Proposal to reward bitassets holders with interest!
Currently the total supply of bitcny, bitusd, bitbtc, biteur is less than $400,000. That is obviously very unfortunate. One way to increase the supply is to give incentives to bitassets holders to hold those assets and one incentive is obviously yield.
Wouldn't be great if those bitasset holders could earn 10% interest on their deposit?
My proposal to the bitshares community is to use part of the bitshares pool to create interest for the bitasset holders but not in the form of a bitasset (in order to avoid the risk of shorting for the creation of those bitassets) but rather in the form of eg. Open.cny, Open.Usd, Open.btc, open.eur.
Even with the current low price of bts (personal opinion) of c$0.0045 all we need is the committee to vote to sell 9 mil bts in external exchanges then convert the btc to the necessary Open.xxx asset to cover this 10% annual yield for the current supply of bitassets.
By sacrificing today 9 mil bts (that is c$40k) from the reserve pool we guarantee to the bitasset holders to earn 10% interest in the form of Open.xxx asset for their respective bit.xxx asset.
I know there are a lot of smart guys in bitshares community that can work out much better the simple math. For example is the bit.assets supply is increased, the interest earned will be reduced so we do not pass the $40k and vice versa. We could do 20% interest and sell $80k worth of bts from the reserve pool.
Obviously there is not even the need to go out in the market and sell those 9 mil bts at once. Since interest will be accumulated daily in the form of Open.xxx asset those bts can be sold gradually within a year, or work out the numbers to protect the pool reserve and not sell more than 9 mil bts if bts falls tomorrow in $ terms etc..
I really can't think anything negative about this. Everyone should be happy with this..
Bitasset holders instead of nothing get an interest in the form of Open.xxx asset
Open ledger gets liquidity
More people will hold bitassets.
What are your thoughts? Let's start a discussion, work out the numbers, let's make a proposal and let's do it.
The first plan before BitShares started was that the shorters will pay for borrowing bitUSD 5%, but not realized. Most probably there would be no shorters in such case.
Maybe part of transaction fees could be divided to holders of bitassets, but the fees are low and I can not evaluate if the algorithm would not be too complex.
The question of interest earned is on the table from time to time, but there is no solution and I guess never be. Bond marker is other question. That is not the same.
I do not think using OPEN.xxx is safe, because it is out of the blockchain, dependend on thirt party.
Thank you for your contribution.
I agree that bond market is another question. In the meantime instead of just waiting and looking our bts investment falling day by day for the last 2 years I think something needs to be done.
bitshares market cap will never increase if the supply of bitassets doesn't increase as well. I don't know if you guys remember but when we had $1 mil bitassets supply, bitshares market cap reached $70-$85 mil range. Therefore we need to find incentives for people not only to create bitassets but also to hold bitassets. One incentive is a high deposit interest.
I don't understand why buying $40k - $80k for 1 year Open.xxx bit assets is considered a risk..Seriously?? Do you think that if Open.ledger runs insolvent bitshares will run into trouble for losing $40-$80k open.xxx assets using $10 mil - $20 mil bts balance from the reserve pool? I am pretty sure that in case of Open.ledger insolvency bts will run into much more trouble since a lot of people hold much more money than$80k in Open.xxx assets in their openledger wallet. $40 - $80k is insignificant people!! And in reality doing it steadily when bts increase in value we will not even need to use $10 mil bts but much less.
But with only $80k one off purchase (which I don't even propose that but steadily within a year) you can give 20% deposit interest to bitasset holders! We are talking about $80k value in Open.xxx assets divirsified to 1,000 bitassets accounts holders...Not only this is not a risk but rather a hedge in case the bitasset peg is not 100% pegged after 1 year. Those people will have their bitassets and 20% of this value will be covered in the form of interest by an external asset over the one year period.
Don't you realize the marketing advantage of something like that? Hold bitshares and earn high interest on deposit. If bitasset supply goes from $400k to $800k earn 10% etc..
Why there will be no shorters? If the demand for bitassets increase (which will definitely increase if you reward them with high interest) then more shorters will come into play to create those bitassets...I really don't follow your logic here.
Correlation does not imply causation ;)
anything above 10% looks scammish (even 10% is too much)
As a wrote 5% was intended and it was a good idea. I am sure you remember it liondani.
5% is perfect for so many reasons!
Maybe I should emphasize that with a daily budget from the pool of 25,000 bts we can give 10% interest and with a daily budget of 50,000 we can give 20% interest on bitasset holders. We can always adjust those numbers in the pool reserve benefit once the supply of bitassets increases. Think of this like that since there are not many bit.assets into existence yet , the interest you receive is higher since many people may see this as risky and once the supply of bit.assets increases the interest earned gradually decreases..
Also not everyone want to receive bit.assets. Imagine marketting wise saying to people that if they convert their btc to bitbtc they will receive interest in the form of Open.btc which is very easily and converted back 1:1 to polo.btc or bitstamp .btc etc and also the bit.btc historically is above the peg by 5% - 10% or more and that by default they can always convert their bit.btc back to the feed price within 24 hours if they want and convert it back to polo.btc or whatever btc they want..
I do not really think Openledger will be insolvent (at least I hope it is better secured than other exchanges hacked). Anyway it would be big problem for BitShares as you wrote. I just make a remark, that it is a out of the blockchain solution and other BitShares shareholder may have problem with it.
The market capitalization of BitShares is simply shame and I am sure it is all about the problems with voting for development. You know that there is oposition against any spending and it is (IMO)crippling advance.
Regarding the shorters it is misunderstanding. I wrote that the first plan before BitShares started was that the shorters will pay for borrowing bitUSD 5% and paying interest for the right to short and bear the risk would be to much. But it does not exist now.
Why not make the interest in BTS??
Why Open.xxx?
To avoid further complications with short selling the bitassets into existence. To avoid the short selling process for the creation of the bit.xxx assets to be created using the pool reserves funds and the need to block bts collateral. I don't think that the pool reserves should be used for the bitasset creation.Users should create bitassets according to the real demand for those assets.
I think it is easier to just sell those bts for the 10% annual interest needs of the main bitassets in external exchanges that have liquidity, polo, btc38 (we can sell 9 mil bts equal to $40-$42k in those exchanges easily within a day if need be) and then convert easily those btc, cny, usd to Open.xxx assets. I say Open.xxx assets since Open.ledger supports the bts wallet. Then reward the interest in Open.xxx asset to the bit.xxx asset holders. The users can then change if they don't like the Open.xxx asset to anything they want (bit.xxx, polo.btc, fiat whatever)
How would you calculate interest?
bit.xxx daily balance X 10% X 1/ 360. That is the calculation of the daily interest which to avoid too many transactions can be posted on a monthly basis or whenever there is a transaction.
How would you pay interest? Somebody would be doing it manually?
I am sure that someone from all these smart people in bitshares community,someone can write a simple code to do this process automatically..:)
In reality I would go as far and say that we should sell c$80k worth of bts from the pool reserve that is 20% annual interest based on the current bit.xxx assets supply. If the bitassets market cap goes to $800k we reduce the interest to 10% if they go to $1.6 mil market cap we reduce the interest to 5% and so on...
If we manage by advertising this to increase the DEX trading, people's involvement with the DEX, advertise the huge interest that bitassets holders receive, maintain the pegs which historically have been quite good and we increase the bitasset supply to a couple of millions then bts market cap will be x10 of what we see now. Hence next we can use much lesser bts from the pool to buy the Open.xxx assets to reward with huge interests the bit asset holders..
I feel that either I just had an epiphany today or I am saying something really wrong here so someone should correct me...But I think that something like this has never been implemented because all these years we discuss the interest to be in a form of a bit asset instead of in a form of an external IOU.asset such as Open.xxx and with this way everyone benefits...
Do you have any plan in case of Openledger insolvency? Why not pay interest with BTS, where daily pool is proportionally splitted amongst shorters (not holders).
I think that we need to give incentives to holders more than to shorters. If people want to hold, then people will short not the other way around. I think you guys forget that there are people out there (including myself) leaving in defaulted countries with no trust at all on their banking system. There are many people out there who want to be able to save their money away from the banking system, and if this system provides them with interest they will save their funds there.
For what is worth I currently do not hold a single bitasset (except some small amount of steemdollars since they pay interest) and just bts. So it is in my favor to earn interest in bts. I believe bts is way undervalued and I don't want to sell any bts at these levels for any bitusd or biteur. Irrespective of that I think the right and normal thing to do is to earn interest in the form of open.xxx assets and then the holder of those open.xxx can convert to bts, bit.asset , fiat or whatever he wants.
Now if I knew that I amy receive high interest of 20% in my bitasset holdings, since I am afraid of the current banking system, I would definitely consider transfer some funds from my bank account to bitassets especially since I will be partly covered 20% by other external IOU assets such as open.usd...
Please people reconsider..We are talking about very small amounts from the reserve pool that can actually can make a huge difference.
The fact that I believe that bts is "way undervalued" doesn't mean that the liquidity permits my risk profile to lock a lot of bts for shorting bit.eur especially since the liquidity and demand for bit.eur is so low and I am exposed to margin calls. I don't want to gamble my life savings. I want to accumulate yield on my life savings..
This is why I am repeating my self and say that we need first to give incentives to people to HOLD bitassets, thereby creating constant demand for those bitassets, by giving them high interests on their deposits which we can do with a very very small daily bts budget from the pool and THEN the traders will come along and short those bitassets in to existence..
I am glad to see Bitshares related topic can attract some whales' eyes.
There was interest for bit assets, but then it was cancelled, because it's very hard to negotiate about who should pay for the interest.
Hell no. This sounds fucked up
For there to be interest, someone must agree to pay it (e.g. borrow money). I'm looking forward to the time where we'll have bond market in bitshares. In contrast, your proposal sounds like something that will get anyone who can think clearly out of bitshares, me included
I really don't get it..Why something like that will drive you away from bts and not the other way around? Do you realize that if you have 1,000 bitusd in your account constantly for 1 year you will receive c$202 open.usd in the end of the year and in order for you to receive that the only thing is to take 45,000 bts from the reserve pool and convert them in open.usd? People are getting paid 45,000 daily from the reserve pool for other silly things that don't help bitshares so much... Where is the risk in that? Your only risk is Openledger to run insolvent and the pool to lose 45,000 which if openledger runs insolvent in the current status of bitshares your bts will most probably lose A LOT OF VALUE!
I haven't dig to much into steem but I recently decided to hold some steemdollars just because I earn some interest. And even if steemdollar is at 80-85 cents now, I believe that at some point it will be again above $1 and I will be able to convert them to fiat usd if need be without losing anything and having earned a big interest.
Imagine now this in bitusd which has historically proved to be very close to the peg and most of the times 5-10% above peg.
Seriously I don't understand your fears with this easy and straight forward proposal...
http://cryptofresh.com/workers I wouldn't call maitenance work a "silly thing"
Ok my bad...I didn't want to offend the current worker proposals which I am in favor of them but rather referring to some worker proposals in the past that got paid much more than 45,000 daily and I don't think they offered too much in the bitshares ecosystem. I am not going into more specific about this.
You do realize that with what I am proposing with a daily budget of 25,000 bts you can offer 10% interest on the bitasset holders right? I really don't get why you guys oppose to this...
It's worth discussing, but I was also going to mention that interest should be based on lending and the natural rate of interest should be left to the free market and based on the demand for capital & loans. Having any committee that acts to set interest rates as the Federal Reserve does will have unintended consequences. Having people hold bitAssets probably won't help as much as having bitAssets circulate as currency or 'checkbook money'. We really need more people to create bitAssets, trade it for real dollars with a fee so people can circulate it as digital cash. BTW @mf-tzo I'm planning to issue a BSIP to have our bitCash Smartcoins custodied by the committee. Hope you can support that. Thx!