Bible Pay

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  • Rob Andrews
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    • June 05, 2017, 08:09:04 pm
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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 an ROI 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.

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 ROI across the board.  What will they receive in Return on Investment in a year?  This particular idea will have a very high ROI if the demand is low, and very low if the stakes are saturated.

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 less after 10 years.

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.

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. 

Missing DWS payments:  Since we know this is a mission critical feature, the DWS payments would be written in a way where *all* DWS staked, and matured payments due that have not been paid that are due in a given month will be paid in a superblock, and, if a superblock is skipped (due to the sancs being offline or something extraordinary, the Business logic would be smart enough to still pay the missing payment the next day - for up to 30 days in the future).  This means that our investors who burn BBP to be in the DWS will definitely not lose their coins.  In a worst case scenario, they will be late a few days, but not lost.  Additionally, 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.   (I will check in the source code for creating a BBP keypair with a private blank key - ie hexcode {0x0} - that is a provably unspendable private key - that 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 ROI 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 ROI %.

Full example of a DWS whale stake in action:

getdwsquote
Returns: 15%
And the currently allocated quantity and total.
(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.


When the saturation % staked exceeds the current daily quoted reward level we decrease the daily reward for the next day by 1%.

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 an ROI of 100% will only be 50% if the duration is 1 month.  75% if 6 months.  100% if 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 ROI will be calculatable off of the base.  We can also quote all the ROI per duration on the screen.

Example:
Current ROI quote is 50% for 365 days.
ROI quote for 6 months is 37.5%.
ROI quote for 1 month is 25%.

User A types  : exec dws 10,000 365.  They will receive a 50% (annualized) reward in 365 days.  They will receive 10,000 + 5,000.
User B types  : exec dws 10,000 180.  They will receive a 37.5% (annualized reward) in 180 days.  They will receive 10,000 + 1,875.


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 ROI to zero (for quotes).
2. If Annual Saturation <= 95%, offer the inverse of the monthly saturation level.

Inverse of monthly saturation level:

IA = 1.0 - Monthly_Saturation_Level

ROI quote = IA * MAX_DWS_ROI

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%.

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%.

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

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

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

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).




« Last Edit: November 11, 2019, 09:54:33 am by Rob Andrews »


  • sunk818
  • Sr. Member

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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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    • June 05, 2017, 08:09:04 pm
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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.

Also, we could edit our nomenclature in the wallet, and change any reference of ROI to 'Whale Reward Units'.  Another words, this reward program could be re-written as more of a 'loyalty reward' program for BBPers.  In this sense, its similar to a department store layaway program - if I convert your layaway dollars to store points first - then I offer you more store points later for leaving your points in the store without buying anything.  This might be the safest way to ensure we remain a utility.


Could you review this and see if you can find a very reasonable cryptoattorney to review this plan for us, possibly for free, before we go to prod?



« Last Edit: November 12, 2019, 04:59:51 pm by Rob Andrews »


  • sunk818
  • Sr. Member

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    • April 24, 2018, 02:02:20 pm
Re: Dynamic Whale Staking
« Reply #3 on: Today at 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.