<html><head><meta http-equiv="Content-Type" content="text/html charset=utf-8"></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" class="">Hi all,<div class=""><br class=""></div><div class="">I’m also of the opinion that the BQS token value should reflect the success of the Bisq network, not of the Bitcoin value.</div><div class="">Plus it seems wasteful to spend 250k just to print the voting ballots for the DAO ;)</div><div class="">2,5BTC sounds good. Maybe some more spreadsheet calculations are needed, but if 2,5BTC works, why not.</div><div class=""><br class=""></div><div class="">PS: as a rational BSQ holder it’s in my personal interest to advocate for the 25BTC, because that way even if BSQ value is low, I’ll still have BTC worth something ;). </div><div class="">But having that extra 20+ BTC in the bank might be a welcome buffer sometime in the future.</div><div class=""><br class=""></div><div class="">regards,</div><div class="">Mike</div><div class=""><br class=""></div><div class=""><div><blockquote type="cite" class=""><div class="">On 1 Dec 2017, at 14:09, sqrrm <<a href="mailto:sqrrm1@gmail.com" class="">sqrrm1@gmail.com</a>> wrote:</div><br class="Apple-interchange-newline"><div class="">
<meta http-equiv="Content-Type" content="text/html; charset=utf-8" class="">
<div text="#000000" bgcolor="#FFFFFF" class=""><p class="">Looking at the characteristics of the BSQ token and the reason it
is introduced I think it should reflect Bisq value as purely as
possible.<br class="">
</p><p class="">By using colored coins on the Bitcoin blockchain there will be an
inherent minimum value of each token equal to the value of the
underlying bitcoin and the remainder of the value of the token
will be the value of the Bisq project. By using 25 BTC for initial
distribution there is no way to avoid a minimum initial value of
all BSQ tokens of 25 BTC.<br class="">
</p><p class="">The purpose of the BSQ token is to introduce a governance
structure on a distributed project by allowing voting, fee payment
and compensation to contributors using the token. There seems to
be no inherent value in having the price of the token also depend
on the price of bitcoin, rather the opposite as there is a less
pure incentive to work for the betterment of Bisq if a large part
of the BSQ token value is not tied to the value of Bisq.<br class="">
</p><p class="">For these reasons I think it would be better to use as few BTC as
possible for initial distribution to lower the BTC price influence
on the token. That should reasonably be voted on though since
there is already a promise to use 25 BTC for the initial
distribution. Using 2.5 BTC as you suggest sounds better to me.<br class="">
</p><p class="">On the issue of the smallest unit being worth a lot, it might be
possible to think of ways to pay lower values than the minimum
unit value. Perhaps by funding several trades with one minimum
unit or using some statistical burn rate (the token is burnt in
only 10% of cases to achieve a fee that is 1/10th of a minimum
unit, might be a harder sell for statistically disinclined though,
like a bad lottery).</p><p class="">Cheers</p><p class="">sq<br class="">
</p>
<br class="">
<div class="moz-cite-prefix">On 30/11/17 00:07, Manfred Karrer
wrote:<br class="">
</div>
<blockquote type="cite" cite="mid:9F30C1AE-1FCE-4A60-A9EE-C2B4DDFECBDB@nucleo.io" class="">
<pre wrap="" class="">With the rise of the BTC price we might need to reconsider the denomination model for BSQ.
The current model is:
1 BSQ = 1000 Satoshi = 0.00001000 BTC = 0.10 USD with BTC price @ 10 000 USD
We have 25 BTC on the donation address which was considered to use for the genesis. That would result in 2.5 M BSQ.
If the project value is 2.5M USD that would result to 1 BSQ = 1 USD. So we have a factor of 10 between "printing costs" and BSQ value.
A compensation request for 14 000 BSQ would cost 0.14000000 BTC which is now about 1400 USD so that is 10% of the payment with a BSQ price of 1 USD/BSQ. Of course that price is a big unknown and it can be easily higher so that requests for 14 000 USD will be a lower BSQ amount like 1400 if the BSQ price would be 10 USD (25M project valuation), thus the “printing costs” for BSQ would be only 0.014 BTC = 140 USD which is reasonable.
But if BTC goes even further up to 100 000 USD we get the same problem again and worse if the project value will be 2.5M and BTC price is 100k USD the 0.14 BTC input for creating 14k BSQ would be already 14 000 USD.
That might be an extreme case on both variables (BTC price, BSQ price) but we have to take it into consideration. Who thought that BTC rises 14 times in less then a year?
Another important factor for the denomination is the smallest possible fee unit. That is 0.001 BSQ or 1 Satoshi which would be with current BTC price, the assumption of 1 USD/BSQ price and the current denomination model 0.001 USD which is a reasonable small unit. With 10 USD/BSQ price it would be 0.01 USD and still ok. With 1 USD/BSQ price but 100k USD BTC price it would be as well 0.01 USD. With 10 USD/BSQ price and a 100k USD BTC price it would be 0.1 USD and still ok.
A possible solution for a 100k USD BTC price scenario is that we only use 2.5 BTC (that was in USD terms more or less the value when I started with the DAO ;-)).
With such a changed model 1 BSQ would be 100 Satoshi.
A 14 000 USD request would then require 0.01400000 BTC which would be with current price 140 USD. With a 100k USD price it would be 1400 USD.
The smallest unit is then 0.01 BSQ = 0.01 USD cent or if BSQ price is 10 USD 0.1 USD which is still ok. If BSQ price would also explode to about 100 USD then we would get into a problem as the smallest unit would be 1 USD and that might be not good enough for the fee of small trades.
So we have 2 aspects which are opposed: The more BTC we put into the genesis the smaller the smallest unit is but the higher the “printing costs” are and vice versa. We have to find the best compromise.
Good thing is that both extreme scenarios (100k USD BTC price, 100 USD BSQ price) are kind of happy problems and will give us enough luxury to solve it when its time, though of course we should think carefully to design it in a way that it is as sustainable as possible.
Beside that there might be some new circumstances changing the situation:
- Bitcoin itself might get divided by additional smaller units if BTC rises too high.
- Bitcoin might become too expensive to use for any of our current use cases (including voting) and we need to move over to another coin, a custom coin or a second layer technology.
Worst case scenario would be that BTC price gets very high and BSQ price very low Then the printing costs could be higher then the BSQ value. With the current model and a BTC price of 50k and BSQ price of 0.5 USD we would touch that point already. Though that is not very likely because the 25 BTC from genesis tx would give the project already a value of 1.25M thus the 0.5USD price would be already 100% covered by the backed BTC.
An interesting aspect is that by adding that “printing money” into BSQ we are backing it by BTC. With a rising BTC price that backing becomes a very valuable investment which will drive BSQ price by itself up.
All contributors are kind of putting extra savings money into Bisq and if that underlaying BTC rises the project itself benefits by the higher backing value.
Any ideas how we should deal with that?
A said above my suggestion is to use only 2.5 BTC from the donation address and then we should be ok for a while. Critical moment would be then 1M BTC price and BSQ price sill only 1 USD. But as said then the 2.5 BTC would be already 2.5M and covering 100% the 1 USD price. Would mean the market does see 0 extra value beside the backed BTC.
This backing aspect is quite interesting and maybe we only have that current problem because we don’t know the market value. The 1 USD price might be simply way too low if we take 25 BTC (250k USD) as backing value.
Br,
Manfred
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