Bible Pay

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  • Rob Andrews
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Dynamic Whale Staking
« on: November 08, 2019, 05:36:06 PM »
This is a concept to be considered:  Dynamic Whale Staking.

The problem statement:  We need more users and more investors to make biblepay more popular. 

Solution:  Make a feature in BBP that allows 'latent BBP' to be 'staked' for a whale-unit reward.  Part of the goal is to make this as easy as possible; no complicated smart contracts, no daily wallet unlocks, no leaderboard, just simply buy the BBP on the exchange, load the wallet and run the command that burns the coins.


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PROPOSED CHANGES TO EMISSION SCHEDULE WIKI:
https://wiki.biblepay.org/Emission_Schedule_2020
** NOTE:  THERE ARE NO NET CHANGES TO THE EMISSION TOTAL AMOUNT OR TOTAL MONEY SUPPLY,
however, the changes included here are:  A) We allow room for DWS rewards - starting in 2020 - by increasing our deflation percent from 19.5 to 20.04%, and allocating an additional maximum of 10% (of our gross monthly block reward) towards DWS rewards (This does *not* decrease the gross block reward, the sanctuary reward, or the POBH reward or the GSC contract amount).  If the DWS rewards are not used, because the DWS stake is never burned, then the BBP is never actually spent from our emissions.  (In this case the actual total money supply in BBP would be less than 5.1 B at the end of the schedule depending on how much is never spent).
________________________________________________________

Why would someone want this:  A person who is seeking cryptocurrency exposure will be looking at coins to invest in with certain characteristics.  I feel our coin has a bright future because:  Its a feel good investment (we do tithe 10% to orphan charity, so the utility of our organization works for you), we are deflationary in emissions per year, we are a HODLing community with governance meaning we have a high % locked up in sancs, and finally - the investor will be comparing ways to get more coin-unit rewards through proof-of-work or mining etc. 

Our original money supply covenant:  We will need to ensure we don't break our covenant.  This would be accomplished by allocating a percent of our emitted coins per year toward this project - in a certain band of years, IE 2020 through 2030, and increasing our deflation rate to pay for the feature.  So we would have no net changes in our total supply, but we would modify our coin emission chart to include this feature over 10 years.  In laymans terms this means we would emit 10% more total coins for 10 years, but we would increase our deflation % per year to cover the change.

Emission Changes:  In this proposal we allocate 10% more than our current annual emission rate (which is currently 612MM per year), therefore we would spend up to 5,083,333 per month on 'dynamic whale staking' deflating at our standard deflation rate (of 19.5%).  However note, this is the absolute maximum, if the product is 100% allocated.  If the feature is not used, these coins would not be emitted for whale staking.   We will also decide how much we need to increase our deflation %.


Full Safeguards:  The DWS money supply ratio would be hardcoded in the wallet for full safeguards, to ensure the wallet cannot emit more than the designated existing total plus the DWS for that month.  So, if we currently emit 50MM in a given month, the wallet would not allow more than 55MM to be emitted in a given month, due to the hard rules.  Additionally, the recipients of each DWS would need to be approved by all the sancs (the sancs who create the daily superblock would evaluate every DWS record and add it to the superblock).  So there will be no chance of a miner adding a DWS that is unauthorized. 

The core wallet will be generating the coins for the investor from the coinbase, so solvency is guaranteed.  BBP cannot go bankrupt from DWS.

Provably identifiable DWS burns:  Since DWS uses a provable burn record, it will not be possible to fake a burn, and it will be provably demonstratable that the burn address does not have a corresponding private key.  Rob will attach the mathematical proof to this proposal that shows how to create a certifiably provable burn address for Biblepay with no corresponding private key.   

-=-=-=-=-=-=-=-=-=

EDIT:  I am attaching the source code that facilitates the generation of a non-spendable-bbp address for both testnet and Prod, based on the first public key derived from an unusable private key of {0x0} (See attached file: DynamicWhaleStaking.cs).

This code creates a BBP keypair using a blank private blank key - ie hexcode {0x0} - that is a provably unspendable private key. This routine generates this public address :  B4T5ciTCkWauSqVAcVKy88ofjcSasUkSYU (This is the first public address from the 0x0 private address that is a valid spending address).  So if you send BBP to this address it will be lost forever.

=-=-=-=-=-=

Mechnical operation:

We will allow a DWS duration of between 7 and 365 days.

The dynamic-whale-reward will be quoted on the screen in 'test' mode - and will match on every biblepay client until the quote is consumed.
It will be updated block to block.

To protect the system from hogs, we will use two moving averages, annual saturation and monthly saturation.
The monthly saturation will primarily drive the quoted dynamic-whale-reward.

Full example of a DWS whale stake in action:

getdwsquote
Amount staked: 1,000,000
Dynamic-whale-unit reward: 15
This means the user would potentially receive 150,000 bbp in reward one year after the coins are burned, if bbp returns them (they are 100% at risk, and we will explain this by posting a risk notice).

(Allowed stakes can be between 100 and 1,000,000 bbp):
dws 1000000 receive_address 365 authorize true
In this case, the whales stake will be sent to the burn address;
365 days later, the whale will receive the original 1mil back, plus 150,000 in additional coins.

The reward algorithm should stabilize at a point where the stake-reward emissions average out to be the allocated projection.

Note:  The shorter term rewards are penalized by 50% divided by the span. 
So a DWU reward of 100 will only be 50 if the duration is 1 month.

75 for 6 months.  100 for 12 months.

  This will encourage DWS whales to lock the coins for longer durations, and free up more of the DWS rewards for more distinct users (because those who choose short spans will receive less rewards).  This will be accomplished by storing the duration on the burn itself, so the actual DWU reward
 will be calculatable off of the base.

Example:
Current DWU-reward level is 50 for 365 days.
DWU-reward is  37.5 for 6 months.
DWU-reward is 25 for 1 month.

User A types  : exec dws 10,000 365.  They will receive receive 10,000 + 5,000 after 365 days.

User B types  : exec dws 10,000 180.  They will receive will receive 10,000 + 1,875 in 180 days.


Target Algorithm version 1.1:

"Two saturation levels are monitored.  The Annual saturation level is comprised of the total outstanding (owed and unpaid) DWS stakes over the next 365 days.

The Monthly saturation level is comprised of the total outstanding owed over the next 30 days."


Annual and Monthly Saturation Equation:
SE_Percent = Total_Outstanding_Coins_Owed / Maximum_DWS_Reward_Amount_For_The_Period


1.  If Annual Saturation is > 95%, drop DWU reward level to zero (for quotes).
2. If Annual Saturation <= 95%, offer the inverse of the monthly saturation level as a DWU reward.

Inverse of monthly saturation level:

IA = 1.0 - Monthly_Saturation_Level

ROI quote = IA * MAX_DWS_DWU

Example:

1.  Annual saturation level is at 25%.  Monthly Saturation is at 50%.  Since IA equals 50% (for 365 days), the quote would be .50 * MAX_DWS_ROI = 100 DWU.

2.  Annual saturation level is at 25%.  Monthly Saturation is at 90%.  Since IA equals 10% (for 365 days), the quote would be .10 * MAX_DWS_ROI =  10 DWU.

3.  Annual saturation level is at 96%.  Quote = 0 DWU.

4.  Annual saturation level is at 94%.  Monthly Saturation is at 1%.  Quote = .99 * MAX_DWS = 198 DWU.

5.  Annual saturation level is at 50%.  Monthly Saturation is at 99%.  Quote = .01 * MAX_DWS = 2 DWU.

Risk Rules:  (Rules to mitigate risk):

Each burn will be audited in the memory pool before accepted (meaning a burn can be turned down by all the nodes, if for example the burn is created fraudulently, or, if the burn will result in an overage condition for BBP).
Rule 1:  Each node will check the components of the burn, to ensure they match the quote available, the duration available, and the availability of the DWS ROI.   Check the bounds for each component also.  (Otherwise if any of this fails, reject the burn).
Rule 2:  No more than 5 mil in gross stakes per day.  This will limit our exposure for GSC contracts to never pay more than 5 mil back to whales in a given day.
Rule 3:  If the Annual Saturation level > 95%, reject the DWS.
Rule 4:  Each node will re-assess the 'total whale metrics' as each transaction occurs.

Burns rejected by the memory pool will automatically refund the funds back to the sender (actually, the transaction will be rejected, the same way a conflict or a double spend is handled).

Howey-test protection, to ensure biblepay stays a utility:

We will add a warning to the DWS burn method:

Your coins are 100% at risk if burned.  This is a self directed action by you.  Type authorize to acknowledge that burning the coins results in a potential entire loss with no future expectation of profit, and biblepay will be held as a harmless utility for this self directed action.  We do not promise you an increase in value for any
 of your coins!  We do not promise to pay you back for any burned coins, and coins are 100% at risk. 



« Last Edit: December 02, 2019, 06:45:34 PM by Rob Andrews »


  • sunk818
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    • April 24, 2018, 02:02:20 PM
Re: Dynamic Whale Staking
« Reply #1 on: November 12, 2019, 10:55:01 AM »

This is a concept to be considered:  Dynamic Whale Staking.


The problem statement:  We need more users and more investors to make biblepay more popular.
...
365 days later, the whale will receive the original 1mil back, plus 150,000 in additional coins.


Yes, I agree with the problem statement. Let's get more users and investors to BiblePay.


With Dynamic Whale Staking, can you explain how this scheme passes the Howey test? To me, this is an investment and there is clear expectation of profit. If you deposit 1M BBP, you will get back 150BBP in one year. Sounds like a dividend or certificate of deposit. Isn't this a risk to BiblePay leaving it open to scrutiny by the SEC?


  • Rob Andrews
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Re: Dynamic Whale Staking
« Reply #2 on: November 12, 2019, 04:44:23 PM »

Yes, I agree with the problem statement. Let's get more users and investors to BiblePay.


With Dynamic Whale Staking, can you explain how this scheme passes the Howey test? To me, this is an investment and there is clear expectation of profit. If you deposit 1M BBP, you will get back 150BBP in one year. Sounds like a dividend or certificate of deposit. Isn't this a risk to BiblePay leaving it open to scrutiny by the SEC?

Up to this point, I am attempting to make the DWS feature very similar to staking rewards that many wallets generate rewards from (Except as an additional feature for our POW base, instead of a base feature).   
 
   So first, by your definition, would you agree that PIVX, with a 'stake reward' of 1.5% on a balance of 1000 pivx makes pivx an SEC investment?  I dont think it fails the howey.  Because the convenant is you receive 150 pivx on a 1000 pivx stake (this is a mining reward, just like our GSC contracts are mining rewards).  Do you now also go back and say our current prod POG investments are failing the howey?  Since they offer return bbp on staked amounts of bbp?  I guess you would also think - all proof of stake coins would fail then also - correct? 

First of all, I want biblepay to remain a utility.  So we offer no expectation of profit from DWS.  This is because a DWS whale burn only gives you back more BBP.  We never promise to you that more bbp on your existing bbp equals a profit. 

Lets look at the definition of the howey test.
When Howey broke up the citrus grove into N parts, they broke the law because they sold each citrus share with the expectation that They would do the work to make it profitable (they were the 3rd party citrus growers) and therefore it was a common enterprise, with expectation of profit.

The 4 reqs of Howey:

- Must be an investment of money
- With expectation of Profit
- In a common enterprise
- With profit to be generated by the 3rd party

So we have DWS, could be argued a crypto stake is or is not money.  Ill take the conservative route and consider that BBP 'may be construed as money'.

However, we can knock out #2, by clarifying that a person is not buying a share, but making a SELF DIRECTED DECISION TO BURN BBP.  BURNING BBP RESULTS IN A LOSS, WITH NO EXPECTATION OF A FUTURE PROFIT.   Ill cover this in a minute.

Common Enterprise:  I could speculate this is not a common enterprise, as burning BBP does not mean you are receiving a special service (IE a growing groundbreaking company or farm) .  But lets veer on the conservative side and agree that someone might perceive we are so innovative that we are a common enterprise, because we offer expectation of cutting edge new releases.

Profit to be generated by 3rd party:  This means you as a whale will not be doing any work -  you are relying on us to make you a profit.  I think we can clarify here that during a burn, the user is making a self directed decision, to burn their BBP stake - and BBP should not be expected to rise in value.

In a nutshell, I propose to make the burn command issue a statement:
1) You are burning your biblepay, with no expectation of profit, and biblepay is held as a harmless utility.
2) You are not guaranteed to receive a dynamic whale stake reward in the future.
3) By typing authorize you agree that this is a self directed decision.  By typing authorize you do not expect biblepay to grow in value or perform any work to grow in value.
4) Once you type authorize, your coins will be destroyed, with no promise to receive them back in the future.

Then we make the reward side a "100% risk" that at the discretion of our wallet, we will *possibly* send you back your original BBP plus a Dynamic Whale Stake Reward.

EDIT: I propose we edit our nomenclature in the wallet, and ensure all references to rewards are  'Whale Reward Units'. 

Also we will add a disclaimer requiring authorize, that ensures this is a self directed action by the user, resulting in no expectation of profit, and no promise by us for a future profit.




« Last Edit: November 14, 2019, 04:10:25 PM by Rob Andrews »


  • sunk818
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    • April 24, 2018, 02:02:20 PM
Re: Dynamic Whale Staking
« Reply #3 on: November 14, 2019, 02:03:29 PM »
DWS feels like PoG v1. Along with spending your coin age you send your coins to a burn address. After the wait period, you get a reward. It doesn't feel that different from PoG v1 except the "burned" funds leave your wallet temporarily.


  • Rob Andrews
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Re: Dynamic Whale Staking
« Reply #4 on: November 14, 2019, 03:24:32 PM »
DWS feels like PoG v1. Along with spending your coin age you send your coins to a burn address. After the wait period, you get a reward. It doesn't feel that different from PoG v1 except the "burned" funds leave your wallet temporarily.

The drastic difference however is in POG, you have control over your coins and each day, you can crash our market or spend the coins.

With burning otoh, you lose control of your coins and burn them, and therefore make our coins rarer for the period that our money supply shrinks.

So this type of ecosystem what we would hope for is new buyers buy into biblepay, our price rises, they burn the coins, they get a refund later plus a reward, and by then we have even more users.  So its sort of an ecosystem with an impetus for popularity, if it works out.



  • sunk818
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    • April 24, 2018, 02:02:20 PM
Re: Dynamic Whale Staking
« Reply #5 on: November 25, 2019, 11:59:39 PM »
The drastic difference however is in POG, you have control over your coins and each day, you can crash our market or spend the coins.

With burning otoh, you lose control of your coins and burn them, and therefore make our coins rarer for the period that our money supply shrinks.

So this type of ecosystem what we would hope for is new buyers buy into biblepay, our price rises, they burn the coins, they get a refund later plus a reward, and by then we have even more users.  So its sort of an ecosystem with an impetus for popularity, if it works out.


Do you feel investors will feel comfortable losing control over their coins by burning to an address they do not own? It is quite nerve racking to lose your coins, then wait and hope the code will send you back the original plus reward. Don't you want investors to feel safer by keeping funds in the wallet and time locking it via a smart contract? This is what Dai Savings Rate (DSR) does (https://web.archive.org/web/20190730215041/https://medium.com/makerdao/dai-reward-rate-earn-a-reward-from-holding-dai-10a07f52f3cf) and I feel a lot safer with a mechanism like this than "burning" and "unburning". In the end, both methods keep supply locked up and Dai Savings Rate feels much safer to investors than Dynamic Whale Staking.


  • Rob Andrews
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Re: Dynamic Whale Staking
« Reply #6 on: November 26, 2019, 08:50:29 AM »

Do you feel investors will feel comfortable losing control over their coins by burning to an address they do not own? It is quite nerve racking to lose your coins, then wait and hope the code will send you back the original plus reward. Don't you want investors to feel safer by keeping funds in the wallet and time locking it via a smart contract? This is what Dai Savings Rate (DSR) does (https://web.archive.org/web/20190730215041/https://medium.com/makerdao/dai-reward-rate-earn-a-reward-from-holding-dai-10a07f52f3cf) and I feel a lot safer with a mechanism like this than "burning" and "unburning". In the end, both methods keep supply locked up and Dai Savings Rate feels much safer to investors than Dynamic Whale Staking.

I suppose with all the projects going on, and prioritization of gospel features, it would be quite impossible to do both and also to integrate in a new ecosystem, add smart contracts, and add a couple more developers to help me code review that release and verify it was successfuly integrated; so at this time my best advice is to not use DWS if you feel uncomfortable.