Today DPoS brings inflation to BitShares by paing 100% delegates 50 BTS per block, it's give us ability to hire devs and for me it's an excellent idea.
I keep reading people blaming this system for the price decline. I guess time will tell whether or not the delegates are providing more value than they're taking.
You probably also keep reading people responding to those posts who are delighted with owning a blockchain that can fund its own growth by paying contributors of valuable labor instead of wasting issuance on mining electricity. Proof of Labor instead of Proof of Work, you might say.
The
BitShares Loves Puppies thread is where I've been compiling all the evidence that show an amazing ecosystem in bloom. Much of this is stimulated by motivated delegates adding value everywhere they can.
Well yeah mining is a ridiculous waste, but I'm not necessarily convinced that delegate pay is better than 0 inflation with fees going to the appropriate people. Maybe it is, we'll see how it goes, but any sort of downward pressure on an asset drives potential investors out. The only thing 99% of people care about is whether or not they think whatever they buy is going to appreciate over time. At least with zero inflation you know objectively that any downward pressure is a result of individuals selling rather than inflation.
Not saying either system is clearly better than the other, but I can certainly see potential investors being turned off by any sort of systemic downward pressure. Bitcoin is the worst for that of course, and people only seem to be realizing just how bad it is over the last year or so.
I'll have to agree that working for equity it is harder for some people to understand. Most Silicon Valley startups issue stock to people who put in cash AND to people who put in the equivalent amount of labor. Cash gets put in up front while labor gets put in over time. Both types are needed and experienced investors understand that shares need to be issued to all contributors and their percentage of the company must be proportional to their percentage of contribution. This is Investing 101.
Let's look at several equivalent alternatives:
Alternative #1 - Developers set aside some of their genesis shares "to fund development." When you analyze that you realize that it means they intend to gradually sell from a pool of pre-issued shares that were not part of the circulating supply in order to raise fiat to pay bills. This produces exactly the same selling pressure. The only difference is whether the new supply is preprinted or printed just in time. (Printing just in time eliminates the risk that someone can run off with the development fund and is thus the more trustless way to do it.)
Alternative #2 - Paying developers from fees to pay those exact same bills creates the exact same selling pressure. The only problem is a new system needs time to grow before it can generate enough fees to pay those bills. So that's a strategy you can only transition to once you reach critical mass.
Alternative #3 - If you do a crowd sale to raise funds you are also generating selling pressure. Money that might have pursued existing shares (i.e. "demand") is soaked up buying the new shares.
Alternative #4 Get a whale to sacrifice prior shares that they have earned to pay the developers, they are still going to be sold to raise fiat. Same selling pressure.
Alternative #5 - Don't pay for anything. Avoid selling pressure! - Alas, relying on part time volunteers just gives time for some better funded team to make it to the finish line before you. And isn't it fundamentally unfair to ask volunteers to sacrifice to make you rich? Where do people get the idea that somebody else, whether whale or volunteer, should sacrifice for their benefit?
Bottom line. There is no free lunch. Funds to develop the system need to come from somewhere. Experienced investors realize they must share the costs in order to share the rewards.
So, we did our best to create a system that incentivizes the flow of investment dollars to fund those who are doing the work and let the chips fall where they may. Issuing shares through delegates is our innovation that puts the shareholders in charge of who gets hired and how much they get paid. It was the most decentralized, trustless way to do it and it was much more cost effective than how Bitcoin is doing the exact same thing.
Like you say. Time will tell.
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