A possible way to remove unnecessary insecurity from the game
TL;DR
Let's merge CON and CKG, so that the market decides in which proportion their holders are awarded a new token "CK", which is Town votes, ownership and dividend token. This will cause Town to become debt-free and we have a very liquid token to invest in. Simplicity gains back the value that we have lost because of uncertainty. With excessive torture of the rules, this is not even a fork (just a default), and simple majority suffices.PrefaceFor a few days I have been trying to find the solution to our two main challenges - human resourcing, and financial stability. Inspired by ArticMine and his analytical and resourceful thinking and suggestions, I have now outlined one possibility to remove unnecessary insecurity in the latter. It of course relates to CON. The point of view I am now taking is both systemic and owner perspective.
The systemic perspective is that CON has become a gamble on the timing of default, whereas its proper role is a perpetuity. This erodes the Town's possibility to raise funding through it. Raising more funding at a 50% fixed real-annual rate increases the chance of default and makes people less willing to pay for CON, creating a vicious circle.
The owner perspective is that CON owners usually invested large sums, and did it in the assurance that CK has a good chance to continue. Even more than CKG owners, the CON owners need to ensure the continuity. There are no hopes of big windfalls in either dividends or value appreciation. The only determinant of success is the perpetual stream of small payments, and CON does not even give any lever to ensure it (no council votes).
Despite that CON market cap until recently was only a fraction of that of gold (about 1/10...1/5), it is likely that the actual sums invested into CON are larger than those invested into CKG. The CKG had been fully created over the first few real-months of the game, and large parts of it were allocated against a small payment. Why I open up this matter, is to give perspective to what kind of people invested in CON.
Now the original role of CON is questioned, and CON is no more the vehicle to invest if you are a conservative investor who favors small but secure returns, which compound nicely over the long, if not perpetual, life of CK. These investors would not invest in CON in this environment, as it has become too risky and volatile. They would also not invest in CKG, which is in the risk of losing all just because of debt payments that are denominated in a mercilessly potent currency.
Without a way to appeal to this kind of investors, we will certainly suffer. We are not a hobby project any more, we increasingly need to be able to accommodate investors. Due to the default risk, turning both the values and the roles of the main investments, CKG and CON, upside down, the whole investment atmosphere will soon (if not already) degrade to betting on our own default.
I cannot personally function very well in that kind of situation, because my decisions (or lack thereof), have inordinate weight in timing of the possible default, and nobody else can function very well either, if they believe I am scheming to time it to my benefit. CK absolutely does not need this kind of spirit. We had fun enough in the good old days without having debts and defaults, (and when men were men and horses were horses and ships - well we did not have them, but we had swords, and lazy servants lost their ears and thieves their noses..)
So, the blessed and blissful interplay between CON and CKG is lost, because the investors cannot anymore fully trust in their roles. Instead of 2 interesting and worthy investment alternatives, we now have none.
Luckily, if even a dead dog can be turned to money if its ownership is settled first, also this CK problem can be remedied. CK is after all not a dead dog but a functioning gaming platform with 2 year history, 500 accounts, $100k in town account and much more in players', only debt is inside the game, and the 24/7 self-hosted active markets show that the aggregate market cap despite the carnage is still more than EUR 1 million.
SolutionA further consolidation in Town (and hence CK) ownership is needed to remove the uncertainty. Special importance is given to find a way that conforms with the rules to the extent possible, ensures the way forward and satisfies everyone in the practical level, giving those who are not satisfied, a market-driven way to cash out in the atmosphere of nice liquidity (and their counterparties buying more, etc.).
Please note at this stage that I have not talked about this to any of the councillors even, and this is not any proposal that I am fixated on and will push at any cost. It is just an idea. I literally got this just 3 hours ago when walking outside in the sun (now it's raining again so I got lucky).
First the Town Council decides to default on CON, announcing publicly that they will not be paid anything from now on. According to the interpretation of our rules, which was not challenged when published some time ago,
Gamemaster Update 1
If it so happens that the game time is resumed, and the Town cannot subsequently pay the CON dividends, the default procedure is as follows:
* CKG loses the dividend and voting rights, becoming a limited-quantity luxury/collectible resource.
* CON holders will get 1 vote per CON, from where they can appoint the Council and continue the game as they wish. This is considered a default for the 1st Town Corporation, but it need not affect the game more than the CON holders decide. (It is likely that the CON holders will redefine CON to have a variable dividend as they are unable to pay a fixed dividend to themselves anyway. CON would effectively take the place of CKG.)
If there is a default on CON, the holders of CON will decide about the future collectively, but no consensus needed. In practice, 51% suffices unless otherwise decided. (Nothing has been decided by the Town Council of CON holders yet, because it has not convened, and does not have any power since CON has not been defaulted.)
So now the "CKG-council" becomes mean. Unwilling to see their ownership and votes go, they empty the kitty. To the last penny. After all, the default looks more convincing if there is no money at all in the coffers.
If the money would actually be dealt as CKG-dividends, it would seriously hamper the future of the game. This kind of trickery might even paralyse it altogether. So it is a good bargaining chip when the "CON-council" has its first meeting. The CKG-council says:
- We have taken all the money from town before the default. It is in a separate account, owned by us CKG holders. You have received the right to make rules by virtue of the default, but you don't have any money. We can return the money to you against a share in the pie. How about a split according to the following scheme:
* In the future, there is only one Town ownership token, let's call it "CK".
* Since CON was defaulted upon, all CON will automatically become CK. There is no need to ask this from anyone. CK is just a new name for "CON that was defaulted upon, and has become Town stock".
* Since CON was defaulted upon, everything that the new council decides to grant to CKG holders in excess to "becoming a limited-quantity luxury/collectible resource" is just a bonus, and the receivers (CKG holders) likewise do not need to be consulted.
* This allows the new council to pay in CK to redeem back the money that the gold holders had in hostage.
* The conversion rate need to be determined. The whole thing became necessary when the trust in CON was broken. The CON price prior to the events was on average 20.0 XMR. If it still retained that price, nothing would be wrong, and CKG would still own 100% of Town. The lower the price of CON, the higher the market perception of the likelihood of default, and the more the CON-owner will receive of the final pie, with the formula:
% share of CK allocated to CON owners = [20.0 - X] / 20.0 // X = CON midprice during determination - So a lower price of CON during the determination period causes CON-holders to grab more of the pie. Unintuitive at first but as you think it through, it carefully ensures that all incentives are correct and the market will find a balance since nobody can push the price even close to either end. The price of CKG does not matter in the allocation. Their share will be the rest. The incentives cause large holders of one but not the other balance their holdings in the markets (because if you have a lot of CON, dumping it will actually cause you to own more of the result, and if you have a lot of CKG, buying some CON will increase the price of CON and therefore the value of your remaining CKG holdings). The process causes much liquidity to the markets, which is needed since the merger is such important and this way nobody can say the conversion rate was unfair.
The somewhat tricky sequence of events, is instrumental to avoid requiring 100% acceptance from either CON or CKG holders, and preserve the spirit of the game, and not break the rules, (unless going broke is, as such, against them).
Assuming that the midprice were 10.0 mil/CON, this causes CON owners to receive half of CK and CKG owners will get the other half.
Since we have 1,000,363 CKG, it makes sense that they get 1 (or some even number) of CK each. The CON that are only 5500 units, will get equally many, so each CON would be converted to 181 CK. If the midprice of CON indeed were 10.0 mil, this would cause CK to be priced at 55,250 m. And since 1 CKG = 1 CK in value, that would correspond to HM02B100 price of 5.5 mil.
The CON would disappear as they are mutated to CK. The items made of gold would stay (stripped of their dividends and votes) and the CK would be a spinoff for the gold holders.
This can be made happen with 3/6 councillors incl mayor or 4/6 without, plus a simple majority of CON holders.
I tried to express the legalities, technicalities and some of the benefits. But as usual, it is done in my clumsy language. Feel free to ask, comment, approve and disapprove.
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