Announcing Granada

Research and Development
168

There are two misconceptions here.

  1. That because the block reward will be, let’s say 160 per block, 100% more as it is currently now, it means there will be dilutive inflation. When you and I know this is no true, because if we print 100% more TEZ, and we distribute those TEZ to all tezos participants according to their stake (if Alice has more coins than BOB she will receive more) with a distribution fee of 0% (baker fee), they all will have the double, the coins will be worth, let’s say, half of the value as before (assuming all participants sell 50% of their stash after the 100% minting), but they will have the double of the coins. So no NET dilutive inflation there.

  2. That there will be some kind of dilution to delegators after the trading fee goes to bakers compared to the status quo. The current status quo is, that bakers receive 100% of the block reward and apply the baker fee to their delegators. If the trading fee of the proposal goes to bakers, then bakers will just have 100% control over the printed TEZ, same as before, then they will be able to apply baker fee to the 100% of the monetary printing, same as before. It would be exactly the same as before. The only difference is that now bakers will distribute more coins to delegators as before, but it will have the same cost to delegators after the baker fee subtraction, and therefore the same NET 0 dilutive inflation for bakers and delegators, as the status quo today. UNLESS, the trading fee doesn’t manage to gather the whole TEZ that it was printed. Then there will be an effective dilutive inflation for both, bakers and delegators. But the proposal propose instead to burn 6% of the minted tezos, which will make bakers unable to apply a baker fee to that fresh minted TEZ.

169

We can build the roads without bakers being taxed. We provide 10% subsidy to LPs if you want, it could be higher than 6%, doesn’t matter, then that loan is paid back not by LP’s, but by traders, trading the XTZ/tzBTC pair, traders pay back to us the subsidy with the trading fee. Then, if there is a loss, let’s say we get back 9% from that 10%, so 99% of the supply was recovered, there will be only 1% dilutive net inflation, and that loss will still be collectivized among all TEZ holders, because 99% of the supply creation of the coin would still be distributed by bakers to delegators with the addition that bakers will be able to apply the baking fee to 99% of supply creation, and not just to the 94%. Or if the trading fee manage to gather 11%, then that 1% profit will be also collectivized among bakers and delegators, after bakers applying the baking fee to that 101%.

So regardless, LB can still be done and viable, with bakers receiving the trading fee instead of burning it.

Is not even a TAX with the purpose to build roads, is just a tax with the purpose to redistribute part of the block rewards at 0% baking fee. The liquidity benefit is just the excuse. I’m not opposed to liquidity baking, I’m opposed to doing it this way.

1 Like
170

The hysteria of this becoming borderline ridiculous fuelled by @keefertaylor for some odd reasons.

Liquidity Baking has been discussed for months and it’s designed to be an experiment. What exactly is the risk of experimenting with this feature if it has a built in escape hatch and will sunset in 6 months?

This is a minimum viable product that can also be improved on in future proposals and add more coins like USDC.

If it works, then great, it benefits the entire Tezos ecosystem as liquidity is a major problem. If it doesn’t work out, then turn it off or let it be deleted automatically with the sunset feature but it’s not worth voting down because Tezos still moves forward with faster blocks and cheaper gas.

Shouldn’t Tezos have some tradeoffs and experiment with cutting edge features that can potentially benefit the entire Tezos ecosystem in a safe manner?

This is the problem with decentralization in some ways, one uniformed person with an agenda and can start claiming controversies that aren’t true and try to snowball the claims.

1 Like
171

The hysteria has nothing to do with @keefertaylor, he raised some valid points though he should’ve raised them months ago.
The hysteria started with a few bakers who doesn’t like the decrease in their rewards from 40 tez per block to 40 tez per block

Same may be applied to you and especially the offensive tone you speak in
However I agree on experiments and tradeoffs, without it we can’t win.

3 Likes
172

And yet you are again claiming that BitcoinSuisse is the issuer in a new thread.

Edited and fixed on the other thread. Thank you for pointing that out. I admit that I misspoke.

I support the idea of competing proposals, I support a healthy debate, but it is disappointing to see you resort to lying, whatever your objective might be.

I do wish our discourse could be respectful and assume best intents on both sides and not resort to FUDing about hidden agendas or lying.

1 Like
173

Some points were admitted to be untrue but he still seems to keep mentioning it in other threads. What do you think that the effect of that is when a person doesn’t read in depth and just accepts those points at face value?

It’s quite simple for me, I look at what benefits the whole Tezos ecosystem and what doesn’t. Same logic applies for people debating on this. Some are arguing for their own selfish needs.

174

I do want to take a moment to discuss this:

It’s public information, that TF participated in the Series A of Bitcoin Suisse. Are you asking because you know or because you don’t know?

No there are no conflict of interests. The tiny stake that TF has in Bitcoin Suisse, the limited role that Bitcoin Suisse has in tzBTC, the small amount of fees that may be collected as a part of this, and the limited margin on top of those fees make up for a total financial incentive on the order of the cost of a beer.

But TF also has a small stake in Taurus, so maybe two beers?

Conflicts of interest are not about dollar values. Conflicts of interest can start small and grow over time. It’s also true that realized income is not the full picture here - Bitcoin Suisse (as a company) will become more valuable, and the ownership stake value does not necessarily increase linearly with revenue.

Based on what you’ve told me:
The Tezos Foundation has stakes in those Bitcoin Suisse and Taurus. Bitcoin Suisse and Taurus will benefit (regardless of dollar amount) as a result of this protocol being adopted. The Tezos Foundation is paying the salaries of the teams building the protocol. This seems like a conflict of interest.

I think there’s probably some other financial interests between these entities. For instance, Bitcoin Suisse also helped Tezos perform the ICO. There may be other service agreements between these two entities. Presumably, some money likely changed hands when TzBTC was developed. This level of opacity makes it really hard to have a clear picture of how money is being exchanged between these entities and whether preferential treatment is being given.

Lastly, the financial benefits in a conflict of interest don’t have to be realized at the time. It might be that Bitcoin Suisse is going to knock $X off a current or future service in exchange for preferential treatment. Perhaps after preferential treatment is given, the minting fee increases. The financial benefit from this change may be small to TF, but there may be larger ones between the entities unrelated to this transaction or in the future. We really don’t know unless we have a full picture of the relationship between the companies.

One way to prevent a conflict of interest from becoming corruption is to voluntarily disclose relationships and the potential for conflicts, which in my opinion, hasn’t been done here (and certainly key details still seem to be missing).

It would certainly help if the foundation could identify:

  • Any other existing business or service provider relationships with Bitcoin Suisse, Taurus or other member’s of the consortium
  • Times that money has changed hands between Bitcoin Suisse, Taurus or other members of the consortium

Conflicts of interest are tricky to identify and there’s no definitive criteria, like “this transaction is under $50 so it’s fine”.

I will leave it to readers to decide if this particular situation seems like it is a conflict of interest, or if lack of a full picture presents the possibility of a conflict of interest. However, the argument that this is a “two beer” arrangement seems like it may be an over simplification.

3 Likes
175

Once is misspeaking. Twice is lying.

I agree that one shouldn’t assume malice without direct evidence, and of course I haven’t done that.

4 Likes
176

I made a new thread discussing the economics of Liquidity Baking and I invite you all to take part.

177

As Keefer mentioned above he had deleted those.
Regarding benefits.
I believe that discussions like this benefit the whole ecosystem even though part of it should’ve happened before.
It helped me learn that decision making happens off chain and the voting process is a a ratification step of developers work.
Not like it is necessarily a bad thing but I didn’t know that and I bet many bakers don’t. And if they did, they’d be more active on agora.
What do you think the effect of that is when a person doesn’t read in depth and just accepts that bakers vote for everything coredevs tell them.

I’m not against I do believe that LB is a very beneficial thing overall. And I tend to agree that tzbtc is the best option at least for the next 6 months. But some bakers may disagree with me and I believe they could be given an option to vote against LB.

I think we had enough argument and it’s time to move on

3 Likes
178

Maybe I’m missing something here, but since the TF only exists to support Tezos, anything that TF makes on its investments in Bitcoin Suisse and Taurus gets used to the same end and not to go into someone else’s pocket, so what’s the conflict?

2 Likes
179

First of all, you avoided my question. TF’s investment in Bitcoin Suisse is disclosed on its homepage and in its semi annual report. Did you know that? When you asked about conflict of interest, did you feign ignorance?

Second of all, yes they are very much about dollar value. If you don’t apply some kind of de minimis threshold, then everyone would be conflicted over everyone else.

By that logic we also need to worry about future conflicts of interests. In other words you set an unattainable standard.

Bitcoin Suisse could also become less valuable.

That is far from being guaranteed at all.

TF pays grant and service agreements to various organizations who employ core developers.

TF had no involvement whatsoever in this TZIP and the choice of tzBTC. The consortium behind tzBTC is public, TF taking a stake in BitcoinSuisse and Taurus is public and indicated directly on its website and in its report. You are grasping at straws to create controversy.

Bitcoin Suisse did not help with the Tezos Foundation’s fundraiser. They participated as a syndicate of course. So what?

First of all, this proposal is not made by TF and TF had no involvement in coming up with its details, besides paying grants to people who worked on it. Second of all, comments were requested for 5 months over the choice of tzBTC. Asking for comments for half a year isn’t exactly preferential treatment. You had 5 months to propose alternatives, 5 months to discuss that proposal and did nothing. Even after that, you still have the option to inject alternatives or reject the proposal outright.

It might be that BitcoinSuisse is going to knock fees if the Michelson interpreter is sped up, but I don’t see you asking about that. That sounds too stupid to even consider, right? I assure you that the idea that Bitcoin Suisse somehow materially benefits from this use of tzBTC or even wants more usage is about as preposterous.

You could say this of literally any change to the protocol done by any one. It’s impossible for any entity to operate with this level of disclosure. TF would be unable to enter any NDA, TF would be unable to have any negotiating power when signing a contract, TF would be unable to hire anyone. TF is not “the government” it’s a private entity and a wealthy patron to the ecosystem. The standard you propose simply doesn’t work, it buries everything under bureaucracy.

What does work is for people to engage in healthy debate over proposals and judge them based on their merit, not on harebrained conspiracy theories about who might benefit.

It would certainly help if you disclosed your previous tax returns and bank statements for the past 10 years. I don’t see how we can take your argument seriously if we don’t know what might be influencing your opinion.

5 Likes
180

What exactly is wrong with TF paying for people to build on the protocol?

That money should be used to grow the ecosystem. I wish TF spent all its money to fund development for Tezos. It’s a huge asset for the ecosystem. How come other chains like Solana don’t have a problem doing swift moves and trying new things at a faster pace.

2 Likes
181

Because Solana is way more centralized.

3 Likes
182

Seems to be an asset at this stage in regards to centralization. I’m confused on why a feature that can turn off in 6 months is being argued so much.

2 Likes
183

it can be turned off earlier if bakers decide so. still it’s being argued about because it’s a serious change.
And actually it’s more about the way it’s presented than the feature itself, no one really is against LB

1 Like
184

I’d like to weigh into this discussion.

First, while I am certainly in favor of liquidity baking and voiced my support for the proposal months ago, simply voicing support for a draft should not imply that I support every aspect of the final proposal based on the draft. It implies general support for the concept or idea, not complete, unequivocal support for every unknown implementation detail.

One principle that is paramount for decentralized, autonomous protocols like Tezos to consider is to reduce reliance on any centralized infrastructure that might be vulnerable to coercion by regulatory bodies, governments, or any other party. The inclusion of tzBTC as an asset in the single liquidity pool incentivized by liquidity baking violates this principle.

In order for tzBTC to remain viable, Bitcoin must be custodied, tokens must be minted, and resources, both financial and otherwise, must be spent by parties that may or may not share common interests with Tez holders. If tzBTC were to disappear overnight for any number of reasons, such as the custodian shutting down, or regulatory pressure, this could have dramatic, unintended consequences for liquidity providers in this protocol sanctioned liquidity pool.

It would have been nice to see liquidity baking arrive without an officially sanctioned liquidity pool, but instead a mechanism by which bakers can vote to allocate inflation to multiple liquidity pools that could be deployed by anyone from an open source contract. This could be similar to the way Curve allows CRV holders to vote on gauge weights - a gauge weight translates into how much of the daily CRV inflation it receives: https://resources.curve.fi/faq/gauge-weights

In general, I would like to support liquidity pools with tokens in them that are not controlled by central parties, as these central parties introduce additional risks. For example, I would like to see tBTC instead of wBTC or tzBTC (assuming we had tBTC available on Tezos).

We can see a good example of the systemic risk potential by Maker’s choice to enable DAI to be collateralized by USDC. At this point in time, approximately 40% of all DAI is collateralized by USDC. While USDC is a very sound protocol with proof of reserves and regular, monthly audits of the reserves, this also makes DAI vulnerable to a single bad court ruling or government order, which could have the chilling effect of making their USDC balance 0 and the entire protocol insolvent.

Because it is a slippery slope from the small amount of tzBTC liquidity we have today to the $billions of liquidity in DAI, I think we should be careful to officially sanction centralized tokens at a protocol level.

Lastly, I would just like to comment that I find the level of discourse troubling. I know @keefertaylor personally and he has selflessly spent thousands of hours working in the Tezos ecosystem for several years, much of that time uncompensated, simply because he believes in the potential, and I know Keefer has the utmost integrity and would never intentionally lie or mislead others. To accuse others of lying simply because they disagree with your opinion and to personally attack them is unacceptable, and should be strongly discouraged by everyone here.

13 Likes
185

Thanks for sharing Luke.
I tend to agree with almost everything you said, especially about tzbtc being a custodial asset which I mentioned on the LB topic several times.
However I can’t agree on the Curve way to vote on gauge weigths here because we have different goals. Curve distribution subsidizes different assets whereas LB’s goal is to subsidize tez and by spreading the inflation to various pools we spread the liquidity.
Having one liquid asset would be key here IMO.

2 Likes
186

Luke, I did not say Keefer lied because he disagrees with me. I’ve interacted with countless people who disagree vehemently with me without levying this kind of accusation. I said he lied because he did. It saddens me that he has fallen to this because I know all the work he’s put in with you in Kolibri, but at the end of the day you have to call a cat a cat.

Keefer knew BitcoinSuisse wasn’t the issuer because I corrected him, and he still kept calling them the issuer for rhethoric effect. That is a lie.

I would also like to address more directly your point about tzBTC not being trustless and the amendment introducing a degree of trust in the protocol.

Invoices have been paid to developers before, and this has shocked absolutely no one. Paying liquidity providers by inflation is no different. The risk taken by the protocol is limited to the cost it pays. Putting this money into a DAO and having it pick an asset as you suggest is not fundamentally different, you’re just passing the buck down the line.

1 Like
187

I said he lied because he did.

These are very strong words. Keefer got an implementation detail slightly wrong. Bitcoin Suisse is still the custodian and participates in a consortium that issues the asset. How credibly decentralized the consortium is will be left as an exercise for further research.

I agree that one shouldn’t assume malice without direct evidence, and of course I haven’t done that.

This also reads to me as “I have direct evidence so I’m going to assume malice.” You’re not assuming good intent, you’re assuming ill intent.

2 Likes