Author Topic: Initial allocation and fundraising  (Read 13235 times)

toast

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Initial allocation and fundraising
« on: May 28, 2014, 12:51:18 am »
I recommend an AGS-style fundraiser be used to get money for this project and allocate part of the initial supply.

For those that don't know, AGS are the "virtual" shares represented by addresses of people who sent money to special fundraising addresses for the bitshares ecosystem. It is similar to how Mastercoin raised money, except that instead of fixing a price per BTC and letting the supply be variable, the supply is fixed and the price per share is determined by splitting the fixed shares-per-day among all the donators from any particular day. (Personally I think you should count time in terms of blocks instead of days, but whatever).

Of course if we're going with bitshares_toolkit we should allocate 10%/10% AGS/PTS.
There is also value in dropping a fraction onto BTC or MSC/XCP.
Maybe 30%-50% allocation for "Proto-Truthcoins" (the virtual TC fundraiser share)?

I do *not* recommend distributing shares to miners. Mining has not been "fair" or "decentralized" for like a year now. Even if you go with POW, their rewards should be paid explicitly from the network's income rather than implicitly via coin/share dilution. Miners are subcontractors for your network.

I do *not* recommend a dev premine. That's the point of this type of fundraiser.

There is also a question of coin distribution vs share distribution. Whichever is the one that pays fees is the one that should be preallocated to AGS/PTS/"PTC".

psztorc

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Re: Initial allocation and fundraising
« Reply #1 on: May 28, 2014, 01:29:52 am »
This is exactly the question I've tried to avoid for as long as possible.

There is also a question of coin distribution vs share distribution. Whichever is the one that pays fees is the one that should be preallocated to AGS/PTS/"PTC".

This is a very important consideration. The actual "Truthcoins" as I designed them, are the voting shares. You must vote on outcomes (but are paid for doing so). In theory the coin layer could be a complete snapshot of the Bitcoin unspent set, ie to guarantee that you own Truthcoin-currency, you would just own Bitcoin on some chosen future date (block number).

I'm very interested in this (snapping Bitcoin for the coin-distribution [which would pay the fees]), primarily for signaling purposes: it is completely the opposite approach to that of every Altcoin so far. I want people not just to understand, but to know, that what is happening here is not at all anything like what has been happening. I want anyone who claims otherwise to be speechless. I think the marketing, and onboarding of the Bitcoin community, would be worth a ton.

That still leaves us with the shares to play with. However, investors must know that they have to use these shares to vote on outcomes or they slowly disappear. I can't really hold the shares for people...that really defeats the whole point, doesn't it?

I've never known exactly what to do about this...I think I may need to *gasp* ask for advice.
Nullius In Verba

toast

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Re: Initial allocation and fundraising
« Reply #2 on: May 28, 2014, 02:37:29 am »
Sorry, could you clarify? I tried to find the coins vs shares in the whitepaper and couldn't.
From what you just described, both the coins and the shares are the "voting shares" used for outcomes. What is used for what? What charges fees for what?

CLains

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Re: Initial allocation and fundraising
« Reply #3 on: May 28, 2014, 05:30:58 pm »
People have tried everything, and are still trying even more things than that to market their coin. The altcoin community may be blind and stupid, but so is evolution, and in the last two years they have evolved a lot. From the emerging strategies I have seen, the safe thing to do is to collect a lot of money by IPO, which seconds as an initial hype of your product. This will get you investors who do not sell low, which will get your coin up a reasonable distance at coinmarketcap once it launches, and it will get you enough money to hire someone to do web-page and viral marketing.

Dropping everything on Bitcoin is extremely risky, and to be honest it feels like an attempt at coming up with some unique marketing.  I would not want you to risk your neck on a single marketing stunt like that when you have no experience with marketing. Instead, let your code and product speak for itself to savvy, wealthy investors who are eager to listen and get involved, and then later try all the stunts you want, and hire professionals marketers to draw in the faceless horde.

/2cents
« Last Edit: May 28, 2014, 05:33:58 pm by CLains »

psztorc

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Re: Initial allocation and fundraising
« Reply #4 on: May 28, 2014, 09:58:27 pm »
First of all I work during the day...trying to only work on Truthcoin in the afternoon.

Sorry, could you clarify? I tried to find the coins vs shares in the whitepaper and couldn't.
From what you just described, both the coins and the shares are the "voting shares" used for outcomes. What is used for what? What charges fees for what?

The reason you are confused, is that the whitepaper assumes that these will be Bitcoin prediction markets. Therefore when the paper mentions Bitcoin it is talking about coins and when it mentions TRU or Truthcoin it is talking about shares. When I said "Truthcoins" I mean shares, when I said Truthcoin-currency I mean coins. Does that help?

People have tried everything, and are still trying even more things than that to market their coin. The altcoin community may be blind and stupid, but so is evolution, and in the last two years they have evolved a lot. From the emerging strategies I have seen, the safe thing to do is to collect a lot of money by IPO, which seconds as an initial hype of your product. This will get you investors who do not sell low, which will get your coin up a reasonable distance at coinmarketcap once it launches, and it will get you enough money to hire someone to do web-page and viral marketing.

Dropping everything on Bitcoin is extremely risky, and to be honest it feels like an attempt at coming up with some unique marketing.  I would not want you to risk your neck on a single marketing stunt like that when you have no experience with marketing. Instead, let your code and product speak for itself to savvy, wealthy investors who are eager to listen and get involved, and then later try all the stunts you want, and hire professionals marketers to draw in the faceless horde.

/2cents

People become slavishly devoted to the coins they own, and oppose the coins they don't.

I have some savings of my own, and don't necessarily need investors at all (toast himself estimated it would only take on the order of weeks to build), but I do need a way to allocate the shares to make the project decentralized. I could have used the money a long time ago, when I was designing the project on weekends.

This project is no where near as involved as BitsharesX, NXT, or Etherium. (That's the major reason it's going to work). But I only need toast for a week, and he's under a related contract already. 4 other groups (of 1, 1, 2 and 2 coders) have contacted me and are interested in building Truthcoin.

The question is what to do about the two different coin layers, so that the project comes to life (once it is built) ASAP.
Nullius In Verba

crimealone

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Re: Initial allocation and fundraising
« Reply #5 on: May 29, 2014, 08:27:51 am »
I really appreciate what you have done. I'm not a coder. What can I do to help you?

zack

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Re: Initial allocation and fundraising
« Reply #6 on: May 29, 2014, 09:47:53 pm »
I think we should have an exchange, and put a MASSIVE sell order with all the coins.
As people buy them, we use the bitcoin they give us to put a buy order at 0.99* the sell order.

Everyone can easily convert back and forth, just by paying a 1% fee.
It is backed by bitcoin, and they have to trust the centralized organization to uphold this promise.
Eventually, truthcoin community outgrows the centralized institution. All the coins are purchased.
Then the price of truthcoin floats freely against bitcoin, and the centralized institution stops existing,
the investors keeping all the bitcoins as profit.

The centralized institution needs to decide on it's total profits from day one. 1,000 bitcoins? 10,000 bitcoins?

If you aim too high, a different centralized institution could undercut.
If you are too low, then your community wont be big enough to have stable truthcoin/bitcoin exchange rate.

toast

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Re: Initial allocation and fundraising
« Reply #7 on: May 29, 2014, 10:19:24 pm »
I think we should have an exchange, and put a MASSIVE sell order with all the coins.
As people buy them, we use the bitcoin they give us to put a buy order at 0.99* the sell order.

Everyone can easily convert back and forth, just by paying a 1% fee.
It is backed by bitcoin, and they have to trust the centralized organization to uphold this promise.
Eventually, truthcoin community outgrows the centralized institution. All the coins are purchased.
Then the price of truthcoin floats freely against bitcoin, and the centralized institution stops existing,
the investors keeping all the bitcoins as profit.

The centralized institution needs to decide on it's total profits from day one. 1,000 bitcoins? 10,000 bitcoins?

If you aim too high, a different centralized institution could undercut.
If you are too low, then your community wont be big enough to have stable truthcoin/bitcoin exchange rate.

Price-fixing is never good. Traditional IPO model is totally broken. You can establish a market price in the presale by doing a AGS-style fundraiser. That way you actually get the money, and get however much money people were willing to invest.

psztorc

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Re: Initial allocation and fundraising
« Reply #8 on: May 30, 2014, 10:56:01 pm »
I really appreciate what you have done. I'm not a coder. What can I do to help you?
Hey, thanks! One thing I wish people would do more is just submit pull requests to the central FAQ, instead of just email/forum their questions. You could do that, or make a list so that I could do that more easily (message or email it to me). Also, I've been advised to go on the podcast "Let's Talk Bitcoin", you could find the guy running it and see if he's interested. You don't by any chance go to / know anyone at Princeton? Many of the items here will require, at some point, careful attention from Bitcoin-dev-experts. Just spreading the word is nice, would like to get (smart) people talking about it so that we can get the criticism we need to produce a viable implementation. Answer people's questions. That's all I can think of right now.

Refocusing here:

the supply is fixed and the price per share is determined by splitting the fixed shares-per-day among all the donators from any particular day. (Personally I think you should count time in terms of blocks instead of days, but whatever).
I'm having trouble with this, is it like this: http://en.wikipedia.org/wiki/Dutch_auction#Public_offerings If not, it seems you'd want to wait until a day when few people are donating.

I do *not* recommend distributing shares to miners. Mining has not been "fair" or "decentralized" for like a year now. Even if you go with POW, their rewards should be paid explicitly from the network's income rather than implicitly via coin/share dilution. Miners are subcontractors for your network.
If you read Satoshi's whitepaper, you'll see the blockrewards were distributed to miners for two reasons. Firstly, they provided subcontracting, but secondly they "[provided] a way to initially distribute coins into circulation". Kaldor-Hicks (profitability) is not enough, a value network must be a Pareto Improvement (incentive compatible for a critical mass) to get people to switch and re-create the network effects of money (which are paramount). This second reason contributed more to Bitcoin's success, in my view, than the first "subcontractor" reason. If Satoshi had given (not mined) any coins to himself, he would invite an immediate fork(s) of the project, and critical mass and network effects would never have emerged.

There is also a question of coin distribution vs share distribution. Whichever is the one that pays fees is the one that should be preallocated to AGS/PTS/"PTC".
I still think the Coins should go to Bitcoin holders (for the allocation reason above), yet the first branch of Votecoins, with many held by / publicly endorsed by me (as I think that I can most inspire trust, after doing all of this work) should be distributed to developers/funders/contributors/etc. But its hardly a settled issue.

Again, the Votecoins are not "free", one must do the work of Voting (for which you are paid). This is a little inconvenient, I don't know how people would feel about this.

In the ancient past, shareholders did a lot of work, monitoring their corporation and electing its Board and Executive Managers. Today, people just kick back and do nothing. In my opinion, this is the source of much of today's economic failure (huge firms with none of the owners knowing or caring about what's going on).
Nullius In Verba

toast

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Re: Initial allocation and fundraising
« Reply #9 on: May 31, 2014, 04:20:59 am »
If you read Satoshi's whitepaper, you'll see the blockrewards were distributed to miners for two reasons. Firstly, they provided subcontracting, but secondly they "[provided] a way to initially distribute coins into circulation". Kaldor-Hicks (profitability) is not enough, a value network must be a Pareto Improvement (incentive compatible for a critical mass) to get people to switch and re-create the network effects of money (which are paramount). This second reason contributed more to Bitcoin's success, in my view, than the first "subcontractor" reason. If Satoshi had given (not mined) any coins to himself, he would invite an immediate fork(s) of the project, and critical mass and network effects would never have emerged.

This worked because bitcoin was cpu mined for a huge chunk of the initial distribution. Claiming that mining gives a widespread distribution is ignoring the reality that mining power is *extremely* centralized, not much better than the few project leaders giving all shares to themselves.

toast

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Re: Initial allocation and fundraising
« Reply #10 on: May 31, 2014, 04:27:20 am »
Of course the *perception* that mining is "fair" might make you more resistant to a fork. But do you care about fork resistance if you're giving away the vast majority of the equity to a few miners?

psztorc

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Re: Initial allocation and fundraising
« Reply #11 on: May 31, 2014, 11:23:51 pm »
I'm only giving the coins to miners as they mine in the future. The rest of the coins are going to Bitcoin owners.

Satoshi solved the allocation problem by distributing the coins not to whoever he thought deserved them, but to anyone interested enough in Bitcoin to prove that interest by CPU mining. The point was that he didn't make it about himself, or his preferences (because there are a lot of people in the world, who could have copied Bitcoin and made it about themselves or their preferences), but instead made it on the principle of building a network (and building network effects). That is what I am trying to emulate.

Its not about copying Bitcoin because Bitcoin is good, its about plugging into the best network.
Nullius In Verba

toast

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Re: Initial allocation and fundraising
« Reply #12 on: June 02, 2014, 01:59:57 am »
I'm only giving the coins to miners as they mine in the future. The rest of the coins are going to Bitcoin owners.

Satoshi solved the allocation problem by distributing the coins not to whoever he thought deserved them, but to anyone interested enough in Bitcoin to prove that interest by CPU mining. The point was that he didn't make it about himself, or his preferences (because there are a lot of people in the world, who could have copied Bitcoin and made it about themselves or their preferences), but instead made it on the principle of building a network (and building network effects). That is what I am trying to emulate.

Its not about copying Bitcoin because Bitcoin is good, its about plugging into the best network.

Ah, that makes sense.

Still, I'm curious about why you care about network effect if you don't have anything to lose from a fork attempt. You could pick an allocation that is more favorable to yourself, and if it gets forked to pure BTC then you are no worse off than if you had started with a pure BTC distribution to begin with. (I'm assuming you're not secretly a large BTC holder).

psztorc

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Re: Initial allocation and fundraising
« Reply #13 on: June 04, 2014, 10:15:26 pm »
Why didn't Satoshi pick a different allocation? I'm most-favored by the allocation which most-maximizes project-success.

Also, I honestly believe that the value-creation is in the Votecoins. That is the point of this project, to establish a reliable Truth-Serum for economic use. The currency will ebb and flow, and be used for all kinds of purposes, independent of this idea.

Finally, I think I would have something to lose from a false-start. It would be more than little a little chaotic, don't you think?
Nullius In Verba

zack

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Re: Initial allocation and fundraising
« Reply #14 on: June 08, 2014, 10:52:52 pm »
There are 2 types of prediction markets, one of which is designed for being using similar to how kickstarter is used. It is for gathering funds for a public good.

We should find the 1000 most profitable textbooks, and created a prediction market for each textbook. Each market should reward whoever is first to provide a torrent to the book.

This would bring a large amount of attention to the project, it would ruin some predatory industries, and it would allocate the initial funds.