate enough shareholders to nominate a proxy they trust to vote for them.

2. Attracting talent - you need to advertise and attract talented individuals to fill the roles. Like with any company, recruitment is difficult. MemoryCoin had reasonable salaries at the start - around $300 a day, but few candidates.

3. Greed - some shareholders will try to abuse the voting system by voting funds for themselves. No amount of explaining will dissuade them. I assume this is greed, but there is a possibility it is motivated by ideological opposition to the idea of 'taxation'.