CPOS (cooperative proof of stake) discussion thread

[santaclause102]

I don't think it would be a good idea to hard code a share dilution for a fixes amount of time. Would there be a possibility to do a temporary share dilution without hard forking? Would be helpful, especially at the beginning, in case tx fees are not enough and the gains from adoption would be the highest.   

Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.

This is a good idea and would be necessary if delegates also make reinvestment decisions. My concern was that an entity with an interest to harm the network that has a lot of financial backup (like a state) can survive this low compensation better. But there is probably no way to prevent it and a harmful actor could obfuscate its identity anyway. Could it?

I thought about whether it is a problem that the max. amount of votes a delegate can get is 2% of all votes (pro - contra votes). But is should be no problem if it is not possible to vote for a delegate that would have more than 2% if you voted for him. Then the persona or team behind the delegate has to set up a new delegate with "votes free to be spent"...

Actually the max pro is 2% and the max against is 2%.

If a delegate gets +2% and -0.5% then the max. he can get is + 1.5% ? That would be a good additional incentive to make delegates try to avoid negative votes.

[bytemaster]

I don't think it would be a good idea to hard code a share dilution for a fixes amount of time. Would there be a possibility to do a temporary share dilution without hard forking? Would be helpful, especially at the beginning, in case tx fees are not enough and the gains from adoption would be the highest.   

Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.

This is a good idea and would be necessary if delegates also make reinvestment decisions. My concern was that an entity with an interest to harm the network that has a lot of financial backup (like a state) can survive this low compensation better. But there is probably no way to prevent it and a harmful actor could obfuscate its identity anyway. Could it?

I thought about whether it is a problem that the max. amount of votes a delegate can get is 2% of all votes (pro - contra votes). But is should be no problem if it is not possible to vote for a delegate that would have more than 2% if you voted for him. Then the persona or team behind the delegate has to set up a new delegate with "votes free to be spent"...

Actually the max pro is 2% and the max against is 2%.   

[santaclause102]

I don't think it would be a good idea to hard code a share dilution for a fixes amount of time. Would there be a possibility to do a temporary share dilution without hard forking? Would be helpful, especially at the beginning, in case tx fees are not enough and the gains from adoption would be the highest.   

Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.

This is a good idea and would be necessary if delegates also make reinvestment decisions. My concern was that an entity with an interest to harm the network that has a lot of financial backup (like a state) can survive this low compensation better. But there is probably no way to prevent it and a harmful actor could obfuscate its identity anyway. Could it?

I thought about whether it is a problem that the max. amount of votes a delegate can get is 2% of all votes (pro - contra votes). But is should be no problem if it is not possible to vote for a delegate that would have more than 2% if you voted for him. Then the persona or team behind the delegate has to set up a new delegate with "votes free to be spent"... 

[Agent86]

Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.

I agree that there shouldn't be a fixed dividend rate that must be destroyed with each transaction.  If one delegate wants to advertise as being low cost and paying the network dividends by destroying transaction fees, he/she is free to do so.  If one delegate wants to sponsor a developer with their transaction fees, they can advertise that way.

[Troglodactyl]

The problem with this is that if you're reinvesting profits funneled through a small number of individuals, it isn't exactly a DAC anymore, and you start having more of the problems you have with traditional centralized structures. Funneling the profits through the delegates who are elected by stakeholders I think mostly solves this, but I don't see a need to artificially fix the percentage of transaction fees available to them for profit and reinvestment in the success of the network.

Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.

Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.

This might be good for political delegates (potentially not trustworthy?) and not sustainable for those delegates that only do it for profit.

The problem with this is that if you're reinvesting profits funneled through a small number of individuals, it isn't exactly a DAC anymore, and you start having more of the problems you have with traditional centralized structures.

Companies like DACs can hire other companies and outsource something that can not be done inhouse. This is the case anyway because there will de facto always be a developer (team) that maintains the DAC and thus performs such an outside service to it.

Funneling the profits through the delegates who are elected by stakeholders I think mostly solves this

Of course delegates have to be paid sufficiently. But that was not the point. The point was whether is makes sense to invest the companies revenues and / or shares into marketing so the price increase because of adoption increase can (by far) make good the expenses. 
Or do you mean that the delegates should decide how to invest the money? That could make a lot of sense. It would be like the CEOs of a company deciding what to do with the money from revenue and whether it makes sense to issue new shares and then reinvest it or pay dividends.

Yes, the point I'm making is that the shareholders should ultimately decide how their DAC should promote its growth.  They can do this directly by individually investing their time and resources in building the network and supporting developers.  They can also do this indirectly by voting for the delegates who they believe will best serve the network.  In my opinion there's no line between "political" delegates and "for profit" delegates.  Some delegates may be run by the developers, and some delegates may promise to donate a percentage of transaction fees to the developers, or to a particular marketing strategy.  Either way, it seems the market should be quite capable of selecting delegates with the desired dividend/reinvestment ratios, and I see no need to hard code it for the next ten years.  It seems unlikely that the developers can predict the needs of the network for the next ten years now more accurately than all of the shareholders will be able to perceive them in real time.

[santaclause102]

The problem with this is that if you're reinvesting profits funneled through a small number of individuals, it isn't exactly a DAC anymore, and you start having more of the problems you have with traditional centralized structures. Funneling the profits through the delegates who are elected by stakeholders I think mostly solves this, but I don't see a need to artificially fix the percentage of transaction fees available to them for profit and reinvestment in the success of the network.

Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.

Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.

This might be good for political delegates (potentially not trustworthy?) and not sustainable for those delegates that only do it for profit.

The problem with this is that if you're reinvesting profits funneled through a small number of individuals, it isn't exactly a DAC anymore, and you start having more of the problems you have with traditional centralized structures.

Companies like DACs can hire other companies and outsource something that can not be done inhouse. This is the case anyway because there will de facto always be a developer (team) that maintains the DAC and thus performs such an outside service to it.

Funneling the profits through the delegates who are elected by stakeholders I think mostly solves this

Of course delegates have to be paid sufficiently. But that was not the point. The point was whether is makes sense to invest the companies revenues and / or shares into marketing so the price increase because of adoption increase can (by far) make good the expenses. 
Or do you mean that the delegates should decide how to invest the money? That could make a lot of sense. It would be like the CEOs of a company deciding what to do with the money from revenue and whether it makes sense to issue new shares and then reinvest it or pay dividends.

[Troglodactyl]

The problem with this is that if you're reinvesting profits funneled through a small number of individuals, it isn't exactly a DAC anymore, and you start having more of the problems you have with traditional centralized structures.  Funneling the profits through the delegates who are elected by stakeholders I think mostly solves this, but I don't see a need to artificially fix the percentage of transaction fees available to them for profit and reinvestment in the success of the network.

Why not just let all delegates keep as much of the fee from their blocks as they want, and destroy the rest?  If they abuse that, they'll be voted out quickly, and the market will naturally regulate the dividend rate and strategies for reinvestment.

[santaclause102]

You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.

Yep...

I'm sorry, I'm a little slow today. Couldn't catch the meaning here. Would you kindly extrapolate a bit?

So POS is more efficient than POW, meaning higher security and less costs for the network to provide the security. This leaves room to take the tx fees and either pay dividends or use them to grow the network (pay amazon to accept your tokens or other marketing efforts). You can cover marketing expenses by diluting shareholders = issue new shares (bitcoin issues 25 new coins / 10 minutes and dilutes shareholders by 10% per year this way). Now you can first dilute shareholders to pay for marketing which hurts those the most that have the biggest stake (in absolute terms). In absolute terms those that have the most also get the highest dividends when later marketing is not necessary any more because everyone understands how to use crypto currencies and sees the benefits etc...   

*If the "Bitcoin is a company" analogy applies it can't be that wrong for Bitcoin (and any other crypto service) what has evolved over decades for brick and mortar companies (the above; in the brick and mortar world: In reality companies only pay dividends when they think that they can not invest the revenue anymore profitably and can't grow anymore (e.g. coka cola))

Got it. Thank you.

You're welcome.

[onceuponatime]

You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.

Yep...

I'm sorry, I'm a little slow today. Couldn't catch the meaning here. Would you kindly extrapolate a bit?

So POS is more efficient than POW, meaning higher security and less costs for the network to provide the security. This leaves room to take the tx fees and either pay dividends or use them to grow the network (pay amazon to accept your tokens or other marketing efforts). You can cover marketing expenses by diluting shareholders = issue new shares (bitcoin issues 25 new coins / 10 minutes and dilutes shareholders by 10% per year this way). Now you can first dilute shareholders to pay for marketing which hurts those the most that have the biggest stake (in absolute terms). In absolute terms those that have the most also get the highest dividends when later marketing is not necessary any more because everyone understands how to use crypto currencies and sees the benefits etc...   

*If the "Bitcoin is a company" analogy applies it can't be that wrong for Bitcoin (and any other crypto service) what has evolved over decades for brick and mortar companies (the above; in the brick and mortar world: In reality companies only pay dividends when they think that they can not invest the revenue anymore profitably and can't grow anymore (e.g. coka cola))

Got it. Thank you.

[santaclause102]

You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.

Yep...

I'm sorry, I'm a little slow today. Couldn't catch the meaning here. Would you kindly extrapolate a bit?

So POS is more efficient than POW, meaning higher security and less costs for the network to provide the security. This leaves room to take the tx fees and either pay dividends or use them to grow the network (pay amazon to accept your tokens or other marketing efforts). You can cover marketing expenses by diluting shareholders = issue new shares (bitcoin issues 25 new coins / 10 minutes and dilutes shareholders by 10% per year this way). Now you can first dilute shareholders to pay for marketing which hurts those the most that have the biggest stake (in absolute terms). In absolute terms those that have the most also get the highest dividends when later marketing is not necessary any more because everyone understands how to use crypto currencies and sees the benefits etc...   

*If the "Bitcoin is a company" analogy applies it can't be that wrong for Bitcoin (and any other crypto service) what has evolved over decades for brick and mortar companies (the above; in the brick and mortar world: In reality companies only pay dividends when they think that they can not invest the revenue anymore profitably and can't grow anymore (e.g. coka cola))

[onceuponatime]

You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.

Yep...

I'm sorry, I'm a little slow today. Couldn't catch the meaning here. Would you kindly extrapolate a bit?

[bytemaster]

You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.

Yep...

[santaclause102]

You can justify dividends better if there was dilution to foster adoption which costs the most for those who later get high dividends...
If the DAC analogy applies it can't be that wrong for DACs what has evolved over decades for brick and mortar companies.

[Agent86]

I think DACs that can hire employees could easily outcompete ones that can't.  We could poach active members of other communities.  Why do volunteer work for NXT and donate your money to the community marketing fund while someone with a bigger stake doesn't do anything when you can work for BitShares X?

As far as guaranteed dividends, there's something that doesn't sit right with me the idea that someone can have a big stake of a DAC in a cold wallet somewhere and not do much of anything and be guaranteed that their proportional ownership goes up over time.

I totally agree with Claims that there are many situations where everyone would agree to give money to something as long as everyone has to give.  You can be in favor of taxes for roads that everyone must pay but still know you wouldn't pay the tax if it was just optional for each person.

[santaclause102]

So I have thought about it some and recognized that no company pays a dividend while in its growth phase.   Only after it has matured does it start paying dividends.   

In reality companies only pay dividends when they think that they can not invest the revenue anymore profitably and can't grow anymore (e.g. coka cola)

On the other hand, paying dividends is marketing in its own right and is effectively paying every shareholder to grow the network.   

The reality of the crypto market is: 5% per year is a nothing against the potential of mainstream adoption and shareholders might appreciate it if a specialized group does the marketing for them.