The same way i did:
Do not complicate it with fiat 1 TEZ = 1 TEZ. The same way I did:
So 2.9% raise in baker fees.
You frame the liquidity baking subsidy as a tax, but in reality you see delegation fees as a tax, the subsidy as a tax loophole, and bakers as constituting a state. You are upset you cannot subtract delegation fees from the subsidy and hope to appeal to bakers as they hold the voting power for this proposal.
I have a higher view of Tezos bakers and think most likely do not see themselves as owners of a central bank-like âmoney printing machineâ, but rather as stewards of a currency that aims to advance an ideal of stateless economic freedom that will ultimately serve their financial interest as it will draw like-minded users to the network.
Your comparisons to US economic policy belie a mindset stuck in traditional models that the general population is increasingly waking up to as failing, perhaps the prime driver of the current popularity of cryptocurrency in general. I encourage you to step back and reevaluate this.
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Letâs speak the same language. If you mean delegation fees as baker fees or delegate fee, no I donât see it as a tax, Iâm not âtaxingâ delegators, Iâm not imposing them a tax, it is a voluntary agreement between them and me, and Iâm not forcing them to âpayâ me (actually Iâm the one that pays them) the baker fee, Iâm offering them a service and a partnership, so we can find more blocks and earn more, they can leave any day of the week if they donât like my service. There is a difference between a TAX that is imposed and a voluntary agreement.
No, I have said it multiple times, that the TAX is not the subsidy itself, you havenât been listening at all, is converted to a WEALTH redistributive TAX once the TEZ collected by the trading fee is sent to the burning trash, IS a WEALTH redistributive TAX applied to all bakers by other bakers (the tyranny of the majority), because that should have been reimbursed to bakers.
No, not at all, bakers are a business, if we were a state, we could actually tax our delegators coercively, even if they were opposed, but the reality is that the baker fee is a VOLUNTARY AGREEMENT.
We donât tax delegators, sorry is a voluntary agreement, you want to make it see, like if we are âtaxingâ and oppressing delegators for our hard work, we are not taxing them, we are not forcing them to accept the delegator fee, is all a voluntary agreement between delegators and bakers. The only ones that are FORCING bakers to redistribute block rewards income by governmental coercion are bakers to other bakers, the majority is IMPOSING over the INDIVIDUAL baker a forced redistribution income TAX. The block rewards are just a resource that is being extracted and delegators provides more work force to the business owners, so we can extract more block rewards, and the payment to delegators is agreed voluntarily through the baker fee, the baker fee is not a TAX.
Thatâs your view about bakers owning or not owning the printing machine, not all bakers will agree with you. Thatâs why your LB proposal is making bakers TAXING themselves to artificially transfer wealth to delegators. You speak of âeconomic freedomâ yet your proposal hiddes a coercive TAX. You are in favor of robbery, if the majority agrees with the robbery, it doesnât make it legitimate, is a legal robbery, but is NOT legitimate. IS just another expropriation by the tyranny of the majority.
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And I encourage you to step back and reevaluate this robbery imposed coercive wealth TAX that your LB proposal is doing. Is a robbery, and you endorse it, you want it or not, due to this new policy, bakers incentives will be reduced, the math is clear at the beginning of this thread. We are not like the FED, i said, the FED doesnât redistribute anything to the participants of the economy, as opposed to TEZOS that the vast majority of the printing machine is being distributed to delegators along with transaction fees. THEREâS NO NEED, for an implemented TAX in the code, we work here with voluntary agreements, you are the one working with forced TAX at code level.
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@sophia really? Are you really saying that bakers tax delegators? Is really a voluntary agreement. Your TAX is not a voluntary agreement, it will be implemented in the code, even if some bakers disagree they will have to adopt it by force.
This is not governance anymore, I sign up for on-chain governance, not a democracy, where property rights are expropriated, and income sources are TAXED, democracies always fails. Democracies are the tyranny of the majority, if the majority say that TF must be expropriated and DSL too, does it make it right? Does it make it a âgood governanceâ? No right? it does not.
@murbard and @sophia are like politicians, that are brainwashing everyone in making them believe that LB proposal is a good thing, when it is not, because it contains a hidden tax, and now you want to brainwash other bakers, to think, this is the âway forwardâ. And is not, not like this. LPâs could still be funded if bakers are reimbursed, and we wouldnât have a loss in rewards. But you and Arthur are so arrogant to accept you hide that tax, maybe unintentionally, but the fact is that you did put that tax there.
Arthur was the first one that jumped, when bakers were discussing about burning the coins of the TF, for the âcommon goodâ âfor decentralizationâ. And he started saying we will be like Zimbabwe. So when the majority wants to burn TF bakers is bad, but when the majority wants to expropriate or TAX the revenue sources to ALL bakers, is good and acceptable. Give me a break with your double morality.
And yes, I want to influence bakers that they are being fooled, because that is the whole truth. You want to influence bakers too, by telling them, that it is okay to be TAXED for NO REASON, because Liquidity could still be funded by the subsidy, if trading fee is reimbursed to bakers, so they can apply the baking fee, liquidity is funded REGARDLESS. AND YES, Iâm upset because I will be TAXED along with my fellow bakers. @sophia if you want to do charity do it with your own pocket, do not want to do charity with the pockets of others, you go and buy TEZ from the exchange and send it to a burning address.
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Iâm still baffled that she called the baker fee a tax, when is a voluntary agreement. Shows that she knows nothing about economics, or even the concept of what is a tax, which by definition requires force. @sophia you want it or not, the wealth tax, is in the code you wrote and imposed by the vote of the majority, which will enforce it.The baker fee is not being imposed to delegators, it canât be a tax.
LB will hurt revenue of bakers which will make it less attractive to bake. The math is clear.
But that only works if you know that it is happening, like conveniently with LB.
We were talking about proposal A of minting and then burning an arbitrary sum of tez in isolation without those tez ever interacting in any way with the rest of the system.
What if you detected a few years later that due to a bug the chain minted and then burned 10^9 tez and you were only able to pay your bills since then because you didnt know?
Wouldnt that beâŚawkward?
The TEZ minted it is interacting with the system, so your example of the bug doesnât apply, the trading fee that will collect back the amount that was subsidized, is no guarantee that it will collect the whole 2.5 TEZ back, it might only collect 2 TEZ, so we are talking about a risk.
Who is running that risk? The Hodler (delegator and baker) or the baker? I argue is obviously the baker, because his incentives to maintain his baker operations are threatened, he needs to take his cut even from the losing position of the scenario of the trading fee collecting only 2 TEZ, not just distribute the 2 TEZ without his cut at a 0% baker fee.
Who takes the risk? Who allowed the TEZ printed machine to print the subsidy in the first place? Who was in possession of the 100% of the printed TEZ before Liquidity Baking? WHO?
Why the baker didnât have that risk when he was managing the 100% of the TEZ printing machine and applying baker fees to the 100%? The answer is simple, because the one who has more to lose is the BAKER, and the one that takes the biggest risk, is the BAKER, and the one who has governmental control over the TEZ printing machine, is the BAKER, and the one who risk more from all other entities in Tezos, is the baker.
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Completely agree. What an excellent response.
Again, we were not talking about LB, we were talking about Arthurs example and a slight generalization to arbitrary amounts.
This example and LB are two different things and we were talking about the first and not the second. I know this can be confusing and I will try to avoid such situations in the future.
You answered that:
Now, lets assume a year ago the Tezos printing machine minted and burned 10^9 tez in the middle of the night without anybody noticing. A massive TAX, completely annihilating bakers inventives but luckily nobody noticed that and everything went on as before. Sadly you opened yesterday a chain explorer and find that minting and burning operations. Shockingly you have been bancrupt for a year without anybody knowing.
The truly fascinating question is, what happens if you dont tell the other bakers about this operations?
Are they like schrodingers cat both bankrupt and not bankrupt?
What happens if you interact with them?
Again, we are talking about the first thing, not the second thing!!!
I donât think that bug is part of our reality, the TEZ printing machine creates blocks with TEZ in them, the printing machine doesnât destroy them, unless is instructed for the TEZ to go to a certain burning address. But letâs say this bug is part of reality. You are exaggerating with the bankruptcy sentiment that the first observer supposedly experienced. Thereâs a reason why he can tell the others, and the others most probably wonât experience any possible feeling of loss of profits either, unless they are crazy irrational.
If a random block prints 1,000,000 TEZ instead of 40 TEZ due to a bug, but 999960 was instantly burned, and the block remains with the same 40 TEZ again, since the printing and burning happened in 30 second, theyâll just treat it like a 40 TEZ buggy block, theyâll still know that the printing machine will keep printing 40 TEZ every half a minute as usual from which they will still be able to apply baker fee. They wouldnât be arguing that they lost possible profits due to a bug of 999960 TEZ not passing through the baker fee, it would be ridicule to treat it as a loss. Buggy block was always in bakers possession. No baker benefited more than other bakers to imbalance things out.Life goes on as normal.
Instead, with LB is different, Bakers authorizes 2.5 TEZ block subsidy from which it is going to be used for a purpose and used elsewhere, out of their reach for X amount of time, from which they will be unable to apply baker fee, in your example, the buggy TEZ block never passed on to non-bakers entities out of their reach, it always stood in possession with bakers, in LB TEZ goes to LPâs smart contract, and itâs used as payment from which LPs can dump or stake. Baker says goodbye to the 2.5 TEZ, and they donât know if they will ever recover it one day. And if is recovered, the tyranny of the majority will impose the burning.
The income tax is real, letâs stop pretending is not @sophia, bakers are a business, and it should be treated as such, if you tax us, and our profits are diminished, we close the doors and the chain centralizes. The 3% income redistribution that is forced upon us, is real, stop talking about economic freedom when you tax the ones that secures the chain. Thatâs makes you a hypocrite. You hid an income redistribution tax in the code you wrote. The tax was hidden under the amazing and convenient feature of increased liquidity making it hard to find and easy to ignore.
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This is probably how they will do it, they will hide these taxes under amazing features. And since Bakers are so desperate because the TF has been dumping suppressing the price, they will vote for the amazing features, even if they have to sacrifice themselves, bakers are desperate for TEZ to go to the moon, and they use that to their advantage to include these hidden wealth or income taxes, so they desperately ignore the taxes in exchange for amazing features.
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I knew I shouldnt have touched the bug word, unforced error on my part.
But here is why LB is exactly the same. Assume LB goes live and we have the same amount of incoming trading fees going to null and subsidies going to the LP.
There is only a slight difference, there is a switch in the protocol that has a 50/50 chance per block generation to send the summed up trading fees directly to the LP as long as both amounts are the same with no subsidy creation or burning happening.
Now LB is running for a year in this conditions and nobody has looked in the chain how many times each alternative was chosen.
A baker now does not know what % between 0% to 2.9% he had lost because there is no observable difference unless you look in the chain history.
Now how is this poor baker to know how much he has to raise his fees to survive?
Why would the trading fees be sent AGAIN with this switch thing to the LPâs if the LPâs are already receiving the 2.5 subsidy, you want them to have even more profitability? You are overcomplicating yourself is not the same. There is clearly a tax that redistributes income, and there is an income transfer of wealth from bakers to delegators of 2.9%.
A baker charging a 10% fee would need to increase his fee to 10.29% in order to not be diluted. As simple as that.
I am talking instead of the subsidies. Sorry i was thinking that was obvious. My bad, sorry.
Lb is not exactly the same. We all have to understand that the printing machine is ours, because we have governmental control over it, if we print an additional amount of TEZ, we donât burn it, we take a cut from it and distribute the rest, is a loan that trader must reimburse if we want to keep the bakers incentives intact. Thatâs what incentives for bakers are for. IF you donât believe in incentives, then burn 100% of the block rewards, distribute all block rewards at 0% baker fee. See how that works. Stop trying to find a reason to justify this TAX, it is wrong, it reduces our incentives. Is a robbery. You donât justify a robbery by any means, not because the tax is a legal robbery means is legitimate.
The problem is that you think bakers have a license to collect a tax on any created tez.
So, when a bug creates and burns 10^9 tez you would just send an invoice when it comes to light. (to whom tough?)
The modified LB above would be required to keep track of all tez creation so the correct tax burden could be calculated.
The principle is rather similar to paying taxes on staking rewards.
In both cases the rewards are just offsetting a loss, but the tax collector does not care.
And yes, you have proven that if you had those tax powers your revenue would be higher than if you dont, congratulation.
No, it would not be higher if reimbursed, our revenue will be the SAME revenue as we have today. Not higher. With the burning of the trading fee, it will be LOWER as it is today. If you want to reduce even more the incentive, then BURN 100% of what the machine prints, see how that works out. You are having a really hard time understanding the simple fact that the incentive is maintained, not increased, if we regain the control of the 100% TEZ printing machine. 94% for bakers, while 6% burned, is a decrease.
No, bakers are not taxing anyone, donât be so naive. A TAX can only be applied with coercive action, when you apply a tax is at the code level through governance. It was clear from the beginning that ALL revenue sources were going to be exclusively for bakers, since they are the ones that put their TEZ in bonds to secure and decentralize the network. Bakers are NOT taxing delegators, the baker fee is a voluntary agreement between both parties. Delegators a free to choose which bakers pay them more, Delegators are the workforce that provide bakers the opportunity to find more blocks with revenue in less time, delegators are paid by bakers, not the other way around. Delegators are free to reject or approve the voluntary agreement, the is no coercion. The only TAX here is the one that is imposed at CODE level with governmental coercion though this new Tax Reform to TAX bakers revenue source with the purpose to redistribute income, is the one that Arthur and Sophia hid there.
What you and Sophia are doing, are simply turning the blame on bakers, that âwe are the tax collectorâ when bakers only work with delegators on voluntary agreements, so the fallacy of you and Sophia that we are the taxers is totally bullshit and shows how ignorant you both are.
