BSIP-019 Updated Draft: "Introducing profit-sharing/dividends to Bitshares (MPA only)"
BSIP-019 has been updated, focusing on MPA tokens!
I have taken feedback from the previous BSIP19 draft thread and have created an updated BSIP19.
Changes:
- BSIP 19 now focuses solely on MPA tokens, a separate BSIP will be created for UIA profit-sharing in the near future.
- Updated motivations, rationale, specifications and discussion sections.
- Updated pull request on the Bitshares BSIP GitHub repo.
I'm looking for constructive criticism and participation in the 'Additional topics for discussion' section so as to improve this BSIP, I'll upvote participants :D
Best regards,
@CM-Steem
BSIP: #019
Title: Introducing profit-sharing/dividends to Bitshares (MPA only)
Authors: Customminer
Status: Draft
Type: Protocol
Created: 2017-06-18
Primary Discussion: https://bitsharestalk.org/index.php/topic,23981.0.html, https://bitsharestalk.org/index.php/topic,23981.msg304489.html#msg304489
Similar Discussions: https://bitsharestalk.org/index.php/topic,23706.0.html , https://bitsharestalk.org/index.php/topic,21476.msg279498.html#msg279498 , https://bitsharestalk.org/index.php/topic,23707.0.html
Replaces: N/A
Superseded-By: N/A
Worker: No worker proposal yet - propose bounty?
Abstract
The introduction of 'profit sharing / dividends' for [BTS|MPA] on the Bitshares DEX via the redistribution of fees.
Motivation
One of the major selling points of BTSX (for myself) back in 2014 was the 5% (really variable x%) on 'anything' marketing.
The idea that anyone could securely hold MPAs long term in their wallet and receive better 'interest' rates than that FIAT banks were offering was (and remains) a powerful message which had myself (and a lot of other users) sold on Bitshares.
During the migration from BTSX (BTS 0.9x) to BTS 2.0 we removed 'socialized yield' due to 'yield harvesting'. I believe that its removal without an established replacement income stream for asset holders was a mistake (one that we can ammend).
The last monthly gathered fee estimate was approximately 1 million BTS per month which is approximately $330,000 (not an insignificant sum).
The Bitshares DEX recently turned a profit!
Peerplays has already implemented profit sharing in graphene.
Rational
- The potential for profiting more by holding your assets on the BTS DEX than within a traditional FIAT bank (without taking on risk) could drive many new users to pick the BTS DEX over centralized banks for storing their savings in the future.
- An increased demand for MPA leads to an increased MPA supply and thus a reduction in the quantity of liquid BTS (since 200-300% BTS are locked up as collateral for each MPA token).
- Other cryptocurrency platforms offer profit-sharing/dividends, such as Peerplays/NXT/CounterParty/DigixDAO/LBRY/Waves/Dash.
- By incentivizing Bitshares users to hold their BTS on the DEX instead of on centralized exchanges we minimize the risk of said centralized exchanges having a massive voting weight with which they could disrupt BTS operations by voting maliciously.
- We can reallocate fee redistribution without increasing fees by reducing referral fee allocation.
Specifications
Implementation of peerplays profit sharing mechanism
The user 'Bunkerchain labs' posted "Implement our profit sharing code thanks to Peerplays development", a large portion of the work required for this BSIP may be complete.
Fee redistribution variables
The fee redistribution values should be discussed thoroughly and either decided by the committee (smartcoins) or the MPA issuer (non-smartcoin assets such as Algorithm based Assets).
Potential fee redistribution variables:
Higher level fee redistribution groups
- Reserve pool : %
- Referral system : %
- bitAsset (MPA) holders : %
- BTS holders : %
Account types
- LTM members : %
- Non-LTM members : %
Dividend settings
- Dividend schedule (sharedrop timeframe) : Days/Blocks
- Max Coin-Age : Days/Blocks
- Bonus rate for age past max coin-age : %
- MPA dividends permissions : Enable/Disable
- MPA dividend prioritization : Equal split between all MPA (subsidizing less active MPA), or proportional to [trading volume|MPA supply].
Basis for distribution within sharedrop timeframe
- Dividends is paid on a scheduled basis as opposed to on user demand
- Dividends are paid based on MPA asset holdings
- 'Coin-age' of asset holdings
- Split of network fees between MPA tokens, either on an equal split or proportional basis.
Discussion
Is BSIP19 vulnerable to 'yield-harvesing'?
A quote from the 'Socialized yield is broken' blog post:
"Under BitShares the BitAsset holders receive a yield simply by holding BitUSD. This yield was between 1% and 5% APR on average. Unfortunately, yield harvesting can happen at any time by someone shorting to themselves to gain a very low risk return and undermining goal of encouraging people to buy and hold BitUSD. The yield was funded from transaction fees and by interest paid by shorts."
- Rather than paying profit to shorters on demand, this BSIP proposes scheduled dividends against BitAsset (MPA) holders via the redistribution of network fees.
- If we simply took a snapshot of user asset holdings at the immediate time of dividend issuance then users could create the asset immediately prior to the scheduled dividend afterwhich they could settle the token back to BTS. To prevent this behaviour, we need to take the age of asset holdings into account.
- Thus BSIP19 is not vulnerable to the 'yield-harvesting' issue that was prevalant within 'Socialized Yield'.
Collateralized Bonds
The concept of "Collateralized Bonds" has yet to materialize within Bitshares 2.0, so in effect we cut asset holders out of fee redistribution (by removing 'socialized yield') without providing a replacement source of income for holding assets on the Bitshares DEX.
Additional topics for discussion
- Should exchanges be exempt from receiving dividends?
- Should LTM users receive a separate bonus dividend? Specifically BTS dividends for holding BTS
- Can we pay out dividends in MPA, or will we have to distribute BTS?
- Is there a better idea than 'coin-age' for fair dividend distribution?
- What's a fair max coin-age? The sharedrop timeframe?
- Should coin-age greater than the sharedrop timeframe receive a bonus modifier?
- Who can perform this work?
- How much should a worker proposal charge for this task?
Summary for Shareholders
- No worker proposal has been created yet, input from coders regarding the cost is neccessary.
- This BSIP does not propose values for these fees, this is up to the discretion of the network & committee.
- The fees distributed towards the referral system will be reduced to make room for profit-sharing.
Copyright
Peerplays created the profit-sharing functionality w/ MIT license:
"The code was created by Bunkerchain Labs Inc. and licensed MIT. So long as MIT parameters are met it can be used in Bitshares." - Peerplays (Steemit)
"Implement our profit sharing code thanks to Peerplays development" - BunkerChainLabs (Bitsharestalk)
See Also
N/A
A most excellent example of a BSIP cm, H U G E. thanks for investing the time to start thinking this through.
I fully agree that the loss of the interest on BitUSD during BTSX days was indeed a major mistake of BTS 2.0 (which showed a disconnect with marketing to an audience). I endorse your efforts in bringing this back, and also think incentives for people NOT to hold funds on central exchanges is a step in the right direction, and blacklisting exchange accounts is an important element related to that.
While I believe explaining things in as simple a manor as possible is a worthy goal towards effective communication, I would not want a BSIP to eliminate important details to give the impression of simplicity when a deeper understanding is required. Comments to "explain it like I'm 5" are fine, but can also give a false impression that it's "easy" to achieve the stated goals. That can be misleading and skew the assessment of the costs to implement.
Simplifying a topic so 5 year olds can understand it could translate into a very limited understanding and open the door to manipulation by the lack of essential details.
I don't think it's reasonable to expect an true "understanding" if essential details are omitted. What constitutes essential depends entirely on the topic.
Clear communication is the goal, and decomposing a concept into the fundamental aspects and omitting non-essential aspects is what good engineering is all about. A good specification will do that and the structure of a BSIP is aimed at that.
Many people are adverse to thinking these days. That is one reason why so few have even attempted to write a BSIP. Again, major kudos to you cm for your willingness to work through the BSIP process.
Whilst I agree that we shouldn't dumb-down complex Bitshares documentation, I believe that attempting to write the document in an ELI5 friendly manner can improve the readability of the document, especially for users for whom English is not their first language.
I understand your point though that pushing the ELI5 approach could give the false impression that the proposed work is easier than it seems, best to inflate the cost and deadline for any work and overdeliver/overestimate rather than underdeliver/underestimate?
This could possibly be the case, and I invite all constructive criticism or theoretical attacks against proposed BSIPs so as to prevent manipulation being possible via the ommision of key requirements.
Semi-relevant: I have published my draft BSIP-020 which was split from the original BSIP-019 draft so as to separate the functionalities in scope.
Thanks for the comment, much appreciated and great input! :)
I would also add:
To promote active users:
Good suggestion, whilst preventing scammers is important I do feel slightly uneasy knowing that my account could be black listed. That said, I could move my holdings to another account to evade being blacklisted..
I don't think the committee would do this on any UIA other than perhaps STEALTH when it's released, perhaps private MPAs would make use of this suggestion though..
For such an idea we would need to take into account the % difference from peed price to reward the most honest traders (rather than parking 1 bitUSD as 1m BTS). That said, how would we reward this over the entire sharedrop period? Perhaps rewarding parties of the filled orders within the sharedrop period? Though then I'd be rewarded for sending money between my accounts over the exchange..
I think that if we begin rewarding market making activity we open the doors to multiple yield-harvesting opportunities for opportunistic traders to take advantage of.
This sounds great! Have been thinking of creating something in this direction so will keep my eyes peeled.
shared on twitter
Disclaimer: I am just a bot trying to be helpful.
Keeping Voting Power on the Bitshares DEX is a great point. Fully support the dividends.
great information.
Its Great Point, Keep Voting!
Tweeted: https://twitter.com/customminer/status/878273957098659840
Disclaimer: I am just a bot trying to be helpful.
I still think that BitShares is too complicated. Is there a very simple explanation of how it works and what the compelling features are? And with that I mean a version that a 5 year old could understand (a comic strip version will do as well :) ).
Which part is too complicated? Creating account/using account/trading/shorting bitassets/creating own assets?
Yes, this is the most important missing feature in bitshares 2.0 implementation. I hope it to be implemented as soon as possible!
@cm-steem do you know why this is Deferred?
https://github.com/bitshares/bsips/issues/43
Xeroc rejected the BSIP without interacting with the Bitshares network/community, even the 'deferred' status is not justified. I believe it may be because the "BTS Foundation" is focusing on regulations specifically bending over backwards for Bittrex (which good riddance at this point tbh..).
The UIAs can be distributed through a python script using the python-bitshares library, so I'm less concerned about that as I am about implementing this functionality for MPAs.
Are you interested in seeing this BSIP implemented?