If we offer a fixed reward in any currency, we are pegging the number of signers to the price of that currency. I would only be comfortable doing that with BKS, because it is internally consistent. If we aren’t offering a fixed reward then we need some kind of automated price feed, which is a yucky messy business to be in.
When BCE sells BKC it has to accept payment. If it’s BTC, there need to be a mechanism that keeps track of USD/BTC to keep BKC at $1. Then a BKC buyer would send BTC to whatever address that belongs to BKC. It’s going to be a mixture of PPC, BTC, NBT and every other coin that we accept for our BKC’s. To give out BTC as dividends all these have to be sold for BTC at some point. Volatiliy of BTC against other coins already exists in our revenue stream; I don’t see any extra burden here to pay signers with BTC except when signers don’t like it.
Either way I don’t think fancy signer compensation schemes would be the among the earliest features implemented in BCE. In the beginning it would be easier to bootstrap from either the dividend distribution system, BKC grants or BKS grants.
So far no custodian grants have been done completely automatically even within Nu, not even the nearly regular payments we have for liquidity pools. So there’s a lot of work to do if we want to free ourselves from doing manual payments.
Fortunately, reputed signers are going to be a much smaller group of people than users. At first we would be able to do that by hand, and we can give them whatever they successfully bid for.
I expect, in the early days of BCE, this would be experimented separately from BCE core, like NuPool and Nagalim’s seeded auction scripts. I also expect early signers to be test drivers that have more or less close relationships with both Nu and BCE, so we can cooperate with them to adapt to market conditions.
It’s a bit too early to make a decision on the matter, although the arguments will be valuable reference in the future.
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That said we need something to begin with when BCE starts operation, so I concede that a decision still has to be made, but it won’t necessarily be final. I’m inclined to pay BTC out of the dividend system
[quote=“Nagalim,post:31, topic:2550, full:true”]With a rising BKS price, we have more monetary power to offer better compensation to our signers, thus creating competition and more security. For instance, with a higher signer compensation we could probably increase the number of signers per transaction.
Conversely, with a lower BKS price we need to tighten up ship and lower the compensation. Then we need to vote to lower the number of signers per transaction. This is entirely consistent with @Sabreiib 's concept of firing emplyees when the stock price tanks.
The two situations above are automatically taken into account when offering BKS rewards to signers.[/quote]
If BKS price rises or falls it has to do with the success of the exchange. Aka if BKS prices rises the exchange is doing well and generating more revenue. If the BKS price falls the exchange is having a hard time and generating less revenue. This also means that if we pay signers a percentage of our revenue (revenue is BTC since we have to convert our BKC income to BTC anyway since we payout our shareholders in BTC) their reward is tied in to the success of our exchange thus providing the signers with incentive to make B&C a success.
If revenue is low and thus income for signers decreases some will quit (aka firing people) if we feel too few are left to provide our service we can increase the percentage they get through motions. I don’t think singers will quit after a few bad months since their operational costs are relatively low and they be giving up a good position (being a reputed signer) that is hard to get back when revenue picks back up again. If I was a reputed signer and had been providing service for 4 months getting a decent amount of bitcoins everything month (say 0.5 BTC-1 BTC) depending on how B&C was doing, and suddenly hard times hit and B&C is hardly making any revenue (aka no BKC sold) would I then think fuck it I quit? No I would think things will pick up and I don’t want to lose the reputation and time I invested into getting this position. Since I as a singer should realize if you give up your position there’s a small change of getting it back again. It will probably be hard to become a signer this will make it so that becoming one is essentially an investment that will only pay off after doing it for a while. It would be weird for an established signer to quit even if a few months they get paid little due to low revenue.
Now I would imagine lots of signers will be BKS shareholders or interested in becoming shareholders. But instead of diluting shares and thus devaluating shares we could give reward them with the BTC which they could use to buy BKS which would create buy pressure and thus driving up BKS share price. If however they have no interest in becoming shareholders they will be happy with the BTC since ,and you can argue all you want, it’s by far the most liquid and widely accepted crypto out there. Everyone accepts BTC few will accept BKS.
Why dilute shares and give signers BKS when we are already using BTC and we can just give them a percentage of our revenue instead? Just as with giving them BKS their reward is tied to our success thus creating incentive for them to have B&C be an success. Instead you want to dilute shares and thus devaluating them and off top of that create addition sell pressure for BKS on exchanges since some of the signers will want to sell them. Instead we can give them some our revenue (which we already have in BTC) which doesn’t dilute BKS shares and on top of that create more buy pressure for BKS due to some signers using their reward to buy BKS.
[quote=“masterOfDisaster,
post:22, topic:2550, full:true”]
re
"Solution I"
where do the BTC come from if not from sold BKC? Should BCE issue BKS to buy BTC? 
If they come from sold BKC you can very well just pay them with BKC and let them sell
the BKC for whatever they want.
Paying with BTC creates unnecessary dependencies on the Bitcoin network. If you want to pay
the signer with something that has sufficiently liquid markets and a stable value, choose NBT 
…but I’d prefer not to have external dependencies when dealing with signer payment[/quote]
I really don’t understand your reasoning here. Since we use BTC to pay out dividends we are already depended on the bitcoin network.
The problem with paying them in BKC is twofold.
The first problem is that they will be forced to trade the BKC since BKC has no value outside of B&C. Essentially we’re saying here’s your reward and good luck trading it in something valuable. To stay with the BKC stamps analogy, imagine being paid by your boss in stamps and saying good luck trading your salary into something that is actually useful to you……
The second problem is that with generating additional BKC that we do not use to sell at 1$ to our customers (aka our trade fee) we are undercutting our own revenue stream. We’d lose money doing this. Imagine us selling 100 BKC thus generating a 100 dollars now let’s say we pay them 20% of our revenue. If we do this in BTC we’d distribute 20% of the BTC we made in revenue to our signers thus paying them 20 dollars. If we do this in BKC we’d create 20 BKC worth 20 dollars and distribute this to them.
Now one could say like @Nagalim does “spending money is spending money is spending money” but this is not actually true. Cause let me tell you what happens next, the signers need to sell their BKC (since its worthless to them) on the market, since we have an infinite sell wall of 1 BKC for 1 dollar they will have to sell them cheaper. Thus selling them for example for 0,80 cents this will mean that essentially we are creating additional BKC to be sold at a lower price than the price we’re offering and in doing so undercutting our own revenue. If we do this every month we’re essential auctioning part of the BKC we create at a lower price and thus costing us money.
So we give our signers stamps and hurt our own revenue. Aka terrible option.
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The BKC will be sold by custodians and fortunately NuBot with automatic price feeds can do the job of placing the sell walls accordingly.
The signer reward is automatic per block by protocol. Dividend payment is manual by BKC custodian.
If Bitcoin things get pear-shaped, signers will be cut off from compensation until the situation has been fixed, the protocol altered.
Would be bad to have them drop off in times when people desperately try to sell their BTC on BCE
The dividend distribution mechanism was created by Nu to use PPC, it will be altered by BCE to use BTC and it was used when creating BCE to distribute BKS.
It seems to me the dividend distribution mechanism can be adjusted easier than an on protocol signer reward mechanism.
Even if the BKC buyers might be able to buy BKC for less than 1 USD that would in no way undercut the revenue.
The balance sheet is the same whether BCE sells 250 BKC for 1 BTC and distributes 0.8 BTC of it to BKS holders and 0.2 BTC to signers, or BCE sells 200 BKC for 0.8 BTC, distributes them as dividends and pays the signers with 50 BKC.
The BKC will be sold by elected custodians. It’s far from sure that they will maintain indefinite sell walls. They need to be elected to maintain the walls.
I doubt there will always be BKC from custodians in the walls, especially if signers are paid in BKC and:
Signer reward in BKC is easier than BTC and doesn’t dilute like BKS would do.
But in the end @Nagalim is right: money is money is money.
I haven’t read the whole discussion but I saw there’s a debate on the currency of the reputed signer reward.
I’m currently implementing the reward as an additional output of the CoinStake transaction. This solution implies the reward can only be in BlockShares.
It’s possible to make the reward in BlockCredit but it requires another implementation. That means if shareholders want that it must be decided very quickly and it would add some development time.
It can also be added later. For example we can add a BKC reward later and shareholder could vote for a reward amount in both units. They could vote for a reward of zero in a particular unit to disable it.
Note that we must also be able to identify the BKC address of a signer (who is only identified by a BKS address). An easy way to do that is to convert the BKS address to BKC like we do with dividend addresses, but it would still require some user interfaces to allow the signer to manage that.
Making the reward on another blockchain is way more complex, if feasible.
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While I’m in favour of BKC, I understand that using BKS makes sense at the start.
Thank you for chiming in!
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This is a misunderstanding let me use an example to clarify. We’ll use a few constants, first lets say every week there is a demand for 10000 BKC, we want to pay our signers 20% of our earnings. If we use BTC to pay singers it goes like this:
First week we sell 10000 BKC for 50 BTC, we pay singers 20% so 10 BTC go’s to signers and 40 go’s to shareholders as dividend.
Second week we sell another 10000 BKC for 50 BTC, we again pay signers 20% so 10 BTC and 40 to shareholders.
Third week it’s the same we sell another 10000 BKC for 50 BTC, again signers get 20% so 10 BTC and 40 to shareholders.
That means that after 3 weeks we made 150 BTC in revenue payed 30 BTC as payment to signers and we distributed 120 BTC as dividends.
Seems simple and your assumption is that same is true for paying in BKC since money is money right?
Alright first week we sell 10000 BKC for 50 BTC, we pay singers 20% so they get 2000 BKC and we distribute 50 BTC to shareholders as dividend.
Second week we only sell 8000 BKC for 40 BTC, since 2000 BKC is sold to customers by signers for 80% of the regular price so they get 8 BTC. This week we distribute 40 BTC to shareholders and 1600 BKC to signers.
Third week we sell 8400 for 42 BTC, since 1600 BKC is sold to customers by signers for 80% of the regular price so they get 8 BTC, we pay signers 1680 BKC
That means after 3 weeks we made 132 in revenue payed out to shareholders and we paid signers 5280 BKC that netted them 21,12 BTC.
Now this looks good right? Seems its even more profitable to pay in BKC then in BTC. However what we are forgetting is that essentially we netted an extra 20% revenue the first week by printing extra BKC. So lets forget the first week and look at the 2nd and 3rd week.
Second week we sold 8000 BKC for 40 BTC and signers got 2000 BKC netting them 8 BTC. So in total we made 48 BTC in the second week compared to 50 if we distribute in BTC.
The third week we sold 8400 BKC for 42 BTC and signers got 1600 BKC that netted them 6,4 BTC. So in total we made 48,4 BTC
Now let’s see what happens the 4th week. This week we sell 8320 BKC for 41,60 BTC the signers get 1680 BKC that nets them 6,72 BTC so in total we made 48,32
Now in the 4th week we reached our equilibrium since in the 5th week it would be the same. We will sell 8320 BKC for 41,60 BTC the signers get 1680 BKC that nets them 6,72 BTC so in total we made 48,32 again. This would keep going on and on and on.
Now let’s look back to distribution in BTC which means we would sell 10000 BKC for 50 BTC every week. This means we’re losing 1,68 BTC per week due to distribution in BKC. Money =/= money, by distributing in BKC we are undercutting our own revenue stream no matter how you cut it. Of course the amount to which we’re undercutting depends on the price signers sell but no matter how small this effect persists. Hence my case for paying signers in BTC.
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Problem is here, why you distribute 100% revenue to shareholders and issue extra BKC to signers?
I agree 100% on this. The only reason I do not think we will use BTC is that practically using BTC is difficult and I’d need to see a plan for implementation. Short of finding a reasonable implementation, I prefer BKS to pay signers.
It depends on the willingness of signers, not ours!
Assume we talk a lot and get a conclusion, but most signers say"I wanna BTC", or “I wanna BKC”, does our talking make sense?
I don’t think signers will make themselves heard like that. I think the rewards will be what we set them and we’ll either get a bunch of signers or we won’t depending on how much we pay them. We can speculate that one currency or another will draw more or less signers, but a controlled experiment for that is neigh impossible.
This logic seems a little bit flawed.
If there’s constant demand for 10000 BKC by the market, why should signers (need to) sell for 80% of the price?
If you adjust it to 100% you’ll see that money is money is money
Due to technical (and not economical) reasons it’ll be either BKC or BKS instead of BTC.
And due to design reasons it seems to start with BKS.
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B&C can wait for customer, signers may not be willing to. If you look at peercoin price charts a lot, you’ll notice that when someone is in a hurry to sell they can drop the price by several percent just trying to cash out, then the price spikes back up shortly after. B&C is not panic selling, but signers may be.
But then it’s no constant demand which was the basis for the scenario.
The profits of BCE would be lower in those times with less demand for BKC.
Those times are all the time. What if a major BKC buy happens every 2 hours and a signer wants to sell BKC but only has 1 hour to do it? They’ll dump on whatever orders are up. This same phenomenon will occur with BKS, don’t get me wrong. However, I would rather have a depressed BKS price than a depressed BKC price because BKC would cut into our dividends which would in turn dump the BKS price anyway.
I have a hard time thinking of a scenario in which a BKC sell couldn’t wait another hour. Signers aren’t expected to be in a position where selling BKC one hour later should play a role.
If they are so short of money they might not be the right people to act as reputed signer… They should stop doing it and get their security deposit back.
How fortunate that @sigmike was going to implement the signer reward in BKS:
And even better - it’s already done:
I still like the idea of the signer reward in BKC, but BCE will start with BKS and I think it’s good this way
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Because they have to compete with us selling infinite BKC for 1 dollar or rather 1 Nubit each, aka they will have to offer lower prices if they want to see their sell orders filled. Now how much lower will depend on the traders but the point is we will always lose money in the way I demonstrated by paying singers in BKC. Not only that but we will burden them with the task of selling their BKC on the open market, while we could just give them BTC instead everyone wins.
However if we are dead set on not paying them in BTC (which honestly is the best way to pay them) we could also pay them in BKC and then give them the opportunity to sell back the BKC to us for 1 Nubit each or the equivalent in BTC. That way we don’t undercut our revenue and we give the signers and easier option of trading in their BKC for something useful.
At that point we may as well pay with nbt. You still have the issue of paying signers with a foreign block chain. I’m all for paying signers with btc if you can think of a reasonable implementation. I can’t figure out an efficient method.
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If the sell walls of the BKC custodians are filled with orders at 1 NBT, selling the BKC at 0.999 NBT will suffice.
0.001 NBT per BKC. Reasoning see above.
Interesting idea. The easiest way to achieve that would be to offer a buy wall at close to 1 NBT.
But that’s a business BCE might not be interested in.
That’s why I got stuck with BKC - it’s close to NBT, but a BCE internal unit.
The longer I think about the signer reward being a part of the coinstake transaction, the better I like that.
After all it’s not only the economical aspects that need to be taken into consideration, but the technical as well.
Signer reward as BKS seems to be the most simple, maintainable, reliable, tested way to issue a reward.