[B&C] Paying reputed signers

B&C Exchange
#21

Let’s talk this practically.

We dispatch dividend/reward periodically. That period maybe one day, one week or one month. Our revenue record of 2016:

Period I: 10,000$ revenue (around 40 BTC by selling BKC)
Period II: 0
Period III: 5,000$ revenue(around 20BTC)

Solution I, signers paid with BTC

Shareholders voted a ratio that they distribute revenue in this way: 60% BTC sent to shareholders as dividend, 20% sent to signers as reward, 20% sent to a fund multi-signatured held by 20 signers for future software development and marketing.

System just send 24BTC to shareholders proportionally according to their BKS quantities, then send 8 BTC to 20 signers as per their performance, and finally our fund added by 8 BTC.

This is simple and robust.

Solution II, signers paid with BKS.

So how much value of BKS should be paid to these 20 signers? Should more than 40BTC value? Should we pay them constant BKS reward regardless what level our our company’s revenue? Should we still pay them during period II when they confirm none transaction and other shareholders get zero income?

No?

What’s the ratio of our revenue sent to them? 20% value? Good, it’s about 8BTC, what’s the average BKS price during three periods? What’s our data feed of BKS price? B&C, BTC-E? CCEDK? OK. We have five big exchanges. The three period average price is calculated.

Period I: 4$ per BKS, so issue 500BKS & sent as reward
Period II: 3$ per BKS, so no reward.
Period II 5$ per BKS, so issue 200BKS & sent as reward

Now the liquidity of BKS market is relative low, so how many signers will sell what proportion of their reward BKS is important and hard to know.

Will their sell orders effectively depress the BKS price? How about that other ordinary BKS holders find they are diluted by 3% (BKS price drop) while only get 2% value of dividend? Will they become angry?

Will some big bad signers intentionally manipulate the BKS price so that the data feed get quite lower BKS average price and reward them more BKS?

*Will some signers find that their reward are losing value because other signers sell some BKS reward earlier than them?*Will reward selling become a competition that every signer tries to sell some BKS as quick as possible?

See, we’ve made the simple thing very complicated and dangerous.

Solution III, signers paid by BKC.

20% value of company income is decided by shareholders to sent to 20 signers.

Period I: use 8BTC to buy 2000BKC? Directly issue 2000 BKC and send to signers?
Period II: no reward
Period II: use 4 BTC to buy 1000BKC Or directly issue 1000 BKC to signer?

When signers get BKC, many of them may wanna sell BKC for BTC or FIAT, so they sell BKC at 0.999999$ and get BTC/FIAT.

This solution is OK, not so bad as solution II.

Conclusion: Obviously Bitcoin solution is the best and the BKC solution and then the BKS solution, last but not least, the worst solution is to reward signers on a preset basis such as 0.01BKS per day or per transaction and neglect what real revenue level of our B&C company is. If we do in this style, our destination is bankrupt.

#22

re "Solution I"
where do the BTC come from if not from sold BKC? Should BCE issue BKS to buy BTC? :wink:
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 :slight_smile:
…but I’d prefer not to have external dependencies when dealing with signer payment

re "Solution II"
If BCE is going to pay a fixed rate of BKS per block as a reward there’s no need to use data feeds. I don’t see a reason why signers should earn a percentage of BCE’s revenue. They deal with fixed rates for time and material. The BKS reward for signing activity needs to be high enough to compensate the efforts.
If we can learn something from the last week of the BKS sale: there’s some demand for BKS :wink:
If we were to assume dwindling BKS prices, we should better stop development and pay back the funders.

re "Solution III"
not 20% of company income, but a fixed rate per block is distributed to signers.
BKC can’t be sold for above $1, but close to it. So the signers have a reliable income stream (as long as their reputation is good enough) in $ per time.
An expected income in $/(block|hour|day|week|month) not easily possible with BTC or BKS and even if it were possible with NBT it would require the same handling of BCE external units and counterparty risk.

I don’t know with how many signers BCE will start.
I guess it won’t be 20 from the start. Let’s assume we have less than 10 at the beginning.
Renting a VPS capable of doing the job or running a machine at home (if internet speed is sufficient) costs a few USD per month.
The calculatory cost of the security deposit makes another few bucks (depending on the amount to be deposited it might be some more bucks :wink: )
And signers might want to be paid for their efforts as well.
Say a signer would require a monthly compensation of $100 to do the job.
With less than 10 signers that makes less than $1000 per month.

If only 0.025 BKC were paid per block as signer’s reward this would distribute approximately 36 BKC per day or 1080 BKC per month, provide a reliable income for the signers, make signer payment comparably easy and in the end wouldn’t be different from paying them with BTC - economical wise.
Whether only BCE sells BKC for BTC and pays signers with a part of the BTC or BCE sells 1080 BKC less per month (and have signers distribute a part of the BKC) plays no role for BCE, but for the signers, because payment in BTC is less reliable in terms of $/month that can be earned by being a signer.
And it makes the payment process more complicated.

Maybe 0.05 BKC per block would be better as it did provide

  • enough compensation even with more than 10 signers
  • offer a bigger incentive to start as signer, because the less signers, the bigger the individual reward. Once more signers start competing for the compensation it will be less rewarding - just like the PoW arms race :wink:

Admittedly I don’t know how much compensation a signer would demand.
But depending on the value of the security deposit I can imagine joining the signer business for $100 per month if all I have to do is keep the signing environment safe and running and the private keys secure.

Tell me: how do you adjust the reputed signer payment to volatile BTC prices? Do you intend to have a price feed for BTC to adjust the reward accordingly? Or shall the reward stay at a fixed rate of x BTC per block?
What happens if BTC price plummets and signers don’t get enough compensation to continue signing operation?
Worst case:
no transactions will be signed, without CHECKLOCKTIMEVERIFY customer funds get permanently trapped in multi signature addresses, BKS price will follow BTC price, rather sooner than later it would be game over for BCE!
And all because of the dependency to an external unit.

For me the time of calculating in BTC is long over - it has been replaced by the option to calculate in USD, thanks to NBT!
…and that’s the reason why I prefer signer payment in BKC over payment in BKS - it’s close to 1 USD and an internal unit.

#23

We should not pay signers a portion of the profits, we should pay them continuously and dependably with a fixed number of shares of the company. Practically, paying with foreign block chains is not very feasible and exposes us to all sorts of exploits. That leaves us with bkc or BKS, and I don’t think we should ever be giving bkc to people that are going to sell rather than trade with it.

Selling BKS depresses price, sure, but so does not distributing dividends. Spending money is spending money is spending money, distributed in shares or nbt or whatever, spending money will end up depressing the share price no matter what form it’s in.

BTS has many problems with it, vastly more than just their basic reward system. I think we have plenty of room to succeed where they failed.

#24

+1!

I don’t understand that… The idea behind paying signers with BKC is that they are going to sell them for BTC, NBT, whatever they prefer and distribute the BKC to BCE customers.
Did you mean BKS while you wrote BKC?
I think we should avoid giving BKS to people that are going to trade with it rather than mint and vote with it.

#25

Sell to who? To prospective future B&C customers, right? Basically, instead of these customers buying from B&C, they will buy them from the signers who are selling them cheap (we’re talking <$0.5 here, the market will be highly illiquid and a 50% price cut is not unreasonable in the crypto world). Very few signers will actually want to use the bkc, a vast majority will sell. We would lose our source of revenue, dividends would dry up, and stock price will plummet.

If we pay in BKS, there will be no way for B&C customers to buy cheap BKC. That means that they will all pay full price and we can just keep on distributing dividends. That should generate more buy than sell pressure as everyone wants in on the profit stream. Selling BKS into that buy pressure is a very smart thing to do, from a trader’s perspective.

I am not of the philosophy that we should have no costs when no one trades. I am of the opinion that we should have operating costs and just be a successful company. If no one uses B&C it will slowly die, and I’m OK with that. If people do use B&C it will soar. I am quite confident it will be used, by Nu at the very least.

#26

The intention of paying signers in BKC is that they sell them - what else should they do with them?
If signers prefer selling BKC for $0.5 instead of $0.95 it’s their bad; they waste over 50% of their compensation by selling cheap.

For customer’s it doesn’t matter where they buy the BKC - the lowest BKC sell orders will be filled first by the buying customers.
If customers can get 1 BKC for less than 1 USD it will nevertheless be consumed by fees just like the BKC that are bought at 1 USD.
And even if BKC get sold cheap by signers - getting cheap BKC might incentivize customers using BCE and trading on it - a kind of advertisement. Sooner or later (as soon as BCE gets heavily used) the BKC can be sold at close to 1 USD - by the signers and the custodians.

I guess that most signers will not depend on converting the compensation immediately to money. The total effort for being a signer is not that big. The biggest cost is likely the calculatory cost of the security deposit and not the operation of the signing environment.

If the signer compensation were to be paid in BKS that would be fine as well - anything but foreign units are welcome!
I was just thinking that by paying with BKC you could get closer to $/month compensation.

And I agree that BCE will need to have operation costs. As far as I understand the signers’ rewards they are paid per block - no matter what the number of transactions in it is. So even if a BCE block doesn’t carry any transactions (and no BKC get destroyed as fee) the reward to signers will be paid.
It’s good this way, because the signers need to do their job continually. The whole exchange will be based on their reliability. It can’t be risked to have them drop off, because there’s no revenue of the exchange and nothing to be distributed.
This is one of the obvious reasons for using BKC of BKS as signer payment: BCE needs to sell BKC to get BTC, NBT or whatever. On the contrary, BKC and BKS can be created by protocol and are available even if no BKC get sold for some time.

#27

We can already do this by voting to lower the fee. If BKC is being sold for $0.5, we will end up voting for double the fee than we would if BKC is being sold for $1.

I have 2 things to say about this. The first is that I expect BKC markets to be less liquid than BKS markets, so the value of 1 BKC is less well known than the value of 1 BKS, not more. The second is that signers have no expectation to receive a certain $/month. With the same argument you present you could say that BKS minters should be rewarded in BKC. Signers make the system secure, albeit in an entirely different way than minters. Doesn’t it make sense to give them a portion of the thing they are securing as a reward?

When paying people, we want to pay them primarily with whatever they want to hold or use because otherwise we are effectively paying a fee to whoever is providing the market liquidity. Since our only options are BKC and BKS, we have to think which one are signers more likely to hold or use? Do we expect signers to mostly be traders, or to mostly be shareholders? I think they will mostly be shareholders, which is why I prefer paying signers in BKS.

#28

[quote]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]

Yes, those BTC comes from BKC sale. Only sold BKC is our true profit, otherwise we just issue trillions of BKC and get richer than Apple Inc Google Inc….:slight_smile:

If we directly give new issued BKC to reputed signers, what if they cannot sell them at 1$ for BTC/FIAT? Don’t forget that BKC pegging does not exist . On Free Market if BKC = 0.1$ at buy side, what would signers feel?

BTC liquidity is 100 times of NBT right now, and I guess most signers wanna FIAT when they are selling their reward. Bitcoin is relative stale if signers sell them in the first time and if they choose to hold BTC also OK, they are already players of crypto world.

I believe that you couldn’t be more wrong.

A fixed rate of BKS per block is stupid.

Assume you are a boss in real world, when your company income is very little and your employees salary is fixed & high and you know you cannot last for long time, bankrupt is ahead, what would you do? Fire them, yes, that’s your only option.
What’s the cost of a signer who keeps his/her computer online for one year? A average 50W PC consumes less than 440KWh which is around 44 USD? Internet fee? He has already paid for it.

So Why B&C company gives them high reward? They are not like Nu’s LPC who risk their own fund exposed to counterparts risk in volatile BTC price market. Totally unbelievable to pay them on a fixed basis!

Furthermore if they don’t share same profit condition with B&C company, they have less incentive to promote their service.

This is not like minting with PoS either, assume all BKS holders are minting and one year later, they all have 110% quantity of BKS, and SAME percentage equity of this company, for simplicity let’s assume that there is no speculate activity on BKS price and the capitalization remains same, every BKS holder has same value in his hands. Since all PoS miners don’t absorb money from outside(no revenue, just mint in internal network) , their money remains same, this is fair and logical.

But for B&C exchange business, our company is absorbing money(BTC) from outside, we are making profit which may fluctuate from 80,000$ to 3000$ per month, and you wanna give them fixed BKS rewards? Given that BKS price is also volatile so that sometimes signers are underpaid and sometimes overpaid. Isn’t this unfair and crazy?

All B&C investors and signers are “venture investors”, they clearly know about it, they may become millionaire or with empty handed. B&C is a business company not a social welfare institute. If we cannot make enough profit, just no money to pay ourselves. It is cruel and true.

#29

If BCE is frequently used, customers need to pay BKC to pay the fees. The BKC “market” can be quite liquid.

With a fixed rate per block the total amount of compensation would be a certain amount of $/month, but all (potential) signers would compete for it. The mechanism stays the same with compensation paid in BKS, but with BKC you can have a $/month value (there’s a ceiling to it) while with BKS this depends on the market price (with rising BKS price the compensation can easily skyrocket, although the operation cost of signing stay more or less the same.)

#30

And paying with BKS or BTC solves this problem? I doubt it, because both are volatile.

If you want a variable compensation, pay it in BKC as a share of the fees that are included in the transactions of the block :wink:
How will you implement a variable compensation with BTC or BKS? How to determine the amount of BTC or BKS per block?

#31

The cost of signers is not the cost of leaving the computer on. A signer could go for years without ever receiving a single signer payment if no one votes for them. The cost is the cost required to build reputation.

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.

#32

B&C dev have raised fund for B&C exchange by recieving BTC and NBT.

  1. the BTC buy wall is thicker than NBT’s.
  2. It takes 1-2 days for signers to sell their BTC reward, what’s the BTC price change within 1-2 day? B&C protocol can dispatch reward every two days during the continuous BKC sale.
#33

if the 2 days are Jan 12th-14th of this year, 37%

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#34

OK, even 37% is acceptable and this probability is quite low, BTW, it maybe 37% higher.

#35

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.

#36

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.

1 Like
#37

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

#38

[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? :wink:

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 :slight_smile:

…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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#39

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 :wink:

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.

#40

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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