Author Topic: The need for change  (Read 7919 times)

0 Members and 1 Guest are viewing this topic.

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
Thanks! Finally, something that I can buy in.
 
Creating something not quite efficient and/or choosing solution that is apparently not optimal, without solid reasoning for doing so did not quite cut it.

Hope it works!
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline bytemaster

The best way to look at the dilution is the moral equivalent of the developers running an AGS style campaign for several years to fund development and awarding the shares to those who funded development. 

In this case rather than giving BTC or PTS you are giving time/skills and the community decides who gets to spend the funds rather than a central party.   

You can attempt to make it more complicated by bringing in "inflation" and "unpredictable supply" and all those other things, but this is really just another form of fundraiser that is safer from a regulatory perspective than everything that has gone before.

For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Empirical1

  • Hero Member
  • *****
  • Posts: 884
    • View Profile
It's shareholders of a specific DAC deciding how best to dilute their own equity unlike holders of currency having the dilution decided for them by central bankers.  & it decreases sharply as the DAC should become more self-sufficient so for me it's fine.

You are also thinking BitShares thinks  'inflation stimulates growth' like keynesians do, but they don't. I think BitShares is only using the model to direct the activities of the DAC in a decentralised way, mainly until revenue is enough to covers the DAC's requirements.

(The large sharedrops in DNS affect my investment decisions more.)
« Last Edit: August 03, 2014, 12:35:00 am by Empirical1 »

Offline Empirical1

  • Hero Member
  • *****
  • Posts: 884
    • View Profile
Yes, but it's still predictable vs. unpredictable and I prefer predictable.

I share some of your concerns about high levels of inflation though.

Edit: Thanks for the numbers, I haven't looked at the DNS case yet.

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
We are talking about slightly bigger inflation % here... as in 105%, 28% and 12% for the first 3 years.[for the DNS case]
« Last Edit: August 02, 2014, 10:54:51 pm by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Empirical1

  • Hero Member
  • *****
  • Posts: 884
    • View Profile

What I do not like is that this suggestion is full with  twisted-logic as:
I hate that, I don't want to worry about shareholders diluting me by some amount in future I can't control.

But you are OK with being diluted all the time, as above not being able to control it?

I own gold, I know the supply inflates by a small fairly predictable % each year but  I'm 'OK with being diluted all the time' :P

But I try to keep as little in fiat money as possible because I have to worry about being diluted by some future amount I can't control.

There is no twisted logic there for me.

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
You found something useful in shareholders voting to create new shares for an opportunity.
-This as an argument that I like inflation.
Yes, but that's because there is not inflation if the value added is >= this pseudo dilution.


What I do not like is that this suggestion is full with  twisted-logic as:
I hate that, I don't want to worry about shareholders diluting me by some amount in future I can't control.

But you are OK with being diluted all the time, as above not being able to control it?



Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Empirical1

  • Hero Member
  • *****
  • Posts: 884
    • View Profile
I hate inflation more than you, that's why I prefer a pre-determined equity/inflation model.

Possible off topic, but how you hate inflation more than me if:
I can not find anything useful in it, and you are OK with pre-determined inflation model?

Not to go into 'how pre-determined it is' if  one can voted in and out of it.

You found something useful in shareholders voting to create new shares for an opportunity.

How DAC B resolves the issue:- by Voting, increases the share supply with exactly what is needed, effectively taking as much as needed inflation, (possible all at once and not by a  long slow process, in the case of needing the whole amount at once).

I hate that, I don't want to worry about shareholders diluting me by some amount in future I can't control.
If they have some small inflation I can already see it will be treated like the revenue in BTSX where they vote to burn it most of the time, unless there is a good opportunity that is worthy of dilution that revenue doesn't cover. As it is pre-determined you can make some calculations about the future.

Like we know Bitcoin should have max 21 million units and a set rate of inflation. If I had to worry about people changing the model or it issuing new coins above the model they started with, I wouldn't want to own it.


Of course the other model is no inflation, give the developers the funds for 18 months development and hope the revenue is enough after that to meet the needs of the DAC and that the developers won't be targeted in those 18 months. It's not terrible but there are risks. Is that your preferred kind of model?

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
I hate inflation more than you, that's why I prefer a pre-determined equity/inflation model.

Possible off topic, but how you hate inflation more than me if:
I can not find anything useful in it, and you are OK with pre-determined inflation model?

Not to go into 'how pre-determined it is' if  one can voted in and out of it.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Empirical1

  • Hero Member
  • *****
  • Posts: 884
    • View Profile

However some businesses take a few years to be positive so it could be useful in that period. Also occasionally a business might have to borrow for expansion or to respond to a competitor so having some form of equity release/inflation available, that is mostly being 100% burnt, (ergo no inflation) available to be directed to funding the business when needed could be good.


Removing ‘The central point of failure’  and seeing if this decentralization will actually work, is the first thing I see as a reason for trying this new scheme. (even though I am not optimistic that we will find anything better than  ‘Better decentralized solutions, to problems that are best solved by centralization’)

However, in the above quote,  I see one of the things that concerns me the most. The believe that in this new shares we have something actually more to sell than without them. Diluting the mixture and putting in more bottles is actually not ‘some form of equity’.
 In other words – you have the same income coming to the delegates as in the undiluted fees model. Hoping that somehow you will sell it for more than the undiluted fee (salt) contained in it, just not gonna happen. And you should not expect this as a result of your new model.

I don't believe these shares are something 'more' than without them. I realise it is not new value.

But having the equity accessible is a potential advantage over a DAC that does not have any of its equity available. 

DAC A has 10% inflation directed via DPOS,  DAC B does not have inflation. Both are worth $10 million and both are generating $1 000 000 revenue and $200 000 profit for shareholders per year.

Currently shareholders in DAC A burn all the inflation so they appear very similar. 

An opportunity comes up to buy a competitor for $1 000 000 or maybe  Bytemaster says I'm willing to give my time to that DAC for two years for $500 000 worth of equity.

How does DAC B get access to the equity to take advantage of either opportunity if they they think it's valuable? 

In DAC A shareholders can access some of the underlying equity, by re-directing the inflation from 100% burn (ergo no inflation) to taking advantage of the opportunity for growth that DAC B can't.

How DAC A decides that? – by voting (and waiting for the necessary fees to be collected; huge difference if it is buying a new company, not paying BM for N years).

How DAC B resolves the issue:- by Voting, increases the share supply with exactly what is needed, effectively taking as much as needed inflation, (possible all at once and not by a  long slow process, in the case of needing the whole amount at once).

Which one do you like better?



To say nothing that ‘Toast’ (the developer of DAC A) could  just have been awarded all the extra shares of DAC A to begin with, and he decides what to do with them even more efficiently. But let’s not go in circles here, talking about this scenario.

Yes let's not go in circles, I've already explained the solution you describe for Toast creates a centralised weak spot for a decentralised system.

As for your other examples I prefer DAC A myself. I hate inflation more than you, that's why I prefer a pre-determined equity/inflation model. If shareholders can vote to issue new shares like you are suggesting in DAC B, I think it will be negative for crypto-currency type DAC's but maybe OK for more specialised ones.

The answer I gave why I don't like canonisers idea of 'smart coins' is nearly the same so I will copy that -


" If you want to win the crypto-currency race as well as benefit humanity you will do best to give them a currency with pretty hard coded initial rules and no or low, unchangeable inflation. (Alternatives will result in coin holders damaging themselves through greed and short termism as well as the financially uneducated succumbing to supporting strategies promoted by a small smarter minority usually using instant gratification as the hook.)

This is why gold has maintained a stable value for thousands of years - because we can't mess with the initial rules (regarding it's inflation and production) too much.

Fiat money on the other hand I would say is the example of 'smart money'  -  coins where there is no hard-coded limit/backing and no guarantee/confidence they will maintain 'X' limit in the future with regard to inflation/production.  No pure fiat currency has lasted more than 50 years & in their collapse 'smart coins' have left the bottom 90% of their users much worse off. I suspect applied to crypto we will see the same events unfold, just on an accelerated time-scale.

I've seen BitShares propose a 10/10/80 model. Where 20% is awarded to AGS & PTS and the remaining 80% is distributed via delegates using a ten year equity release plan. I'm all for that (well I'd prefer 20/20/60). Provided whatever the equity release plan is, is clearly defined and pretty hard-coded somehow into the system. It should let us be extremely flexible to responding to the needs of the DAC.

So unlike you I would like the " inflation rate, or the amount of currency that is put into production at any point in time " to be hard coded. They can always fork if they don't like it, but a 'future inflation/production un-defined/uncertain blockchain' would immediately have less value I believe anyway.


Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile

However some businesses take a few years to be positive so it could be useful in that period. Also occasionally a business might have to borrow for expansion or to respond to a competitor so having some form of equity release/inflation available, that is mostly being 100% burnt, (ergo no inflation) available to be directed to funding the business when needed could be good.


Removing ‘The central point of failure’  and seeing if this decentralization will actually work, is the first thing I see as a reason for trying this new scheme. (even though I am not optimistic that we will find anything better than  ‘Better decentralized solutions, to problems that are best solved by centralization’)

However, in the above quote,  I see one of the things that concerns me the most. The believe that in this new shares we have something actually more to sell than without them. Diluting the mixture and putting in more bottles is actually not ‘some form of equity’.
 In other words – you have the same income coming to the delegates as in the undiluted fees model. Hoping that somehow you will sell it for more than the undiluted fee (salt) contained in it, just not gonna happen. And you should not expect this as a result of your new model.

I don't believe these shares are something 'more' than without them. I realise it is not new value.

But having the equity accessible is a potential advantage over a DAC that does not have any of its equity available. 

DAC A has 10% inflation directed via DPOS,  DAC B does not have inflation. Both are worth $10 million and both are generating $1 000 000 revenue and $200 000 profit for shareholders per year.

Currently shareholders in DAC A burn all the inflation so they appear very similar. 

An opportunity comes up to buy a competitor for $1 000 000 or maybe  Bytemaster says I'm willing to give my time to that DAC for two years for $500 000 worth of equity.

How does DAC B get access to the equity to take advantage of either opportunity if they they think it's valuable? 

In DAC A shareholders can access some of the underlying equity, by re-directing the inflation from 100% burn (ergo no inflation) to taking advantage of the opportunity for growth that DAC B can't.

How DAC A decides that? – by voting (and waiting for the necessary fees to be collected; huge difference if it is buying a new company, not paying BM for N years).

How DAC B resolves the issue:- by Voting, increases the share supply with exactly what is needed, effectively taking as much as needed inflation, (possible all at once and not by a  long slow process, in the case of needing the whole amount at once).

Which one do you like better?



To say nothing that ‘Toast’ (the developer of DAC A) could  just have been awarded all the extra shares of DAC A to begin with, and he decides what to do with them even more efficiently. But let’s not go in circles here, talking about this scenario.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Empirical1

  • Hero Member
  • *****
  • Posts: 884
    • View Profile

However some businesses take a few years to be positive so it could be useful in that period. Also occasionally a business might have to borrow for expansion or to respond to a competitor so having some form of equity release/inflation available, that is mostly being 100% burnt, (ergo no inflation) available to be directed to funding the business when needed could be good.


Removing ‘The central point of failure’  and seeing if this decentralization will actually work, is the first thing I see as a reason for trying this new scheme. (even though I am not optimistic that we will find anything better than  ‘Better decentralized solutions, to problems that are best solved by centralization’)

However, in the above quote,  I see one of the things that concerns me the most. The believe that in this new shares we have something actually more to sell than without them. Diluting the mixture and putting in more bottles is actually not ‘some form of equity’.
 In other words – you have the same income coming to the delegates as in the undiluted fees model. Hoping that somehow you will sell it for more than the undiluted fee (salt) contained in it, just not gonna happen. And you should not expect this as a result of your new model.


I don't believe these shares are something 'more' than without them. I realise it is not new value.

But having the equity accessible is a potential advantage over a DAC that does not have any of its equity available. 

DAC A has 10% inflation directed via DPOS,  DAC B does not have inflation. Both are worth $10 million and both are generating $1 000 000 revenue and $200 000 profit for shareholders per year.

Currently shareholders in DAC A burn all the inflation so they appear very similar. 

An opportunity comes up to buy a competitor for $1 000 000 or maybe  Bytemaster says I'm willing to give my time to that DAC for two years for $500 000 worth of equity.

How does DAC B get access to the equity to take advantage of either opportunity if they they think it's valuable? 

In DAC A shareholders can access some of the underlying equity, by re-directing the inflation from 100% burn (ergo no inflation) to taking advantage of the opportunity for growth that DAC B can't.

« Last Edit: August 03, 2014, 01:52:33 am by Empirical1 »

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile

However some businesses take a few years to be positive so it could be useful in that period. Also occasionally a business might have to borrow for expansion or to respond to a competitor so having some form of equity release/inflation available, that is mostly being 100% burnt, (ergo no inflation) available to be directed to funding the business when needed could be good.


Removing ‘The central point of failure’  and seeing if this decentralization will actually work, is the first thing I see as a reason for trying this new scheme. (even though I am not optimistic that we will find anything better than  ‘Better decentralized solutions, to problems that are best solved by centralization’)

However, in the above quote,  I see one of the things that concerns me the most. The believe that in this new shares we have something actually more to sell than without them. Diluting the mixture and putting in more bottles is actually not ‘some form of equity’.
 In other words – you have the same income coming to the delegates as in the undiluted fees model. Hoping that somehow you will sell it for more than the undiluted fee (salt) contained in it, just not gonna happen. And you should not expect this as a result of your new model.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline santaclause102

  • Hero Member
  • *****
  • Posts: 2486
    • View Profile
it works if Delegates effectively work to increase the value of the DAC

at 100 million cap and a mere 10% inflation, we would have 101 full-time employees earning 100 000 $ a year working to effectively increase the value of the DAC
but you know what I mean. If DNS is with inflation and X is not and both take of we don't know more than before because they might have taken of each for different reasons. You can't even say that inflation doesnt matter (if you just look at the empirical evidence).
Can you pls explain what do you mean in your double negative.
To know that something has no influence is also a result. With the construction above where two parameters with the two test objects (DNS and X) are not the same, it is impossible to know whether the inflation for expansion construction is beneficial.
But it is a very theoretical and doesn't help. Just a side node... 

Quote
but I believe the details of the experimental projects will give us fine details of the incentive structures that will allow us to draw innumerable conclusions from their differences
+5
« Last Edit: August 02, 2014, 07:42:25 pm by delulo »

Offline CLains

  • Hero Member
  • *****
  • Posts: 2606
    • View Profile
  • BitShares: clains
Delulo simply brings up the technical point that we are not doing a double blind controlled experiment here, and that we are definitely not doing interventionist causal analysis to distinguish correlation from causation, so we can't infer from the fact that say DNS succeeds, that it was element X that was the cause (e.g. inflation). This is all well and true, but I believe the details of the experimental projects will give us fine details of the incentive structures that will allow us to draw innumerable conclusions from their differences. /VOICE